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Trump accounts: what they are, how they work, and use cases Thumbnail

Trump accounts: what they are, how they work, and use cases

In the One Big Beautiful Bill Act (“OBBBA”) that was signed into law on July 4, 2025, a new form of investment account was created; the 530A account, or Trump account.

The term “530A” references the specific section of the U.S. tax code that stipulates the rules around these new account types. Think of it sort of like the label 401(k) accounts, where “401(k)” is the section of the tax code that stipulates the rules around those account types.

In addition to creating the tax code language that created 530A accounts, the OBBBA also gave the formal label “Trump accounts” to such accounts. While these accounts can be interchangeably called 530A account or Trump accounts, I’ll refer to them at Trump accounts herein. And it appears most of the industry has taken to referring to them as Trump accounts, as opposed to 530A account.

While the formal creation of Trump accounts was July 4, 2025 with the signing of the OBBBA, the accounts didn’t actually go live until a year later; on July 4, 2026. As such, as of the release of this article, Trump accounts are less than a month old!

This article will explain the ins and outs of Trump accounts and what I see as the main potential use cases for them. But please note there are still clarifications and formal guidance needed from the IRS and other areas of government regarding certain aspects of Trump accounts. Considering how new they are, there are still some things about them that are evolving. I’ll address as much as I can, with what I believe to be accurate as of the writing of this article.

I’ll dig into the details of Trump accounts much more below. But, in a nutshell, they’re ultimately a traditional IRA. However, it’s a special sub-category of IRA that can only be opened and funded for children who aren’t older than 17 as of the end of the year. And there are a host of other nuances and restrictions until the year the account owner/child turns 18. With this in mind, I think the best way to think about Trump accounts is that they’re their own unique animal until the year the account owner/child turns 18, at which point they’re effectively just another traditional IRA…but even then with potentially a little more nuance compared to normal traditional IRAs. Read on, and you’ll see what I mean.

But to drive this general point home about Trump accounts ultimately being traditional IRAs, the very first part of section 530A of the tax code says, “Except as provided in this section or under regulations or guidance as established by the (Treasury) Secretary, a Trump account shall be treated for purposes of this title in the same manner as an individual retirement account under section 408(a).”

And one other thing I want to get across now before moving on; Trump accounts are ultimately owned by the child. As such, any income that ultimately comes from a Trump account is taxed to the child. But as you’ll see below, distributions practically can’t even happen from Trump accounts until the year the child turns 18. Which means the child will eventually be an adult when they ultimately realize income from the accounts.

Given the above, Trump accounts are loosely similar in set up to opening a brokerage account for a child. The account is legally owned by the child, and any income is taxable to the child. But so long as the child is a minor, they aren’t legally allowed to open and own financial assets. As such, a guardian or parent must open the account, and act as a custodian, on behalf of the child. But then once the child reaches 18 (in the case of Trump accounts) or age of majority (which may or may not be 18 in the case of non Trump accounts, depending what state the child lives in), the account is fully theirs, the guardian or parent custodian relationship falls off, and the child (ahem, young adult), is free to do with the account as they please, for better or worse…unless it’s owned by a trust set up by the guardian or parent to help protect and control the money. But that’s a whole separate topic.


Legislative background

The idea belying Trump accounts was spawned by legislators trying to create some sort of new investment account type specifically geared toward helping children get a head start in saving and funding longer-term life goals like higher education, starting a business, home ownership, retirement, etc. In the original draft of OBBBA legislation, the House of Representatives proposed what were to be called MAGA accounts, where MAGA stood for Money Account for Growth and Advancement. Ultimately, throughout the legislative negotiation process in finally bringing the OBBBA into law, MAGA accounts became renamed Trump accounts, and they became less tax-generous and less flexible than originally proposed.

For example, MAGA accounts were originally proposed to have their growth taxed at capital gains tax rates, which are lower than ordinary income tax rates. However, Trump accounts have their growth taxed at ordinary income tax rates.

Additionally, for both MAGA accounts and Trump accounts, distributions aren’t allowed out of the accounts until the account owner is 18. But, for MAGA accounts, distributions would have been allowed without penalty (and again growth would be taxed at capital gains tax rates) for higher education expenses, qualified post-secondary credentialing expenses, certain small business expenses, and first-time home purchases. And in all these cases, I believe there weren’t restrictions on the dollar amounts of MAGA account money that could be used to go toward those qualifying expenses.

With Trump accounts, as you’ll see below, distributions after age 18 follow normal traditional IRA rules, where there are greater restrictions on using the money prior to 59 ½ than there would have been with MAGA accounts.

But I digress. While I find it interesting to look at initial versions of legislative proposals, those don’t ultimately mean anything as they’re not what made it into final law. As such, the rest of this article will discuss what actually made it into law for Trump accounts, and not what could have made it into law for MAGA accounts.


Opening Trump accounts

Since Trump accounts are intended to help children get a jump on saving for their futures, they can only be opened for children. Specifically, a Trump account can only be opened for someone who will be younger than 18 as of the end of the calendar year in which the account is getting opened.

For example, if your child is currently 17 but will turn 18 prior to end of this year, it’s too late for your child to have a Trump account opened for them.

In addition to needing to be younger than 18 as of the end of the account opening year, the other pertinent qualifying condition is that the child needs to have a valid Social Security number in order to have a Trump account opened for them.

Since Trump accounts are opened for minor children, there needs to be qualifying adult who actually does the account opening and acts as the custodian of the account while the child is still a minor, like I mentioned above.

As for who’s eligible to open a Trump account for a child, the IRS has a very specific list of people who can AND the IRS places a clear priority within that list. Specifically, the order of priority of who’s able to open a Trump account for a child is the child’s 1) legal guardian, 2) parent, 3) adult sibling and then 4) grandparent. Furthermore, the IRS makes the account opener represent, under penalties of perjury, that they are duly authorized to open the account. Which means if the child has living parents and/or adult siblings, a grandparent cannot open the account for the child…at least not without implicitly lying under penalties of perjury. And if the child has a legal guardian who is NOT one of their parents, the parents can’t technically open the account for the child (the legal guardian would have to).

Only one Trump account can be opened per child. Unlike with normal brokerage accounts, traditional IRAs or Roth IRAs, a child cannot have multiple Trump accounts opened and funded at any one time. I think it’s technically possible for two Trump accounts to be opened at once, but only one can have money in it. Such as in the case of transferring a Trump account from one custodian to another; I don’t think the transfer to the new custodian can happen unless the new Trump account is already opened there. But it’s clear there can’t be two different Trump accounts, both with money in them, for the same child.

Currently, there is only one financial broker/custodian that offers Trump accounts; Robinhood. It’s expected that other major financial brokers/custodians like Fidelity, Vanguard, Schwab, etc. will eventually start offering Trump accounts. But for now, there is no option other than to have the account opened at Robinhood.

BNY Mellon does a lot of the servicing and administration of Trump accounts, on behalf of the Department of Treasury. For example, I believe BNY Mellon helped develop the Trump account mobile app (more on that in a bit), in conjunction with Robinhood. It’s not clear what BNY Mellon’s involvement will be if/when other custodians like Fidelity start offering Trump accounts, and whether Trump accounts held outside of Robinhood will still be viewable through the Trump account app.

When other firms start offering Trump accounts, existing accounts at Robinhood will be able to be transferred to those other firms, fundamentally similar to how a brokerage account at one firm can be transferred to another firm.

With regards to how to actually open Trump account, it requires 1) filling out and submitting IRS Form 4547 (fun fact: 45 and 47 are the numbers of Trump’s presidencies, meaning it was not an accident or coincidence that the IRS Form is numbered 4547…) and 2) completing the Trump account application via the Trump account mobile app.

You can find the Apple version of the app here

You can find the Google Play version of the app here

There is also a government website dedicated to Trump accounts at https://trumpaccounts.gov/. However, from what I can see, you can’t fill out the Trump account application directly from the website. Instead, it appears the website requires you to download and use the app, and then you can fill out the application within the app.

As for filling out Form 4547, you can do that as part of your tax return, or through your IRS online account, assuming you’ve since created an IRS online account. However, I believe if you do Form 4547 through either of those two options, you’ll still have to separately use the Trump account app to actually open the account. Because Form 4547 is simply the formal request/notification to the IRS to let them know that you’ll be opening a Trump account. But Form 4547 itself doesn’t actually open the account. That’s where the Trump account app and application process comes in. Or at least that was my own personal experience.

I just opened a Trump account for my 16 (soon to be 17) year-old daughter. I’ll explain my reason for doing so later in this article. But for now, I share this to say I had a bit of a wrinkle in opening her account.

I logged in to my online IRS account, and pretty quickly and easily found the section to fill out Form 4547. But after I filled it out, I then received a status update saying the IRS couldn’t process my request to open her account.

Maybe it was my fault for not knowing this, but I thought that I could fill out Form 4547 AND open the account through the IRS online account. But in hindsight, it appears that’s not the case. From what I can gather, it now seems like the IRS online account only lets you fill out 4547; it doesn’t also act as the application to open the underlying Trump Account.

After waiting a day and not getting any other notifications or updates from the IRS, I downloaded the Trump account app and started filling out the application there. In doing so, it already had record of me having filled out Form 4547. And from there everything worked fine and went smoothly.

The Trump account app is rather efficient and easy to use, based on my experience. Furthermore, it seems that you cannot only open the account through the app but you can also fill out Form 4547 as part of the process. As such, if you’re going to open a Trump account, it appears the quickest and easiest way is to just use the Trump account app from start to finish. In other words, don’t bother trying to first separately fill out Form 4547 via your tax return or via the IRS online account. Since it seems that can be done in the Trump account app as part of the account opening process, just do it all there.

And you can open Trump accounts for multiple kids through the Trump account app.

Once the account is opened, which happened within a day in my case, the Trump account app is what you’ll use to set up making contributions (more on that below), view balances, etc. And if you have multiple children for whom you’ve opened up Trump accounts, you can toggle between their respective accounts within the app.


Contributing to Trump accounts

There is a technical term called the “growth period” of a Trump account which refers to the period of time before January 1 of the year the child turns 18. That’s an important term to keep in mind.

Like I mentioned before, you cannot open a Trump account for child who will be 18 or older as of the end of the year. That’s because they’ve already passed the “growth period” and are ineligible.

The growth period is the period in which contributions can be made to the child’s Trump account. However, once the growth period is over (i.e. once it’s the calendar year the child turns 18), the account can no longer receive any contributions. Furthermore, once the growth period is over, the Trump account begins to act like a normal traditional IRA. But I’ll get into that more in the next section. For now, just know that “growth period” means the years before the year the child turns 18, and it’s the only time accounts can be opened and contributions can be made to a Trump account.

There are a few different ways to get contributions into Trump accounts, and a few different people or entities who can make contributions into Trump accounts:

Federal government contributions

The U.S. government has a “pilot” contribution program whereby any child born between January 1, 2025 and December 31, 2028 is eligible to receive $1,000 contributed into their Trump account from the U.S. Department of Treasury.

To receive this contribution, the child must have a Trump account opened for them by their guardian, parent, adult sibling or grandparent, per what I mentioned earlier. In other words, the government will NOT be automatically opening and funding Trump accounts for newborns. The child will need to have a Trump account opened for them for the government to then make the $1,000 contribution.

Additionally, the person opening the Trump account for the child needs to consciously opt into receiving the $1,000 government pilot contribution when filling out Form 4547. The government will not automatically deposit the $1,000 into the child’s account without the account opener electing for the child to receive the pilot contribution (if eligible) via Form 4547.

Furthermore, in addition to needing to have a valid Social Security number (which is needed to open a Trump account in the first place), the child must also be a U.S. citizen to receive the $1,000 government pilot contribution. Whereas I don’t believe a child needs to be a U.S. citizen to have a Trump account opened for them.

Each eligible child is only able to receive one pilot account contribution. In other words, the government will not be contributing $1,000 per year to each eligible child. It is a one-time payment for newborns who meet the criteria mentioned above.

To my knowledge, and based on what I’ve thus far heard from others who’ve already opened Trump accounts and have children eligible to receive the government’s pilot contribution, the $1,000 is deposited into the child’s account soon after it’s opened, with no additional steps needed. So long as the account opener properly opted into the child receiving the pilot account contribution when filling out Form 4547, once the Trump account is opened, the $1,000 should show up in it soon thereafter.

I’ll be talking about taxability of the government pilot contributions later in this article. But for now, I’ll say that the receipt of the pilot contribution isn’t taxable to the child/account owner in the year they receive it. But it will ultimately be taxable to them when the money is later distributed.

Qualified general contributions

Trump accounts can receive donations from U.S. states (or political subdivisions thereof), the District of Columbia, Indian tribal governments and/or 501(c)(3) tax-exempt organizations. In other words, separate from any contributions from the federal government, Trump accounts can also receive contributions from state/local governments and charitable organizations. The tax code refers to any of these classes of contributions as “qualified general contributions.”

However, such contributions can only be made to Trump account beneficiaries/children in certain “qualifying classes.” Where to be in a qualifying class, the child must:

  • Be younger than 18 as of the end of the year
  • Reside in a particular state or “qualifying geographic area” that has no less than 5,000 Trump account beneficiaries in it. Furthermore, the Secretary of the Treasury needs to approve the area as a qualifying geographic area. This last part admittedly is very vague, and it’s still to be determined what exactly the Secretary will or won’t approve.

There are confusing parts to what I just summarized above about qualifying geographic areas. But below are some examples of qualified general contributions and who’s eligible to receive them:


    Michael and Susan Dell (of Dell computers) have committed to contribute up to $6.25 billion in total to Trump accounts through their charitable foundation. Specifically, the first 25 million children age 10 and under to open Trump accounts, and who live in a U.S. zip code that has median incomes below $150,000, will receive $250 contributed into their Trump account from the Dell’s charity.

    Additionally, the child needs to be born before January 1, 2025 to be eligible for the Dell contribution. Which means a child cannot be eligible for both the $1,000 federal government pilot contribution AND the contribution from Dell.

    You can see if a child is eligible for the $250 Dell contribution at https://investamerica.org/dell/

     

    Ray and Barbara Dalio (of the hedge fund Bridgewater Associates) have committed to contribute up to $75 million in total to Trump accounts through their charitable foundation. Specifically, the first 300,000 children age 10 and under to open Trump accounts, and who lives in Connecticut in a zip code that has a median income below $150,000, will receive $250 contributed into their Trump account from the Dalio’s charity.

    I don’t know for sure, but I suspect the Dalio contribution might similarly have the same requirement as the Dell contribution that the child needs to have been born prior to January 1, 2025. But I haven’t been able to confirm that; it’s just an educated guess of mine that these major philanthropic donors might seek to limit their contributions to children who aren’t eligible for the $1,000 government pilot contribution.

     

    The list of other charities, states and local governments who are pledging to contribute to Trump accounts is rapidly changing. I’m not aware of any formal government source that tracks and summarizes them all. For now, the most comprehensive and up-to-date source I’ve found is from the organization Americans for Tax Reform. I frankly know nothing about this organization and how reputable they are. But their website listing current Trump account donors appears to be thorough and accurate. You can find it here: https://atr.org/trumpaccounts/

    I’ll be talking about taxability of qualified general contributions later in this article. But for now, I’ll say that the receipt of a qualified general contribution isn’t taxable to the child/account owner in the year they receive it. But it will ultimately be taxable to them when the money is later distributed.

    Employer contributions

    Employers are able, if they choose, to make contributions to Trump accounts of their teenage employees and/or child dependents of their adult employees. For 2026 and 2027, an employer can contribute up to $2,500 per employee. Starting in 2028, the $2,500 max employer contribution amount will be indexed for inflation.

    It’s important to note that the $2,500 contribution is per employee, and not per dependent. For example, if you work at company XYZ and have three children, each of whom has their own Trump account, your company can contribute a maximum of $2,500 this year across all three of those accounts, in whatever combination your or the company chooses. Your company cannot contribute $2,500 to each of your three children’s Trump accounts.

    As of the writing of this article, there are a few dozen large companies who’ve publicly announced they plan on making Trump account contributions for their employees. But like with the list of charitable donors who’ve thus far said they will be making Trump account contributions, the list of companies who said they’ll contribute is going to continue to change.

    If you have any questions about whether your employer might be contributing to Trump accounts, or how much they might be contributing, ask your human resources department.

    I’ll be talking about taxability of employer contributions later in this article. But for now, I’ll say that the receipt of any employer contribution isn’t taxable to the child/account owner - or the employee who works at the employer who made the contribution - in the year they receive it. But it will ultimately be taxable to the account owner when the money is later distributed.

    Contributions from family and friends (or for that matter anyone other than the above mentioned contributors)

    Separate from the above three types of contributions, anyone can contribute to a child’s Trump account. This includes parents, grandparents, siblings, aunts & uncles, friends, random strangers, etc.

    For 2026 and 2027, the maximum annual contribution allowed for a given child’s Trump account across these contributions is $5,000. Starting in 2028, this $5,000 annual limit will be indexed for inflation.

    It’s important to note that this contribution limit is per child/account holder, regardless of how many people contribute to it. For example, if a child’s parents, grandparents and aunts/uncles all want to contribute to the child’s Trump account, they can collectively contribute no more than $5,000 in 2026. And they can collectively contribute another $5,000 in 2027.

    Another important note is that if an employer contributes to a child’s Trump account, the amount of the employer contribution counts toward the $5,000 annual limit. Conversely, contributions from the federal pilot program and/or any qualified general contributions from state/local governments or charitable organizations do NOT count toward the $5,000 annual limit.

    This could be a bit confusing, so here are a couple of examples of contribution limits in action:



    Example 1:

    Jane Smith is currently 8 years old. Her mother, Jessica Smith, opens a Trump account for Jane. Jane is too old to receive the government pilot contribution. However, she qualifies for, and receives in 2026, $250 from the Dell charitable foundation. This $250 does not use up any of her $5,000 limit for 2026. Jessica Smith’s employer contributes $1,000 to Jane’s Trump account in 2026. Additionally, Jane’s grandmother contributes $2,000 to Jane’s Trump account in 2026. This means that Jane’s mother, father, aunts & uncles, friends, etc. can only contribute up to another $2,000 to Jane’s Trump account for 2026 as the $1,000 employer contribution and $2,000 contribution from her grandmother already used up $3,000 of her $5,000 annual limit. Furthermore, if other charitable organizations or state/local governments later make contributions to Jane’s Trump account in 2026, those will all be allowable and won’t impact or use up any of the $5,000 limit.

    Example 2:

    Let’s instead assume all the same facts as above, except now pretend Jane is only one year old. Given her birth date, she now automatically qualifies to receive the $1,000 government pilot contribution. The pilot contribution does not impact any of the limits or analysis above, as it’s in addition to the $5,000 limit and any qualified general contributions received from state/local governments and charitable organizations.

    There are some other important contribution-related things to mention:

    First, even though Trump accounts are technically an IRA at their core, contributions to Trump accounts do NOT require the child have earned income. This is unlike making contributions to an actual IRA or Roth IRA for the child, where the amount of the contribution can’t exceed the child’s earned income for the year. Trump accounts require no such work or earned income requirement for contributions to be made.

    Second, contributions to Trump accounts do NOT impact the contribution limits to traditional IRAs and Roth IRAs. As mentioned above, a child cannot have a contribution made to their IRA or Roth IRA unless they have earned income. And the contribution can’t exceed the amount of the child’s earned income. For 2026, a child could potentially contribute up to $7,500 in total to their traditional and/or Roth IRA. Regardless of the amount of contribution to the child’s Trump account, it doesn’t impact how much can be contributed to their IRA or Roth IRA.

    For example, assume the child is a teen and has $7,000 of earnings in 2026 from working a part-time job. The child can have 2026 contributions of up to $7,000 to their IRA or Roth IRA. Further assume the child has total 2026 contributions of $5,000 to their Trump account from their parents. This $5,000 Trump account contribution does not use up any of the child’s $7,500 2026 contribution limit to their IRA or Roth IRA. If it did, then the child would only be able to contribute no more than $2,500 to their IRA or Roth IRA.

    Third, starting January 1 of the year the child turns 18 (i.e. the end of the “growth period”), a Trump account essentially becomes a traditional IRA for all intents and purposes. As of that time, contribution rules to Trump accounts take on the rules of contributions to traditional IRAs. That means Trump account contributions then DO require the account holder to have earned income. Furthermore, Trump account contributions then DO count toward the annual contribution limit to traditional and Roth IRAs.

    Fourth, contributions to a Trump account for a given calendar year need to be made by December 31 of that year. This is unlike contributions to traditional IRAs or Roth IRAs, where a given year’s contribution can be made the following year, up until the tax return filing deadline.

    Fifth, rollovers from one Trump account to another Trump account do not count toward the year’s contribution limit. For example, assume it’s now 2030 and someone has had a Trump account opened at Robinhood for four years. The account has since grown to $30,000 between contributions and investment growth. The account’s custodian (assume the child’s parent) can roll the Trump account out of Robinhood to any other firm offering Trump accounts. Let’s assume Fidelity offers Trump accounts by 2030, so the parent rolls the account there. Even though that will be $30,000 coming into the child’s Trump account at Fidelity that year, none of that rollover counts toward whatever that year’s inflation-adjusted contribution limit is.

    Sixth, just to reiterate what I said at the top of this section, contributions can no longer be made to a child’s Trump account starting in the year the child turns 18. Even if the child is still 17 as of the beginning of the year, contributions can’t be made at all at any point during that year. And this doesn’t apply to just contributions from family/friends and employers; it also applies to any potential qualified general contributions from state/local governments and charitable organizations. Once the growth period is over – starting January 1 of the year the child turns 18 – no contributions can be made to Trump accounts. Or at least, contributions can only be made under normal traditional IRA rules; not Trump account rules.

    Seventh, I should briefly mention that there are penalties for making excess contributions to Trump accounts in any year. Specifically, the penalty is 100% (yes, 100%) of any growth attributable to the excess contribution. For example, assume you and your parents collectively contribute $6,000 to your child’s Trump account this year. That’s $1,000 over the $5,000 limit. You must remove the $1,000 excess contribution and any growth attributable to it as soon as reasonably possible. There is no tax or penalty on removing the $1,000 excess contribution itself, but let’s assume there has since been $100 of growth attributable to that $1,000 while it was in the account. The penalty will be 100% on that $100, or $100, In other words, you must give up as a penalty all gains attributable to the excess contribution. Presumably custodians will put in place a process to help calculate earnings attributable to excess contributions, like most custodians do with IRAs and Roth IRAs. Though, in theory, considering there can only be one open and funded Trump account for a child at any given time, presumably the custodians will prevent people from contributing too much by simply coding in a max contribution amount into their systems, and not allow in any contributions once the limit has been met.

    Eighth, contributions to Trump accounts (generally) need to be made in cash. For the most part, contributions can’t be made via contributing securities in-kind. However, it was recently announced that Trump accounts will allow certain stocks to be donated by charitable organizations as part of their qualified general contributions. Specifically, SpaceX president Gwynne Shotwell received approval to donate shares of SpaceX stock to Trump accounts. However, it’s unclear whether the recipient accounts will be allowed to continue to hold SpaceX shares as-is, or if the shares will need to mandatorily be sold when received and reinvested into eligible investments (see the next section for more information on eligible Trump account investments). This is something that will need further clarification. What’s clear though is that individuals such as parents and grandparents contributing to Trump accounts can only do so with cash.

    And finally, I wanted to wait to talk about this in the taxation section later. But I feel it needs to be brought up now. Contributions from family/friends to Trump accounts receive no tax deduction or tax-deferral. Neither for the person who contributes the money, nor for the child whose account it is. Which means Trump accounts will have after-tax money, or “basis” in them. This will make for interesting tax treatment of distributions. More on this later.


    Investments within Trump accounts

    The OBBBA sets clear limitations on which investments are eligible to be held in Trump accounts.  Specifically, eligible investments must be a mutual fund or exchange traded fund which:

    • track the returns of 1) the S&P 500 or 2) any other index which is comprised of equity investments in primarily U.S. companies, and for which regulated futures contracts are traded on a qualified board or exchange
    • do not use leverage
    • do not have annual fees and expenses of more than 0.10% per annum
    • meet such other criteria as the Treasury Secretary determines appropriate (this could mean a lot of things. I’m curious to see how much discretion the Secretary will actually use in deviating from the above clear-cut requirements)

    As of the writing of this article, there is literally only one investment that’s currently approved and is therefore the default investment for all money in all Trump accounts; State Street SPDR Portfolio S&P 500 ETF (ticker SPYM), which is a run of the mill S&P 500 index fund. This means that literally ALL of the money in a child’s Trump account will get put into this fund. You cannot choose to have some or all the money held as cash or invested in anything other than SPYM. At least not currently.

    According to a July 16, 2026 presentation I attended from the Ed Slott Group, there are four other investments that have since been approved and will become available to use in the coming months:

    • iShares Core S&P 500 ETF (ticker IVV)
    • iShares Core S&P Total U.S. Stock Market ETF (ticker ITOT)
    • Vanguard Total Stock Market ETF (ticker VTI)
    • State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (ticker SPTM)

    Interestingly, as mentioned above, SpaceX stock has been approved to be contributed to Trump accounts from the Shotwell family. Based on current public information, the Shotwells plan to make contributions to Trump accounts of children between ages 11 and 17 in lower income areas, with a focus on those near Shotwell’s home in central Texas. Like I mentioned above, it’s not yet clear if Trump accounts will be allowed to continue to hold SpaceX shares, or if those shares will need to be sold and reinvested into one of the funds that’s otherwise eligible at the time.

    Starting January 1 of the year the child turns 18 (i.e. after the “growth period” is over), Trump accounts effectively become a normal traditional IRA like I mentioned before. With that means the above restrictions on qualified investments go away. At that point, the account can be invested like any other IRA, where the only hard restrictions on what the account can invest in are collectibles and life insurance, as the IRS strictly prohibit IRAs from investing in those two things. Otherwise, IRAs can invest in whatever their custodians allow. Which means the typical major financial custodians like Fidelity, Schwab and Vanguard will allow things like stocks, ETFs, mutual funds, bonds, etc. And if you use a self-directed IRA custodian, you can potentially invest in some other assets like real estate, crypto, etc.


    Distributions from Trump accounts

    Distribution rules from Trump accounts are interesting. On one hand, they’re rather simple. But on the other hand, they have some complexities.

    The distribution rules are simple in that during the growth period (which again means prior to the year the child/account owner turns 18), distributions simply aren’t allowed, practically speaking. There are only a few exceptions where distributions ARE allowed prior to the year the child turns 18:

    • A qualified rollover to another Trump account. This isn’t really a distribution in my view, because the money isn’t leaving the umbrella of a Trump account. It’s simply moving from one Trump account to another. But, nonetheless, this is technically an allowable reason for money to leave a Trump account prior to year the child turns 18
    • A qualified rollover to an ABLE account. If the child qualifies as disabled and, as a result, also has an ABLE account opened in their name, a Trump account is allowed to be rolled into the ABLE account. However, this Trump-to-ABLE rollover is only allowed in the year the child turns 17.
    • Distribution of excess contributions. Like I previously mentioned, if a child’s Trump account has contributions in a year more than that year’s contribution limit, the excess contribution and all growth attributable to it need to be removed. The removal of those funds is allowed, regardless of how young the child is.
    • Bequeathing of the account to a beneficiary in the event of the death of the child/account owner. If the child dies, the Trump account can be left to a beneficiary. But the account ceases to become a Trump account upon the child’s passing. And, based on my reading and interpretation of current tax code around Trump accounts, the account must payout to the heir in the year of the child’s death. Which I don’t think is reasonable to do, particularly if the death occurs in the last few days of the year. So maybe my interpretation is incorrect. Anyway, upon the child’s death, the “basis” of the contributions would not be taxable to the heir. But any growth of the account, as well as any contributions made by the government pilot program, qualified general contributions or employer contributions, will be taxable as ordinary income to the heir in the year of the child’s passing.

    To sum up the distribution rules prior to the year the child turns 18: you can effectively consider money in Trump accounts completely locked up and not able to be removed for any reason, other than the few exceptions I just mentioned. And note that you don’t have to wait until the child actually turns 18 for the growth period to end. It ends January 1 of the year the child turns 18.


    So then what happens and what are the distribution rules once it’s January 1 of the year the child turns 18??? This is again rather simple, yet also a bit complex.

    It’s simple in that the Trump account now basically just becomes a normal traditional IRA, like I mentioned before. As such, it then begins to follow all normal traditional IRA rules around distributions. Which means money can be taken out at any time for any reason, but a 10% early withdrawal penalty will apply prior to age 59 ½ unless a penalty exception exists. The common IRA early withdrawal penalty exceptions are if the account holder is permanently disabled, if the money is used for qualified higher education expenses, if the money is taken out as a series of substantially equal periodic payments, if it’s to pay for health insurance while the account holder is unemployed, etc. You can find a full list of all IRA early withdrawal penalty exceptions here: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions

    Technically, even though a Trump account becomes a normal traditional IRA the year the child turns 18, it’s still formally going to be sub-classified as a Trump account. I’m frankly not entirely sure of all the nuances why this separate distinction will continue to exist, other than a couple of reasons; 1) tracking of basis on distributions and 2) to prevent SEP IRA and/or SIMPLE IRA money from being rolled into it, as the tax code makes it clear Trump accounts can never take in money from a SEP IRA or SIMPLE IRA (whereas “normal” IRAs can). But hold that thought for now, as I’ll talk more about taxation and basis tracking later.


    Reporting of Trump accounts

    I’m going to break this “reporting” section down into two sections: 1) gift tax & gift tax return reporting and 2) reporting of contributions and basis.

    As for gift taxes and gift tax reporting, you can think of contributions to a child’s Trump account as no different than any other money or gift someone makes to a child. The normal annual gift exclusion applies - currently $19,000 per giver per recipient for 2026 – as does the lifetime gifting exemption - currently $15,000,000 per giver for 2026.

    I won’t get into all the specifics of gifting and gift taxes here as I’ve covered that in detail before, specifically in the March 2026 newsletter titled Gifting, annual gift exclusions, gift taxes and gift tax returns (IRS Form 709). But, the point is, giving money to a child’s Trump account is no different from a gift tax and gift tax reporting perspective than giving any other gifts to a child. For example, if the child’s grandparent gives the child $15,000 of cash during 2026 and then also contributes $5,000 into the child’s Trump account in 2026, the grandparent will have made $20,000 of total gifts to the child for the year. Since that’s $1,000 over the annual gift exclusion of $19,000, the grandparent will need to file a Form 709 gift tax return for 2026 to report the gift. As discussed in the prior newsletter about gift taxes, it’s almost certainly the case that no gift tax would be owed. But the gift tax return would nonetheless need to be filed since the gift exceeded the annual exclusion.

    I bring up the topic of gift taxes here simply because there was some concern that ALL Trump account contributions would require a gift tax return be filed. That’s because a contribution to a Trump account is a formally a “future interest” gift, which means the gift recipient (i.e. the child) doesn’t have complete control and use of the money yet, since the money is fully locked up in the account until the year the child turns 18. Under current gift tax rules, giving a gift of future interest of any size requires the gift to be reported on a gift tax return.

    However, in IRS Revenue Procedure 2026-25, the IRS clarified that contributions to Trump accounts will receive a safe harbor exemption from being treated as future interest gifts for gift tax reporting purposes. As a result, contributions to a Trump account are no different than any other “present interest” gift with regards to gift tax reporting purposes.


    With regards to reporting in the context of contributions to Trump accounts, basis in Trump accounts, etc., the account’s custodian firm (currently Robinhood in all cases) is responsible for providing a Form 5498-TA each year. This is like the Forms 5498 for IRAs, Health Savings Accounts (“HSAs”) and so forth.

    Specifically, the Form 5498-TA will report the year’s government pilot contributions, qualified rollovers, employer contributions, other contributions, the account holder’s basis in the account and the fair market value of the account. Like with other Forms 5498, 5498-TA will be sent out early in the year, reflecting information for the prior tax year.

    For those who are interested in seeing the IRS’s current draft version of the Form (i.e. current as of August 1, 2026, but this link will presumably expire at some point after the Form becomes finalized), here you go: https://www.irs.gov/pub/irs-dft/f5498ta--dft.pdf


    Taxation of Trump accounts

    The taxation of Trump accounts is a little quirky. But ultimately, in sticking with the theme that Trump accounts are just traditional IRAs with some twists, you can mostly think of the tax treatment of Trump accounts no different than the tax treatment of traditional IRAs that might have after-tax contributions, or basis, in them.

    Whenever money is eventually distributed out of a Trump account - which again must imply it’s at least the year the child turns 18, since no distributions other than those few exceptions are allowed during the growth period - the taxation of the distribution to the account holder will be some combination of 1) tax-free removal of basis and/or 2) taxable removal of growth and/or contributions from the government pilot program, qualified general contributions or contributions from employers.

    I think it’s straightforward to understand why all growth is fully taxable when distributed, and it’s all taxable as ordinary income. Just like with any other traditional IRA, tax on growth is deferred until the money is eventually distributed. But removal of the money that was contributed to a Trump account is a bit different. The removal of the contribution may or may not be taxable to the account owner, depending what type of contribution it was:

    • Government pilot contribution – not taxable to the child when initially received, but fully taxable to the child/account owner whenever it’s eventually distributed
    • General qualified contributions – not taxable to the child when initially received, but fully taxable to the child/account owner whenever it’s eventually distributed
    • Employer contributions – not taxable to the child – or the child’s parent who worked at the employer that paid the contribution – when initially received, but fully taxable to the child/account owner whenever it’s eventually distributed
    • Contributions from family & friends – no tax deduction or tax deferral for the contributor when the contribution is made, the contribution is not taxable to the child when initially received, but fully taxable to the child/account owner whenever it’s eventually distributed

    Let’s look at an example:

    Again assume we’re talking about Jane Smith. Fast forward and pretend Jane turns 18 this year; she is past the growth period, so now she’s able to take distributions from her Trump account, which is now functionally just a traditional IRA.

    Jane’s Trump account has a current value of $75,250, which is comprised of:

    • $1,000 government pilot contribution
    • $250 in qualified general contributions from a charitable donor
    • $4,000 in contributions from the employer of Jane’s mother
    • $50,000 in contributions from Jane’s parents and grandparents
    • $20,000 in total growth within the account throughout the years

    Jane’s “basis,” or money that’s considered to have already been taxed, is just the $50,000 of contributions from Jane’s family. The $5,250 of other contributions is all taxable to Jane when she distributes it. As is the $20,000 of growth.

    All said and done, out of Jane’s $75,250 of Trump account balance, $50,000 / $75,250 = 66.45% of it is non-taxable to distribute. The other 33.55% will be taxable as ordinary income to Jane. Additionally, because the Trump account is now practically an IRA, the 10% early withdrawal penalty will also apply on the taxable portion if Jane takes a distribution before age 59 ½ (barring any penalty exception applying to the distribution).

    For example, assume Jane takes out $10,000 from her Trump account when she’s 18, and no penalty exception applies. 66.45% of the distribution, or $6,645, will not be taxable to her. But the remaining 33.55%, or $3,355, will be taxable. Additionally, the 10% early withdrawal penalty will apply on the $3,355.

    And keep in mind the above-calculated split of what percentage is taxable vs what percentage isn’t going to be static. As the account value changes, the proportion of taxable vs not taxable will change. It’s unclear at this point how and when the calculation will apply. But it should presumably be using account values as of December 31 of the year of the distribution, as is currently the case for traditional IRAs.

    Another type of distribution that could be done once the child is out of the growth period is a conversion of the Trump account to the account holder’s Roth IRA. Again using the above example, if Jane were to instead convert instead of distribution $10,000 from her Trump account to her Roth IRA, only $3,355 of that conversion would be taxable. The remaining $6,645 of conversion would not be taxable. This is ultimately a form of “back door” Roth IRA contribution; first getting money into a traditional IRA (or in this case a Trump account), and then converting it to a Roth IRA.

    And like any other Roth conversion, there is no 10% penalty even if the person is under 59 ½ when they do the conversion. Additionally, a person doesn’t need to have earned income to do a Roth conversion, unlike with making a contribution to a Roth IRA.

     

    Interestingly, even though Trump accounts functionally become just another traditional IRA of the account holder after the growth period ends, the IRS has clarified in IRS Notice 2025-68 that the tracking of proration between basis and non-basis in Trump accounts will NOT be aggregated and commingled with the basis and non-basis in the account holder’s other traditional IRAs.

    This is a unique twist. Normally, regardless whether a person has one IRA or 50, the balances of all their IRAs get aggregated together for purposes of determining the proration of how much of the collective pot of IRA money is after-tax basis vs pre-tax non-basis. But Notice 2025-68 makes it explicitly clear that Trump accounts – even though they formally become traditional IRAs after the growth period – will NOT have their balances aggregated with non-Trump account IRAs for purposes of proration calculations.

    There are also some other slight differences between Trump accounts after the growth period and actual IRAs. While the IRS makes it clear that money can be rolled out of a Trump account and into a normal traditional IRA after the growth period, the treatment of rolling money into a Trump account IRA is as simple. The IRS makes it clear that SEP IRA and/or SIMPLE IRA money cannot be rolled into a Trump account IRA. Which is different than normal traditional IRAs.

     

    All the above talk about taxes has been solely about federal tax treatment of Trump accounts. As always, state income tax treatment needs its own attention, as it can deviate from federal treatment. And such is the case with Trump accounts. Furthermore, the state tax treatment of Trump accounts is something that will be rapidly evolving over time as more states formally issue guidance on Trump accounts.

    According to information from the recent Ed Slott Group presentation I referenced before, it’s expected that many states will conform to federal tax treatment of Trump accounts. However, at least seven states have thus far said they will depart from federal treatment, as least as it relates to the child receiving contributions in their Trump accounts, and as it relates to earnings being taxed as they occur within the account.

    Specifically, the presentation said that California, Hawaii, Kentucky, Massachusetts, Pennsylvania, South Carolina and Wisconsin have already said they will tax contributions to Trump accounts. I frankly don’t know the exact rules each state plans on implementing. But I suspect it’s just in reference to contributions from the government pilot program, employer contributions and qualified general contributions from state/local governments and charitable organizations. I don’t believe the states would tax the child on receiving contributions from friends and family, as those will already be after-tax money and are functionally just normal gifts.

    Additionally, these same seven states have apparently said they will tax earnings along the way within Trump accounts. In other words, these states will functionally treat Trump accounts like normal brokerage accounts. Any dividends paid within the account will need to be reported as taxable income on the child’s state tax return in the year of the dividend. And apparently same thing if positions are sold at a gain within Trump accounts; those gains will need to be reported as income to the child on the child’s tax return for the year.

    Again, state tax treatment of Trump accounts is something that will evolve a lot over the coming months. Stay tuned and look up your particular state for more information.


    Impact of Trump accounts on other potential benefits

    There are some other potential considerations around Trump accounts that I think deserve mentioning. But also, I don’t know if there has been any formal guidance issued yet from the government on these things. As such, for now these is just my educated guesses.

    I’ve been asked if a child having money in a Trump account will impact the child or the child’s family’s low income-related social benefits such as SNAP benefits, TANF benefits, Medicaid, housing assistance, etc. I don’t know for sure, and I’m far from an expert on any of these forms of benefits. But from what little I know, I believe all these things look only to the family’s income and disregard their assets (except maybe Medicaid???). But even if they were to look at assets, I would think that assets in a Trump account would be excluded, particularly during the growth period, as the money can’t be taken out for any reason anyway, other than for those few very limited exceptions.

    Another question I’ve seen around Trump accounts potentially impacting other things is in the case of need-based financial aid for college. I’m also not an expert in college funding or the FAFSA process. However, I know that retirement accounts such as IRAs are excluded from being counted as an asset on the FAFSA form. With that in mind, and knowing that a Trump account is ultimately just a subcategory of IRA, I strongly suspect that a Trump account will not adversely impact a child’s ability to get need-based financial aid for college. Though again, I don’t believe there has been any formal guidance from any relevant government authorities about this topic. So stay tuned.


    Potential use cases for Trump accounts

    Okay, now time for my thoughts about how and when Trump accounts could provide some unique value and be worth considering if you have kids or grandkids who are young enough to be eligible for a Trump account.

    My overarching thoughts are that Trump accounts aren’t very special and generally don’t stand out as being a no-brainer to do. And that’s because they’re ultimately nothing more than a traditional IRA, but with some tweaks. And I don’t feel traditional IRAs are a slam dunk no-brainer for kids to open, even if they have earned income to make them eligible to contribute.

    Here are some reasons/limitations why I don’t find Trump accounts particularly exciting:

    • There are rather small contribution limits, albeit the child doesn’t need earned income for contributions to be made
    • All growth is eventually taxed as ordinary income instead of at the reduced long-term capital gains rates like with normal brokerage accounts
    • There are VERY rigid restrictions around distributions until the year the child turns 18, though this is arguably a good thing in helping prevent premature use of the money
    • The investment options during the growth period are super limited. Though frankly, the limited roster of funds is sufficient enough, in my opinion, as investing for long-term growth doesn’t need to be much fancier than some basic equity index funds
    • It’s another account type that needs to separately be opened, tracked, etc.
    • Once the growth period is over, the child/account owner takes over complete control and can do with the account as they please, which could be dangerous. Though to be fair, the same issue applies with traditional IRAs, Roth IRAs, brokerage accounts (unless the brokerage account is held in a trust that protect and controls the money, separate from the child), etc.

    Could Trump accounts be funded and used to get a jump on children saving for their eventual retirements or longer-term life goals? Absolutely. For example, even disregarding any potential contributions from people other than family and friends, 17 years of contributions at $5k per year, could be $85k in total contributions between birth and the year the end of the growth period. And then if you assume an annualized investment growth rate of ~8%, the account could potentially grow to roughly $170k by the time the child turns 18. And then at 18, if the child lets that ~$170k stay invested and it continues to annualize about 8% returns until they turn 60, they could have roughly $4.2 million dollars in their IRA at the time. That’s rather impactful, considering it was from only about $85k of contributions when they were a child. Granted, that $4.2 million is 60 years from now, and doesn't account for inflation. If we assume inflation will continue to average the same roughly 2.5% per year that it has over the last few decades, $4.2 million 60 years from now will only have the buying power of the present-day equivalent of about $955k. But still, that's a sizable amount of money nonetheless.

    And I should point out that the assumed rate of return on the investments will have a big impact on the projected outcomes. For example, if assuming only a 6% instead of 8% annualized return all the while, the account would grow to approximately $140k by the time the child is 18. And then if kept invested, potentially up to about $1.6 million by the time they’re 60 (or, after the assumed 2.5% per year inflation, about $365 thousand in today's buying power).

    And if you assume a 10% annualized return all the while, the account could potentially be about $200k by the time the child is 18, and about $11.0 million by the time they’re 60 (or, after the assumed 2.5% per year inflation, about $2.5 million in today's buying power).

    But these growth figures and potentials aren’t specific to Trump accounts. The same results could be had with other account types. There is frankly a lot more flexibility in opening a plain old brokerage account for the child. Then there would be no limits on contributions, no restrictions on investment selection, no restrictions on distributions, and tax treatment over the long-term would be more favorable than with Trump accounts (as long term capital gains will be taxed lower in brokerage accounts than they will in Trump accounts. However, dividends and interest thrown off along the way will be taxable when received in a brokerage account as opposed to deferred in Trump accounts).

    And if saving money specifically for a child’s potential eventual higher education, a 529 plan is arguably a better choice than a Trump account, as all growth can be removed tax-free if distributions are used for qualified higher education expenses. Plus 529 contributions could potentially have some state income tax savings, depending on the state.

    So, on the surface, I don’t see a lot of reason for excitement around Trump accounts. However, there are two distinct cases where I see there being good reason to considering opening and using a Trump account:

    Ability to receive contributions from the government, charitable donors and/or employers

    If your child or grandchild is eligible to receive the government pilot contribution, any of the qualified general contributions from state/local governments or charitable organizations, or from employers of the child’s parent(s), I view it as worth opening a Trump account if for no other reason than to get those contributions. I know none of those contributions are technically “free,” per se, especially the government pilot contribution as that’s ultimately just coming from taxpayers. But, nonetheless, if someone other than the child’s family and friends is willing and able to put money into the child’s account, might as well take it.

    Even if the child is too old to receive the government pilot contribution, I suspect there could potentially be other rounds of government contributions in the future. The fact that the government chose to call these initial $1,000 contributions “pilot” contributions kind of hints that there might be other rounds of government contributions in the future??? Maybe not, but who knows.

    Additionally, even if the child isn’t currently eligible to receive any of the currently known qualified general contributions from state/local governments or charitable organizations, or the parent’s employers, it’s possible they might be eligible in the future as other donors and employers begin offering Trump account contributions.

    To sum up my thoughts here, I still don’t see a lot of unique value to Trump accounts on the surface. Especially compared to normal brokerage accounts or 529s for the child. But, if the federal government, state/local governments, charitable donors and/or employer are willing to give money to children but only if it’s to go into a Trump account, then so be it…opening a Trump account to receive said contributions is a logical thing to do.

    Ability to do Roth conversions after the growth period, to help increase the child’s Roth IRA balances

    Don’t take this as specific advice, but this is the reason why I opened and funded the full $5k into a Trump account for my 16-year-old daughter, even though she’s too old for the government pilot contribution, likely won’t be receiving any qualified general contributions and likely won’t be receiving any employer contributions.

    Recall that for anyone – including a child – to directly contribute money into an IRA or Roth IRA, they need to have earned income. My daughter has thus far had very limited earnings from some very small part-time gigs. I’ve put the amount of her earnings into her Roth IRA each year she had some earnings. But overall, it’s been a rather paltry amount.

    With a Trump account, I can put in the full $5k contribution now, hopefully get some growth on it between now and next year when her growth period ends, and then she can convert the entirety of her Trump account balance to her Roth IRA.

    Considering it’s less than a year until January 1 of next year when her growth period is over, the $5,000 of contribution likely won’t grow too much, if it grows at all (it might actually decline in value if the S&P 500 declines between now and then). And since all $5,000 of contributed money is after-tax basis, that much won’t be taxable when converted.

    Let’s assume the $5,000 grows by 5% between now and January of next year. That will bring the total account value to $5,250. If she converts all that in January, only the $250 of growth will be taxable to her; the $5,000 of contributed money will not be. And since she will likely have no other income at time besides some dividend and interest income from her brokerage account, it’s quite possible she’ll ultimately have no tax to pay on the conversion considering how small the dollar amounts are and given her standard deduction.

    So, all said and done, contributing to a Trump account and then converting it after the growth period ends is essentially an indirect way to get more money into a child’s Roth IRA even though the child didn’t have earned income when the contributions were made. I view that as a win. In the case of my daughter, we can only make one year of contribution to her Trump account since she’ll be 17 this year. But for kids with lots of years before their growth period ends, they can potentially build up a sizable amount of money inside a Trump account to then convert when their growth period is over.

    However, there is one big potential wrinkle to this Roth conversion idea…the kiddie tax. Even after a child turns 18, the kiddie tax may still apply up until the child turns 24, particularly if the child is a student. I won’t get into all the details of the kiddie tax here, but the gist of it is that a child is only able to have a certain amount of unearned income taxed at their own tax rate. If they have more unearned income than that, it will be taxed at their parent’s tax rate. And if the parent is in a high tax bracket, the tax rate on the conversion can be high. Though I suspect in many cases the parents will be the ones paying kid’s tax bill anyway. So it likely won’t be a huge burden to the kid.

    Anyway, for 2026, the kiddie tax potentially kicks in if the child has more than $2,700 of unearned income. And unearned income includes things like dividends, interest and/or capital gains from a normal brokerage account or bank account. And it also includes Roth conversions. So, if you’ve been funding your child’s Trump account for many years and a lot of growth has since accumulated, you’ll have to be careful when having your child do Roth conversions after the growth period, as there might be a lot of taxable unearned income stemming from the Roth conversions. Which means the child might want to parse out conversions over multiple years to avoid or minimize the kiddie tax.

    The other potential risk in this Roth conversion plan is that once the growth period ends and the child takes full ownership of the account (or at least they will once they actually turn 18, or the age of majority in your state), what if they don’t actually go through with processing the conversion per your wishes? Like I mentioned before, once the child is an adult and the account is theirs, the account is theirs…they can do - or not do - with it as they please.


    Well that’s it for my take on Trump accounts. I hope you found this helpful!

     

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