The One Big Beautiful Bill Act (OBBBA), Public Law 119-21, 139 Stat. 72 (July 4, 2025), created a new type of savings account for children called a Trump account. Although these accounts are traditional individual retirement accounts (IRAs) under I.R.C. § 408(a), special rules initially apply to Trump accounts that do not apply to other traditional IRAs. In the year the child turns 18 years old, most of these special rules no longer apply and the account is governed by general rules for traditional IRAs.
Here we review the current rules for Trump accounts, as set forth in Notice 2025-68.
Creating a Trump Account
A Trump account can be established for a child with a social security number up until the year before the child’s 18th birthday. Only one Trump account can be established per child. Unlike other retirement plans, a Trump account is generally created by the Secretary of the Treasury after a parent or guardian elects to have the account established. Specifically, authorized individuals (usually parents or guardians) can create a Trump account in one of two ways:
- Elect to have a Trump account established for the benefit of the child by making the election on IRS Form 4547, Trump Account Election(s), or
- Elect to establish an account through an online tool or application on trumpaccounts.gov.
While Form 4547 is available to file with the 2025 return, the online portal application will not open before July 5, 2026. The process to establish an account is as follows:
- The parent or guardian makes the election to create an account.
- The Treasury coordinates with the trustee of the initial Trump account.
- The Treasury sends information to the parent or guardian to activate the account through an authentication process.
- This initial Trump account is opened.
The Notice states that Treasury will begin sending activation information starting in May 2026.
The person who made the election to open the account will be the responsible party for the initial Trump account of the child. Treasury will select one or more financial institutions as a financial agent to serve as trustee of initial Trump accounts.
Funding a Trump Account
Up until December 31 of the year before the child turns 18, a Trump account can be funding in five different ways:
- a pilot program contribution from the Secretary of $1,000 for an eligible child
- qualified general contributions
- employer contributions that are not includible in the gross income of the employee under I.R.C. § 128 (section 128 employer contributions)
- qualified rollover contributions
- contributions from other sources (such as the account beneficiary, parents, or any other person)
Contributions to Trump accounts are generally limited to $5,000 in the aggregate per year; however, contributions from pilot programs, qualified general contributions, and qualified rollover contributions do not count toward this limit. After 2027, the $5,000 limit will be subject to cost-of-living adjustments.
Contributions are not included in the income of the beneficiary, regardless of the source.
Pilot Program
Children born during calendar years 2025 through 2028 are eligible to receive a pilot program contribution of $1,000 to their Trump accounts from the U.S. Treasury. To qualify, the child must be a U.S. citizen with a social security number.
The election to receive a pilot program contribution must be made by an individual who anticipates that the eligible child will be his or her qualifying child under I.R.C. § 152(c)) for the tax year in which the election is made. This election is made on an IRS Form 4547 or through an online tool or application on trumpaccounts.gov, once the online portal opens.
The Treasury Department will make the pilot program contribution as soon as practicable after the election is made and the Treasury can confirm that the account has been opened. Pilot program contributions will be deposited into the Trump account of an eligible child no earlier than July 4, 2026.
Qualified General Contributions
Qualified general contributions may be made by states (or political subdivisions), the United States, the District of Columbia, Indian tribal governments, or I.R.C. § 501(c)(3) tax-exempt organizations) for members of a qualified class of account beneficiaries. The contribution to each beneficiary is an amount equal to the ratio of the amount of the general funding contribution to the number of beneficiaries in the qualified class. For calendar years 2026 and 2027, the application will require a minimum general funding contribution equal to at least $25 per account beneficiary in the qualified class. The Treasury will open applications to entities wishing to make a general funding contribution sometime after July 4, 2026.
At some point in the future, general funding contributions can be made to beneficiaries in a qualified geographic area. Until that time, only the following three types of eligibility criteria can be considered:
- All account beneficiaries who are in the growth period when the contribution is made;
- All account beneficiaries who are in the growth period when the contribution is made and who live in one or more states (including the District of Columbia) specified by the general funding contribution; or
- All account beneficiaries who are in the growth period when the contribution is made and who were born in one or more calendar years specified by the general funding contribution.
Note: It was announced in early December that the Michael & Susan Dell Foundation pledged approximately $6.25 billion in "qualified general contributions" to Trump Accounts of children under the age of 10 who live in ZIP codes with median household incomes below $150,000. It is estimated this donation would provide $250 to 25 million eligible accounts. It is unclear when this contribution will be finalized. The rules published in this Notice do not allow zip code-specific eligibility criteria.
Employer Contributions
I.R.C. § 128(a) provides that employers can contribute up to $2,500 per year—tax free—to the Trump account of an employee or any dependent of an employee. This annual limit is per employee, not dependent. In other words, if an employee has two children with Trump accounts, the employer contribution program may contribute up to $2,500 across the two Trump accounts, not $2,500 per child.
The Trump account contribution program is a separate written plan of an employer for the exclusive benefit of its employees to provide contributions to the Trump accounts of employees or their dependents.
The employer program may be offered via salary reduction under a Section125 cafeteria plan only if the contribution is made for the employee’s dependents (not for the employee directly).
The $2,500 employer contribution limit is subject to a cost-of-living adjustment after 2027.
Qualified Rollover Contributions
After an original Trump account is created, the responsible person may create a rollover Trump account at a qualified institution of choice. More detailed rules for these trustee-to-trustee transfers will come later but the Notice provides some guidance.
A rollover Trump account can only be established during the growth period. The rollover Trump account must first be funded by a qualified rollover contribution before receiving any other contribution. A qualified rollover contribution must be a transfer of the entire balance of a Trump account. This ensures that there will only be one funded Trump account for an individual at any time. Qualified rollover contributions carry over any basis attributable to the funds being transferred.
The trustees of rollover Trump accounts are not subject to the selection process of I.R.C. § 530A(g), which is the process the Treasury Department uses to select the trustees of the initial Trump accounts. However, the trustee of a Trump account must be a bank or other person approved by the IRS to be a nonbank trustee of a Trump account. Any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA under I.R.C. § 408(a) is automatically approved to be a nonbank trustee of a Trump account.
Contributions from Other Sources
Anyone can contribute to the Trump account of a beneficiary. As discussed above, the aggregate contributions cannot exceed $5,000 per year (not counting pilot program contributions, qualified general contributions, or qualified rollover contributions).
Unlike other retirement account contributions, contributions to Trump accounts are attributed only to the year in which the contribution is made. In other words, a contribution made in February 2026 cannot be applied to 2025.
Those contributing to Trump accounts do not receive a tax deduction, but contributions are not included in the income of beneficiaries. Contributions to a Trump account do not impact contributions to an individual retirement account for the same beneficiary. Unlike contributions to IRAs, Trump account contributions do not require earned income.
Rules During the Growth Period
The growth period is the period from the day the Trump account is established through December 31 of the year before the child turns 18. The following special rules apply only during the growth period:
- funds in a Trump account can be invested only in eligible investments
- Generally, these are broad-based U.S. equity funds with an annual expense ratio of \(0.10\%\) or less
- a Trump account has a separate contribution limit from other IRAs
- a Trump account cannot make distributions (except in very limited circumstances)
- no deduction by an individual is allowed for any contribution to a Trump account
- trustees of Trump accounts have similar but different reporting requirements from trustees of other IRAs
After the growth period, most of these special rules end, and the rules under I.R.C. § 408 governing traditional IRAs apply. Even so, a Trump account continues to be a Trump account after the growth period. These accounts cannot receive contributions under a SEP or SIMPLE IRA plan. Neither can the account be aggregated with other IRA funds when allocated basis related to distributions.
Distributions and Taxation
Earnings from Trump accounts are not subject to tax until the money is distributed. As noted above, however, distributions are not usually allowed during the growth period, even if there is a hardship. During the growth period, only the following distributions are permitted:
- qualified rollover contributions
- qualified ABLE rollover contributions
- distributions of excess contributions, or
- distributions upon the death of the account beneficiary.
- If the account beneficiary dies during the growth period, the rules of I.R.C. § 530A(d)(6) apply, and the account ceases to be both a Trump account and an IRA as of the date of death. Gross income of the inheriting beneficiary will include the fair market value of the assets as of the date of death (reduced by basis).
Beginning on January 1st of the year in which the beneficiary turns 18, distributions from Trump accounts are generally subject to the rules that apply to distributions from a traditional IRA. In other words, ordinary income tax rates will apply to distribution amounts that exceed basis. Additionally, a 10 percent penalty applies to early distributions if an exception does not apply. Exceptions to the penalty may include, for example, distributions for qualified higher education expenses or first home purchases or distributions made after age 59½.
Pilot program contributions, qualified general contributions, and Section 128 employer contributions do not create basis in a Trump account. Qualified rollover contributions carry over any basis attributable to the funds transferred. Contributions from other sources during the growth period create basis in the Trump account.
How to Get Started
Parents of children under the age of 18 can elect to establish a Trump account for their children by filing Form 4547 with their 2025 individual income tax return.
For children born in 2025, the parent must check the box in line 7 to elect a pilot program contribution election.
If an election to open an initial Trump account is not being made at the same time as the election to receive a pilot program contribution, the authorized individual for opening the initial Trump account must be a legal guardian, parent, adult sibling, or grandparent of the eligible individual, in that order of priority. If an election to open the initial Trump account is made at the same time as an election to receive a pilot program contribution, then the authorized individual is the person who expects that the eligible child will be his or her qualifying child under I.R.C. § 152(c)) for the tax year in which the election is made.
As noted above contributions cannot be made to these accounts until after July 4, 2026. Parents should work with their tax advisors to compare the benefits of Trump account contributions to I.R.C. § 529 plans or other investments.
Stay tuned for further guidance.