Trump accounts for children

How it works

The tax law signed July 4, 2025 (Public Law 119-21) created Trump accounts, a kind of IRA for a child under 18, opened by a parent or guardian on IRS Form 4547. No contributions could be made before July 4, 2026. Family members and others can put in up to this year's official trump account contribution limit (not yet verified here; see the official source below) a year in total, a figure adjusted for inflation after 2027, and an employer can add a smaller amount for a worker's child that counts within that total and is not taxed to the worker. For a child born a United States citizen from January 1, 2025 through December 31, 2028 with a Social Security number, the Treasury deposits a one time this year's official trump account pilot deposit (not yet verified here; see the official source below) when a parent or guardian elects it on the same form. The deposit is not automatic, and it does not count toward the yearly total. Gifts from a state, a city, or a charity to a broad group of children also fall outside that total. Until the year the child turns 18, the money can be invested only in low cost funds that track a broad index of United States stocks, and withdrawals are generally not allowed. After that, the account follows most of the rules of a traditional IRA, and growth, along with any money that was never taxed going in, is taxed when it comes out. Contributions from family are not deductible.

What it gives

A child born from 2025 through 2028 can start with a federal deposit that costs the family nothing.

Growth is not taxed while it stays in the account.

An employer contribution for a worker's child is not taxed to the worker.

What it costs, or where the catch is

The federal deposit arrives only after a parent or guardian elects it on the form; it is not automatic.

The money cannot come out before the year the child turns 18, and the only investments allowed are broad stock index funds.

Family contributions earn no federal deduction going in.

A worked example

Lena was born in February 2026, a United States citizen with a Social Security number. Her parents file Form 4547 and elect the federal deposit. If the deposit were $1,000 and it grew at 7 percent a year for 18 years, it would become $1,000 times 1.07 to the 18th power, about $3,380. Her grandmother adds $500 a year from July 2026, and that money grows inside the account with no tax until it comes out.

Where it goes wrong

The common miss is assuming the federal deposit arrives on its own, when it comes only after the election on Form 4547, or putting in more than the yearly total from family and an employer together.

Who confirms it for you

For your own numbers, a CPA or enrolled agent. This page explains how the rule works for people in general; it does not know your situation and does not tell you what to do.

The official source

IRS: Treasury, IRS issue guidance on Trump Accounts. Every figure that changes by year in How it works comes from the site's rules table, which the watcher checks against the official page on a schedule; where a figure is not yet verified, this page says so instead of printing a number. Each worked example uses the figures of the year it names, or says its figures are only supposed.