Trump Accounts: A New Way to Invest in Your Child’s Future

Christopher P. Barthe
Vice President and Wealth Planning Officer
Washington Trust Wealth Management

If you are looking to give your child a financial head start, Trump Accounts offer families a new tax-advantaged way to invest in their children's futures, including a potential $1,000 contribution from the federal government.

Here's what you need to know.

What Are Trump Accounts?

Trump Accounts are tax-advantaged investment accounts owned by children and managed on their behalf during childhood. Created under the 2025 budget reconciliation law (also known as the One Big Beautiful Bill), they are a type of traditional individual retirement account (IRA) with special childhood rules. Your contributions are invested, earnings grow tax-deferred, and withdrawals are restricted. Eligible children can also receive a one-time $1,000 federal deposit.ⁱ

Getting Started—and Claiming the $1,000 Deposit

Your child generally qualifies for an account with a valid Social Security number if they are under 18 at the end of the election year. You don’t need a newborn: the January 1, 2025–December 31, 2028, birth-date window applies specifically to the federal government’s one-time $1,000 pilot contribution.ⁱⁱ To request that deposit, you must expect the beneficiary to be your qualifying child under federal tax rules for the election year. Your child must also be a U.S. citizen, have a valid Social Security number and meet the birth-date requirement.ⁱⁱⁱ

Getting started became easier on October 1, when Treasury announced completion of automatic enrollment for eligible children. But you still have a step to take: as a parent or guardian, you must claim your child’s account before managing it or accepting contributions from family, friends and employers. Visit TrumpAccounts.gov to download the official app. Receiving the $1,000 also requires claiming the account and electing the pilot contribution. Automatic enrollment alone doesn’t trigger the deposit.^iv

You generally won’t need a separate account-opening election after automatic enrollment, although Form 4547 and electronic elections remain available for exceptions. For an opening-only election, authorized individuals are prioritized as legal guardian, parent, adult sibling and grandparent.^v

Growing the Account with Help from Others

You don’t have to fund the account alone. During your child’s “growth period,” contributions from you, relatives, friends and employers can total $5,000 annually. Your child doesn’t need earned income, and Treasury’s $1,000 deposit doesn’t count towards that allowance. Your personal contributions aren’t tax-deductible.^vi

Your workplace may help, too. Through a qualifying employer Trump Account Contribution Program, you can exclude up to $2,500 annually in employer contributions from your income. That limit applies to each employee across contributions for you and your dependents, not per child. Employer contributions count toward each receiving account’s $5,000 limit. Both limits are indexed for inflation after 2027.^vii

Your child may also receive qualified general contributions funded by eligible government entities or tax-exempt 501(c)(3) organizations through Treasury. These fall outside the $5,000 cap. Each beneficiary in the designated class must receive an equal amount. Classes can include all beneficiaries in their growth period or groups defined by states, Treasury-designated geographic areas or birth years. Designated geographic areas and approved groups combining geography and birth year must meet a 5,000-beneficiary threshold. These arrangements are separate from employer programs.^viii

How is Your Money Invested? 

Cash generally goes into qualifying mutual funds or ETFs tracking broad indexes of primarily U.S. companies, without leverage. Annual fund fees and expenses cannot exceed 0.10%, or 10 basis points. If you don’t choose, the trustee selects an eligible default investment.^ix September’s temporary regulations also permit certain donated publicly traded U.S. stocks through qualified general contributions. Generally, those shares must be held until the earlier of five years or the growth period’s end, subject to exceptions. Your investments can lose value.^x

Treasury oversees the program. BNY manages its national infrastructure as financial agent, collaborating with Robinhood to provide initial trustee and brokerage services.^xi

Planning for When Your Child Grows Up

Think of this as long-term money. You generally cannot withdraw it during the growth period, even for hardship. (Limited exceptions include permitted transfers, excess-contribution corrections and death.) If your child qualifies for an ABLE account, you can arrange a direct transfer of the entire balance during the calendar year they turn 17.^xii (An ABLE account is a tax-advantaged savings account that helps eligible people with disabilities pay qualified expenses while generally preserving access to government benefits based on income and assets.)

The growth period ends December 31 of that year. Starting on January 1 of the year your child turns 18 (not their birthday), traditional IRA rules generally apply. Contributions can continue under ordinary IRA eligibility, compensation requirements and limits. Withdrawals may trigger income tax and a 10% early-distribution tax unless an exception applies. A Roth conversion also becomes an option after the growth period, but amounts exceeding the account’s after-tax basis generally create taxable income.^xiii

Washington Trust Wealth Management Can Help

Our experienced wealth managers can help you and your child understand how a Trump Account fits into your family’s financial picture, from coordinating contributions with other savings priorities to evaluating future withdrawals or a Roth conversion. Together, we’ll consider the timing, potential tax costs and your child’s goals so you can make informed decisions as their needs evolve.