Trump Accounts: A guide for parents

Learn how Trump Accounts work and if they fit into your family’s financial strategy.
A mother and father looking fondly at their newborn baby.

Updated June 2026.

 

This article is intended to provide perspective on how federal policy changes may impact your financial life. These insights are not political statements from Ameriprise Financial.

Every parent wants to give their child a strong financial start, and understanding the different savings options is an important first step. Starting in July 2026, parents can fund a new type of investment vehicle, known as a Trump Account, for their children.

If you have children under the age of 18, you may have questions about this new option. An Ameriprise financial advisor can help you better understand Trump Accounts and the other investing options available to save for your child’s future.

What is a Trump Account and how does it work? 

Created as part of the One Big Beautiful Bill Act (OBBBA) of 2025, a Trump Account is a tax-advantaged retirement savings vehicle for U.S. citizens under the age of 18. This savings vehicle functions essentially as a "starter" IRA for children under 18, but with different contribution limits, investment rules and other requirements.

Contributions to Trump Accounts are made with after-tax dollars, earnings grow tax-deferred and withdrawals are taxed as ordinary income. However, unlike with a traditional IRA, contributions to a Trump Account aren’t tax deductible.

What are the rules and restrictions governing a Trump Account?  

Trump Accounts come with specific eligibility criteria and investment requirements. Here is a breakdown of the key rules:

  • Age limit: U.S. citizens who are under 18 years old, as of the calendar year-end, are eligible to establish a Trump Account.
  • Account ownership: The account is in your child’s name and the parent/legal guardian acts as the sole custodian. Similar to custodial IRAs, once the child is no longer a minor (age 18 in most states), they will have full access and control over the account.
  • Investment requirements: Funds must be invested in mutual funds or exchange-traded funds (ETFs) that track the return of either the S&P 500 Index or another index that consists of equity investments primarily in U.S. companies. Management fees are capped at 10 basis points (0.10%).
  • Contribution limit: The maximum annual contribution limit is $5,000. This limit includes contributions by friends, employers and family and will be adjusted for inflation beginning in 2028. Contributions by governments and charities are not subject to this limit.
  • Employer contributions: Employer and employee salary reduction contributions may also be available subject to a $2,500 limit per employee. These contributions are not included in the employee's gross income, provided they are made through a formal program. Employer contributions count toward the $5,000 contribution limit described above.
  • Distributions and penalties: Prior to age 18, distributions are not allowed. At age 18, distributions from the account are permitted, but would be subject to the 10% early withdrawal penalty until age 59½. Trump Account owners can avoid the 10% early withdrawal penalty when using assets to pay for pay for eligible education expenses, to purchase a first home and for other reasons consistent with Traditional IRA rules.
  • Rollover capability: Beginning at age 18, account holders will be able to transfer their Trump Account to a traditional IRA and, if beneficial, convert to a Roth IRA.
  • Estate planning: If the account beneficiary passes away before the calendar year in which they turn 18, the account loses its status as a Trump Account and becomes taxable to the beneficiary.

How do I open and contribute to a Trump Account? 

Parents or legal guardians can open a Trump Account by filling out IRS Form 4547 or through a new app available via trumpaccounts.gov. Contributions can be made to Trump Accounts after July 4, 2026. Trump Accounts are established and administered by the U.S. Treasury Department. 

Who qualifies for the $1,000 pilot program?  

To encourage adoption of these Trump Accounts, the government has created a pilot program offering a one-time contribution of $1,000 for U.S. citizens born after Dec. 31, 2024, and before Jan. 1, 2029. Your child may also be eligible for additional one-time contributions from philanthropists or nonprofits depending on where you live.

What happens to a Trump Account when my child turns 18?

When your child turns 18, they take full ownership of their Trump Account and can decide how to manage it moving forward. They’ll have a few options:

Your child could also withdraw the funds from the Trump Account — however distributions will be taxed1 the same way as traditional IRAs and a 10% early withdrawal penalty may apply (with standard IRA exceptions).

Do Trump Account funds affect financial aid eligibility for college?

The U.S. Department of Education has not confirmed how Trump Accounts will be treated in the FAFSA.

Should I open a Trump Account or are there other ways to save?

If your child is eligible for the one-time $1,000 contribution or if your employer offers contributions to employees’ Trump Accounts as part of its benefits program, it may be worth opening an account to take advantage of the free money available for your child.

That said, any additional contributions should fit within your overall financial strategy. If your financial goals include saving for your child’s future, there are several other investing accounts to consider as well. Options like 529 plans, trusts and custodial accounts each offer different features, tax treatments and levels of flexibility, so comparing them can help you choose the approach that best supports your priorities.

 

Learn more: 8 ways to save for your child’s future

Save for your child’s future 

Your Ameriprise financial advisor is here to help you make informed decisions about saving and investing for your child’s future. If you’d like to explore the different accounts that may be right for your family, reach out to your Ameriprise financial advisor for personalized guidance tailored to your financial goals. 

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The One Big Beautiful Bill: What you need to know https://afi-www.ameriprise.com/financial-goals-priorities/taxes/one-big-beautiful-bill-tax-cuts 529 plans: frequently asked questions https://afi-www.ameriprise.com/financial-goals-priorities/education-planning/529-plan-faq Financial tips for new parents: 8 steps to take after having a baby https://afi-www.ameriprise.com/financial-goals-priorities/personal-finance/financial-tips-for-new-parents
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1Trump Account distributions are typically taxable at ordinary income rates. A portion of the distributions could also be subject to kiddie tax rules and be taxable at the parent’s tax rate.
These materials are intended to be educational in nature and do not establish a fiduciary relationship. Neither Ameriprise Financial nor its advisors make IRA rollover or transfer recommendations or act as a fiduciary in discussing your IRA rollover or transfer options. Further, the information contained in this document should not be construed as an investment opinion or recommendation by Ameriprise Financial Services, LLC to buy or sell securities or take a specific course of action with respect to your retirement assets.
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