Trump accounts are a new type of tax-deferred investment vehicle for U.S. children, created under President Trump’s “big, beautiful bill” tax and spending bill, which promises $1,000 seed contributions from the federal government for eligible kids.
Here’s what to know, including who qualifies for a Trump account, how to set one up and how they compare to other savings plans geared to children.
Who is eligible for a Trump account?
Children who are U.S. citizens and who are born between Jan. 1, 2025, and Dec. 31, 2028, are eligible to have a Trump Account, according to a fact sheet from the Department of the Treasury. Households of any income may open an account, and all such accounts qualify for a one-time $1,000 contribution from the U.S. government.
Families with children under 18 may also open accounts, but they won’t receive the $1,000 gift from the government. However, parents, friends, employers and other parties can contribute tax-free dollars to an account.
How do I open a Trump account?
Parents or guardians must set up and manage the account until a child turns 18.
The Treasury Department said households should use IRS Form 4547 to open a Trump account on behalf of a child. The newly created form is also where applicants can request the $1,000 U.S. government contribution to the account. The White House said that each Trump account for eligible children will launch with a $1,000 contribution from the government.
In May 2026, the Treasury Department will send instructions to individuals who applied for government-funded accounts on how to activate them.
When can I set up an account?
Families can open a Trump account beginning in early 2026 and can start making financial contributions on July 4, 2026, according to the Trump Administration.
How much can I contribute?
Excluding the government’s $1,000 donation, a total of $5,000 per child can be deposited into an account each year. Employers can contribute up to $2,500 per year to an employee’s account tax-free, which will count toward the $5,000 limit.
Financial contributions from cities, states, tribal governments and tax-exempt organizations, including nonprofit organizations, are generally not counted toward the $5,000 limit, according to employment law firm Littler.
Annual contribution limits to the accounts are indexed to inflation and will be adjusted after 2027, according to a notice from the Internal Revenue Service.
Can funds be withdrawn before a child turns 18?
No. Families may not withdraw funds from a Trump account before a child turns 18, except for the following reasons:
A rollover of the entire account to a Trump account with another brokerage Certain rollovers to an “Achieving a Better Life Experience” account in the year the child turns 17 Distribution when the individual dies
After age 18, standard IRA rules for withdrawals apply.
How will money in a Trump account be invested?
Under the “big, beautiful bill,” funds in a Trump account must be invested in an authorized investment, such as mutual funds or exchange-traded funds that track the S&P 500 stock index or another index with mostly U.S. equities. Financial firms managing the funds also may not charge more than 0.1% in annual fees.
Should I personally invest in the account?
Financial experts advise people considering opening a Trump account to accept the government’s $1,000 contribution — money is money, after all — but to think twice about putting in their own money. The reason: Other types of savings plans — such as a 529 plan, a tax-advantaged savings account for education expenses, or a custodial brokerage account, an investment account for a minor managed by an adult — can be more financially advantageous.
“The gift is the biggest part of this. It really is free money,” Madeline Brown, a wealth and financial policy expert at the Urban Institute, a nonpartisan think tank in Washington, D.C., told CBS News.
“It’s a nice perk for parents with children who qualified,” added Kate Ashford, a wealth management specialist at personal finance company NerdWallet. “But it’s not a slam dunk, and it’s not going to do as much for you as other accounts.”
She cited the accounts’ contribution caps and more limited investment tax advantages as drawbacks compared to 529s or custodial brokerage accounts.
“The only advantage is your earnings grow tax-free over the years, but you pay the ordinary income tax rate — not, say, a capital gains tax rate,” Ashford said.
Adam Michel, director of tax policy studies at the Cato Institute, a libertarian public policy research firm, thinks there are better ways to set money aside for children, such as in a 529 or standard IRA account.
“Generally speaking, parents should not put their own money into a Trump account,” he told CBS News. “The primary use case for the accounts is to receive free money from sources like the government or private donations.”
For example, Michael and Susan Dell on Tuesday said they would donate a total of $6.25 billion — or $250 apiece — to millions of kids in Trump accounts.
How do Trump accounts compare to a 529 savings plan?
If you’re saving for college, a 529 savings plan could be a better alternative, investment experts said. It lets families sock away money tax-free for education expenses. Savings from such an account can also be transferred to an IRA, offering accountholders more flexibility to save for retirement or other expenses.
The Trump accounts have “many more strings attached and complicated rules that make it not an attractive overall investment vehicle,” Michel of the Cato Institute said.
To be sure, 529 plans also have limitations. If people use funds for non-education expenses, for example, they must pay a 10% penalty.
Meanwhile, a Trump account offers some flexibility. Beneficiaries, once they are adults, may use the money for purposes beyond education, such as buying a home or starting a business, while the accounts also can serve as a kind of IRA.
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