A Trump Account is a new, tax-advantaged investment account for kids. It works like a traditional IRA that a parent or guardian manages until the child grows up. Trump Accounts for kids are a federal program, so the U.S. Treasury sets up and oversees the accounts, and any U.S. kid under 18 with a Social Security number can have one. Kids who are U.S. citizens born between January 1, 2025, and December 31, 2028, can also receive a one-time $1,000 deposit from the federal government if a parent opts in.
If you've seen Trump Accounts in the news and wondered whether your kid qualifies, how the money works, and how it stacks up against the other ways to invest for your kids, here's a rundown, including how a Trump Account compares to a 529 plan and a custodial account.
What is a Trump Account?
A Trump Account is a starter traditional IRA for a minor, sometimes called a 530A account after the section of tax law that created it. The kid is the owner and beneficiary, and an adult (usually a parent or guardian, called the authorized individual) manages it until the child turns 18. Trump Accounts were created by the Working Families Tax Cuts, part of the law commonly known as the One Big Beautiful Bill Act, which was enacted on July 4, 2025.
The goal is to give kids an early, low-cost head start in the stock market. The money is invested for the long haul, offers tax-deferred growth potential, and stays put during what the IRS calls the growth period, which runs until the year the child turns 18. After that, the account simply becomes a regular traditional IRA in the child's name.
Who is eligible for a Trump Account?
Any U.S. kid under 18 with a valid Social Security number is eligible for a Trump Account. The one-time $1,000 federal seed deposit is narrower. It’s available to kids who are U.S. citizens and born between January 1, 2025, and December 31, 2028, and only when a parent opts in. There are no citizenship or Social Security requirements for the parents themselves.
Kids born before 2025 can still have a Trump Account, they just don't receive the $1,000 seed. Some of them may qualify for a separate charitable deposit instead. The Michael and Susan Dell Foundation has pledged a one-time $250 deposit for up to 25 million kids aged 10 or younger, born before 2025, who live in ZIP codes with median incomes below $150,000. A handful of state and philanthropic programs have announced similar deposits. These charitable gifts are program details, not a guarantee, so eligibility and timing depend on each program.
How Trump Accounts work
Once an account is open, three things shape how it potentially grows: how much you can put in, how the money is invested, and how it's taxed when it eventually comes out.
How much can you contribute?
Families, friends, and employers can add up to a combined $5,000 per year per child. An employer can contribute up to $2,500 of that total through a workplace program, and those employer dollars are left out of the employee's taxable income. The $5,000 cap is set to rise with inflation over time.
Three kinds of deposits sit on top of the $5,000 and don't count against it:
- The $1,000 federal seed
- Deposits from qualifying charities like the Dell Foundation
- Contributions from state, local, or tribal governments
Contributions you make yourself are after-tax dollars, so there's no upfront deduction the way there is with some retirement accounts.
How the money is invested
Trump Account money is invested in low-cost funds that track broad U.S. stock indexes, like the S&P 500. To keep costs down, the law caps the funds' expense ratios (their annual cost) at 0.10%. While the child is a minor, you can't pick individual stocks or use active strategies, the menu is limited to those broad index funds. That keeps things simple, but it also means the account is tied to the U.S. stock market and doesn't hold bonds, international stocks, or other assets during the growth period.
Taxes and withdrawals
The money is generally locked during the growth period, until the year the child turns 18. Withdrawals before then are allowed only in narrow cases, like rolling the account over or the unfortunate event of the beneficiary's death. When the child turns 18, the Trump Account converts the account into a standard traditional IRA in their name.
From that point, traditional IRA rules apply. Earnings and any pretax deposits (the seed, charitable gifts, and employer contributions) are taxed as ordinary income when withdrawn. Withdrawals before age 59½ usually owe income tax plus a 10% early-withdrawal penalty, though there are exceptions, including qualified higher-education expenses and up to $10,000 toward a first home. You can find the current rules at IRS.gov.
How to open a Trump Account
You open a Trump Account by making an election with IRS Form 4547, either with your federal tax return or online through the official government portal at trumpaccounts.gov. Enrollment is not automatic. A parent or guardian has to opt in, and the same election is how you claim the $1,000 seed for an eligible kid.
There's a limit of one account per child. If more than one adult could open it, the IRS follows a priority order, starting with a legal guardian, then a parent, and so on. A few details, like the exact enrollment steps and timing, are still being finalized by the Treasury Department and the IRS, so it's worth checking the official sources for the latest before you act. Some employers, including Acorns, have set up programs to match the federal contribution for their employees' kids.
Trump Account vs. 529 plan vs. custodial account
A Trump Account isn't the only way to invest for a kid, and it isn't always the best fit on its own. Two of the most common alternatives are a 529 education savings plan and a UGMA/UTMA custodial account. Here's how the three stack up:
| Feature | Trump Account | 529 plan | UGMA/UTMA custodial account |
| What it is | A starter traditional IRA for a kid, set up under federal law and run by the U.S. Treasury | A state-sponsored account built for education savings | A flexible custodial brokerage account an adult opens for a kid |
| Who's eligible | Any U.S. kid under 18 with an SSN; $1,000 seed for U.S. citizens born 2025 to 2028 | Anyone saving for a named beneficiary's education | Any kid; no birth-year or citizenship rules |
| Contribution limit | Up to $5,000 a year combined (seed and charitable gifts don't count); set to rise with inflation | No federal annual limit; subject to gift-tax rules and high state caps | No set limit; gifts above the annual gift-tax exclusion may need reporting |
| Investment options | Low-cost U.S. stock index funds only, with expense ratios capped at 0.10% | A menu of preset portfolios offered by the plan | A wide range: stocks, bonds, mutual funds, and ETFs |
| Taxes | After-tax contributions; tax-deferred growth; earnings taxed as ordinary income at withdrawal | Tax-free growth potential; qualified education withdrawals are federal-tax-free; possible state perks | A portion of the kid's investment income is tax-free each year, then taxed under kiddie-tax rules |
| Access and withdrawals | Locked until the year the child turns 18, then traditional IRA rules apply (10% penalty before 59½, with exceptions) | Tax-free for qualified education costs; other withdrawals owe tax plus a 10% penalty on earnings | Available anytime for anything that benefits the child |
| Who controls it | A parent or guardian manages it; the child takes ownership at 18 | The account owner (usually a parent) keeps control | An adult custodian manages it until the age of transfer (18 or 21, by state) |
There's no single right answer, and many families can actually use more than one. A 529 is hard to beat for education-specific tax breaks. A custodial account's rules and taxes make it the most flexible option, since the money can go towards anything that benefits your kid. A Trump Account adds free seed money for eligible kids and a long runway to grow.
If you want to start investing for a kid in your life today, with full flexibility on how the money is used, a custodial account like Acorns Early Invest is an option worth considering alongside a Trump Account.
The pros and cons of Trump Accounts
A Trump Account is a program with strong benefits, but it also comes with trade-offs. Whether it's a good idea depends on your kid's situation and your goals. Here's an honest look at both sides.
The upsides
- Free $1,000 federal seed money for eligible kids, plus possible employer or charitable deposits
- Low-cost investing, with fund expense ratios capped at 0.10% by law
- Tax-deferred growth potential and a long time horizon when you start early
- Almost anyone can contribute, and the kid doesn't need earned income to qualify
The trade-offs
- The money is generally locked until the child turns 18
- Earnings and pretax deposits are taxed as ordinary income when withdrawn
- Investments are limited to U.S. stock index funds while the child is a minor
Bottom line: A Trump Account tends to make the most sense if your kid qualifies for the $1,000 seed or you have access to employer contributions. It's one tool among several, and many advisors suggest pairing it with a 529 or a custodial account rather than choosing just one.
Where a flexible custodial account fits
Not every family will qualify for the $1,000 seed, and not everyone wants money locked away until their kid turns 18. If you want to start investing for your kids right now, with the freedom to use the money for whatever helps them most, a UGMA/UTMA custodial account is a flexible complement to (or alternative to) a Trump Account.
Acorns Early Invest is a custodial account you can open for any kid in your life, with money that can go towards college, a first car, a down payment, or anything else that benefits them. It's included in the Acorns Gold plan, which is $12/month, and Gold customers also get a 1% match on the first $7,000 invested per year per kid. You can add multiple kids at no extra charge.
Start investing for the kids in your life with Acorns Early Invest.
Read next: Investing for Kids and Custodial Account vs. 529 Plan.
Frequently asked questions
Who is eligible for a Trump Account, and who gets the $1,000?
Any U.S. kid under 18 with a valid Social Security number is eligible for a Trump Account. The one-time $1,000 federal seed deposit is reserved for kids who are U.S. citizens and born between January 1, 2025, and December 31, 2028, when a parent opts in. Kids born before 2025 can still have an account without the seed, and some may qualify for a $250 charitable deposit, such as the one from the Dell Foundation, if they meet the age and ZIP code requirements.
How much can you contribute to a Trump Account?
Families, friends, and employers can add up to a combined $5,000 per year per child, an amount set to rise with inflation over time, and an employer can provide up to $2,500 of that total. The $1,000 federal seed and any qualifying charitable or government deposits sit on top and don't count toward the $5,000. Your own contributions are made with after-tax dollars, so there's no upfront tax deduction.
How do you open a Trump Account?
You open a Trump Account by making an election with IRS Form 4547, either with your federal tax return or online at the official portal, trumpaccounts.gov. Enrollment isn't automatic. A parent or guardian has to opt in, and there's a limit of one account per child. Because a few rules are still being finalized, it's best to check IRS.gov for current steps and timing before you start.
How is a Trump Account different from a 529 plan?
A 529 plan is built for education and offers tax-free withdrawals for qualified school costs, while a Trump Account is a retirement-style account invested in U.S. stock index funds, with earnings taxed as ordinary income when withdrawn. A 529 also offers possible state tax benefits and a Roth IRA rollover option for unused funds, whereas a Trump Account locks the money until the child turns 18 then follows traditional IRA rules. Many families use both, along with a custodial account, depending on their goals.
Are Trump Accounts a good idea?
For families whose kids qualify for the $1,000 federal seed, or have access to employer contributions, a Trump Account can be a low-cost way to start investing for them. The main trade-offs are the lock-up until age 18, ordinary-income tax on earnings, and U.S.-stock-only investing while the child is a minor. It isn't a scam, it's a federal program run by the Treasury and IRS, but it also isn't free money beyond the seed: anything you add is your own after-tax money. It's best thought of as one option among several.
Can you use a Trump Account for college or a first home?
Yes. After the child turns 18 and the account becomes a traditional IRA, withdrawals for qualified higher-education expenses or up to $10,000 toward a first home are allowed without the 10% early-withdrawal penalty, though income tax may still apply. Before age 18, the money is generally locked except in limited cases. If your main goal is education-specific tax advantages, a 529 plan may be a better fit.
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