In 2026, a provision of 2025’s One Big Beautiful Act became available to use: Trump Accounts. These accounts combine many of the features of existing accounts into a new package with distinct benefits.
What are Trump Accounts
Congress describes Trump Accounts as “individual retirement accounts (IRAs) that operate under a unique set of rules.” Let’s break down what exactly that means, including the various components.
- Accounts are created for the benefit of a minor beneficiary.
- You contribute after-tax money to the account.
- Anyone can contribute, but there is an annual contribution limit for the account. (Currently, this is $5,000 but it will adjust for inflation after 2027.)
- Employers can contribute up to $2,500 to an employee’s child’s Trump Account tax free. (The amount would count toward the $5,000 limit.)
- Funds in the account can be invested but investment options are limited to diversified index funds of primarily U.S. companies (as defined by the IRS) that minimize fees and expenses.
- Any income generated within the account will grow tax-free, but will be subject to income tax on withdrawal (similar to a traditional IRA).
- The accounts have a “growth period” that extends from when the account is opened (as early as the child’s birth) to December 31 of the year the child turns 17.
- After the growth period, the accounts convert to a traditional IRA, and your investment options increase.
It’s important to note that the money you contributed after-tax won’t be subject to income tax upon withdrawal after the conversion, but any earnings accrued would be. After the growth period, traditional IRA rules apply, including penalties on withdrawals taken before age 59½ (with a few exceptions) and the like.
What makes Trump Accounts special?
There are two unique perks to Trump Accounts: The federal contribution pilot program and the provision for qualified general contributions.
With the federal contribution pilot program, any U.S. citizen born between 2025 and 2028 may qualify for a $1,000 contribution to their Trump Account from the federal government. That $1,000 would not count toward that annual contribution limit.
While this program is temporary, there may be opportunities to max out contributions to these accounts, in the form of qualified general contributions. These contributions would come via state or local governments, nonprofit organizations, or similar. A nonprofit or a state government might decide to contribute to the Trump Accounts of any children in a certain zip code whose families median income meets certain criteria, for example.
A number of prominent philanthropists, such as Michael Dell and Ray Dalio, are offering contributions to Trump Accounts for families with median incomes below a certain amount.
Should you consider a Trump Account?
Trump Accounts may be a useful tool for parents but should not replace other savings tools, such as 529 accounts or UTMA accounts. One strategy you might consider? When the growth period ends and the account converts to an IRA, you could immediately roll the account into a Roth IRA, paying the taxes on any accrued earnings growth.
Because these accounts just became available in July, 2026, there are still some outstanding questions around implementation going forward.
If you’re interested in how a Trump Account might fit into your financial plan, feel free to reach out to our team to discuss.
