A new type of investment account for Americans under the age of 18 has been created and will be available this year. The Working Families Tax Cut Act of 2025 (WFTCA), also known as the One, Big, Beautiful Bill Act (OBBBA), is the new law creating these accounts. Designed to provide financial security to millions of young Americans, the accounts can be created starting mid-2026.
The WFTCA was signed into law on July 4, 2025, and provides significant tax relief to families. The law has several major provisions that offer such relief; this article discusses the investment accounts for children under 18, which are called Trump Accounts for Newborns, or simply “Trump Accounts.”
What is a Trump Account?
The WFTCA creates a type of IRA retirement account for children who were born between January 1, 2025, and December 31, 2028. When a parent or guardian opens a Trump Account, the government will make a one-time contribution. From that time forward, anyone can contribute funds to the account, including parents, employers, and charities.
Who Qualifies for a Trump Account?
To qualify for the $1,000 government seed money, children must be U.S. citizens born between January 1, 2025, and December 31, 2028. While any child who is under the age of 18 and who possesses a Social Security number may open an account, only those children who were born in the 2025-2028 window will receive the $1,000 federal contribution.
How Does a Trump Account Work?
- Starting early in 2026, parents or guardians may opt to open a Trump Account for their child.
- Parents can use IRS Form 4547 to elect the account, and starting mid-2026, they can make elections online at trumpaccounts.gov.
- The federal government starting on July 4, 2026 will provide a one-time $1,000 contribution to the account. To ensure your child gets the government contribution, make sure to select this option when you open the Trump Account on your child’s behalf.
- The federal contribution does not count against the annual contribution limit.
- Anyone can contribute to the account. There is a $5,000 annual contribution limit, per child, from all sources combined. This includes $2,500 per year from employers as a nontaxable benefit. These limits will be indexed for inflation starting after 2027.
- Funds must be invested in eligible mutual funds or exchange traded funds (ETFs) that track a major index, such as the S&P 500.
- Withdrawals are generally prohibited until age 18, at which point the account functions like a traditional IRA.
- For those with children aged 10 and under in households with median incomes below $150,000, Dell Technologies CEO, Michael Dell, and his wife have pledged $6.25 billion to provide an extra $250 to each of 25 million children.
- Charities and state, local, or tribal governments can make additional “qualified general contributions.” These contributions won’t count toward the $5,000 cap as long as they’re made to a “qualified class of beneficiaries” — a group or program that meets certain eligibility rules.
- Withdrawals are not allowed until January 1 of the year the child turns 18, except in limited cases such as rollovers, death, or disability. At adulthood, the account will generally convert to a traditional IRA and will become subject to the standard distribution and tax rules.
- Financial experts encourage families to carefully compare Trump Accounts with other savings vehicles like 529 plans or custodial brokerage accounts. While the free government seed money is valuable, other accounts may offer better tax advantages depending on your goals.
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