Trump Accounts: What They Are and How They Work
A new type of individual retirement account for minors is now law. The 2025 reconciliation act (P.L. 119-21) created what it calls Trump Accounts—traditional IRAs structured specifically for children under 18, with a distinct set of rules that govern the account until the beneficiary reaches adulthood.
Accounts can be opened starting July 4, 2026. An authorized individual—a parent, legal guardian, grandparent, or adult sibling—may open one on behalf of a child. The child must be a U.S. citizen with a work-authorized Social Security number.
The Growth Period
The rules that distinguish Trump Accounts from standard IRAs apply during what the IRS terms the growth period: the years before the calendar year in which the beneficiary turns 18. During this window:
- Contributions are not limited by the child’s earned income (unlike standard IRAs)
- No contributions are tax-deductible
- Investment earnings compound tax-deferred
- Withdrawals are prohibited, with one narrow exception (rollover to an ABLE account for disabled beneficiaries)
- All invested funds must be held in a diversified U.S. equity index fund with annual fees not exceeding 0.1%
Once the growth period ends, the account converts to a standard traditional IRA with no special restrictions on investments, contributions, or withdrawals.
Key Differences from Other IRAs
Standard traditional IRAs require contributions to come from the account holder’s earned income. Trump Accounts have no such requirement, making them usable for children with little or no income of their own. The tradeoff is that contributions are not deductible during the growth period—a concession that has limited practical impact given most children’s near-zero tax liability.
Roth IRA conversion is permitted once the beneficiary turns 18, giving account holders a path to tax-free withdrawals later in life.
One Account Per Child
Each child may be the beneficiary of exactly one Trump Account. The combined annual contribution limit during the growth period is $5,000 in 2026, indexed for inflation after 2027—lower than the standard IRA ceiling of $7,500. Excess contributions face a 6% annual penalty until removed.
The Treasury Department has said it does not intend to proactively open accounts on behalf of children, citing preexisting privacy law concerns. Accounts will be opened voluntarily using IRS Form 4547.