By: Gary Gainspoletti, CPA, CFP®
Since many clients have asked questions about the new Trump Accounts, we thought it would be a service to you to give you a brief synopsis of the nature of these freebies.
Trump Accounts are tax-advantaged investment accounts for U.S. citizens under 18, functioning as a starter individual retirement account (IRA). Launched on July 4, 2026, the program includes a $1,000 U.S. Treasury seed contribution for children born between January 1, 2025, and December 31, 2028. You can set them up via the Official Trump Accounts Portal or the Internal Revenue Service using IRS Form 4547.
How Trump Accounts Work
- Eligibility: Any U.S. citizen child under 18 with a valid Social Security number.
- Custodianship: Parents or legal guardians act as sole custodians until the child turns 18, after which the beneficiary takes full control.
- Contributions: Up to $5,000 per year from individuals (parents, family, or the child). Employers can contribute up to $2,500 tax-free annually for an employee’s dependent child.
- Investments: Restricted during the minor’s growth period to low-cost mutual funds or ETFs tracking broad U.S. equity indices.
- Growth Period Restrictions: Money generally cannot be withdrawn until January 1 of the year the beneficiary turns 18.
- Adulthood Use: At age 18, funds can be kept for long-term growth or withdrawn (taxed as ordinary income) for major expenses like higher education or a first-time home purchase, transitioning to standard traditional IRA rules.
BNY (The Bank of New York Mellon) acts as the main financial agent managing the Trump Accounts program, in an exclusive partnership with Robinhood, which serves as the direct brokerage platform and initial trustee.
The day-to-day choices regarding who puts money into the accounts and where that money is directed include the following entities:
Who Puts Money In (The Contributors)
- The U.S. Treasury: Provides a $1,000 one-time seed deposit for eligible children born between 2025 and 2028.
- Parents and Family: Can deposit up to $5,000 per year per child using the official mobile app.
- Private Employers: Can contribute up to $2,500 tax-free annually for an employee’s child.
- Corporate and Philanthropic Donors: Companies like Dell Technologies, Nvidia, and Bank of America have pledged billions of dollars to match family contributions or fund accounts for low-income children.
While this can certainly be a great starter account for your new born, you need to be aware of how your funds are being invested and how to gain access to them in the future. There are restrictions and limitations. We would be remiss in our duties if we didn’t tell you to certainly take advantage of the $1,000 freebee by setting up the account. So, absolutely take advantage of the $1,000 gift and thank President Trump.
However, as to future contributions, our recommendation would be for you to set up a 529 or UTMA account with your trusted advisor. With these accounts you, as the custodian, would have more control over the investment choices and especially, future contribution and withdrawal options. As always don’t hesitate to contact us for further information or directions in this endeavor.
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This content is provided for educational purposes only. Commentary should not be regarded as a complete analysis of the subjects discussed and should not be relied upon for entering into any transaction, advisory relationship, or making any investment decision. The information presented does not involve the rendering of personalized investment advice and should not be viewed as an offer to buy or sell any securities.
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