TRUMP ACCOUNTS: WHAT YOU NEED TO KNOW!
Trump Accounts were created under the One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025. The website went live on July 6th at https://trumpaccounts.gov/.
For those taxpayer’s who have been looking for ways to begin funding a retirement program via an IRA (or Roth IRA) for their children or grandchildren, the new Trump Accounts provide a pathway that was not available in the past. Trump Accounts can be established for any U.S. citizen child under the age of 18. Specific rules under IRC Section 530A govern these accounts.
Annual contributions are limited to $5,000 per year (adjusted for inflation beginning in 2028) until the year the beneficiary turns 18. All contributions must be made in cash. Contributions are treated as completed gifts to the beneficiary in the year they are made, and do not require the filing of a gift tax return.
Employers may also include Trump Account contributions as an option, within their Section 125 Cafeteria Plans. Employers may make tax-free annual contributions of up to $2,500 to the Trump Account of an employee’s eligible dependent.
In addition to the annual contribution, IRC 6434 establishes a Pilot Program that provides a $1,000 tax free government contribution for each U.S. citizen child born during calendar years 2025 through 2028.
In addition, Michael Dell has pledged $6.25 billion to provide an additional $250 contribution for the first 25 million children born between 2016 and 2024 who open Trump Accounts, and reside in a ZIP code with a median household income of $150,000 or less.
There are restrictions on how Trump Account assets may be invested. Funds must be invested in eligible low-cost U.S. equity index funds or ETFs with expense ratios capped at 0.10%. Individual stocks and active management strategies are not permitted while the child is a minor. These requirements are intended to keep investment costs low while encouraging longterm investing. The overall goal is to give every child in the United States “skin in the game” and an opportunity to benefit from long-term tax deferred stock market growth.
Distributions are not permitted during the “Growth Period” which ends on January 1 of the calendar year in which the beneficiary turns 18. After age 18, distributions are generally taxable under IRC Section 72, similar to a nondeductible IRA, with basis established by:
Qualified general contribution
Government contributions received under the IRC Section 6434 Pilot Program
Employer contributions made through a Section 125 Cafeteria Plan
No distributions are permitted before age 18 unless the beneficiary dies.
If you have questions about how these new provisions may affect your tax planning strategies, contact your FMD Advisor. We can help you determine whether a Trump Account fits your family’s goals and develop a plan to invest in your children’s, and grandchildren’s future.
