TAX PLANNING
Trump Accounts in Six Questions
- Individuals can begin to fund Trump Accounts for eligible children as of July 4, 2026.In order to be eligible, children must 1) be under 18 and not turn 18 in the current calendar year, and 2) have a social security number (SSN). Only children born between January 1, 2025 and December 31, 2028 qualify for the federal government’s one-time $1,000 seed contribution.
- Contributions made by an individual to a Trump Account may qualify for safe harbor from gift tax, GST tax, and gift tax reporting.The IRS provided guidance on gift tax treatment of Trump Account contributions in IRS Revenue Procedure 2026-25, issued June 29, 2026.
- Careful consideration should be given to the potential financial and tax planning implications of Trump Accounts.Work with your wealth advisor to review how a Trump Account could impact other plans and strategies you have in place.
Trump Accounts are top of mind for many as July 4 approaches. Whether/how they fit into your overall wealth plan depends on your long-term financial priorities for your family and the other strategies you have in flight. This article explores the basic functionality and mechanisms of Trump Accounts.
What Is a Trump Account?
Trump Accounts (TAs) are essentially starter traditional individual retirement arrangements (IRAs) for children under age 18. They are structured for longevity and meant to capitalize on compounded interest over time. There are specific mechanisms built into TAs to ensure this potential for long-term growth.
While TAs may be used alongside other savings vehicles for children (e.g., traditional savings accounts, 529s for education expenses, dependent care flexible spending accounts for childcare or medical expenses), their purpose is specifically retirement savings. TAs are subject to a “growth period” which runs until the calendar year the child turns 18.
Once funds are in a TA, they are essentially locked for the duration of the growth period. This can be beneficial for long-term growth, but can leave little flexibility if a more immediate need arises. A wealth advisor can help weigh the benefits and considerations.
Who Is Eligible for a Trump Account?
Trump Accounts can be created for any child who:
- Is under age 18 and will not turn 18 in the current calendar year
- Has a valid social security number
While any child who meets these criteria is eligible for an account, there are a number of additional criteria that must be met in order to qualify for the $1,000 federal seed contribution.
These include:
- They are a US citizen.
- They were born between January 1, 2025 and December 31, 2028.
- They have a valid social security number.
- They can be claimed as a dependent and meet the definition of a qualifying child under IRC 152(c).
How Do You Set Up a Trump Account?
The Trump Account must be set up by an “authorized individual” using IRS Form 4547. This can be done online at trumpaccounts.gov.
An authorized individual for these purposes could be a:
- Legal guardian
- Parent
- Adult sibling
- Grandparent
Once Form 4547 is received and verified by the Treasury Department, the Department will establish the account.
How Do Trump Account Contributions Work?
Contributions to Trump Accounts can be made by individuals, government organizations, employers, and nonprofits.
Considerations:
- Gift tax. Per IRS Revenue Procedure 2026-25 (issued June 29, 2026), a contribution made by an individual will be treated as a “completed gift” rather than as a future interest in property—as long as it meets certain safe harbor requirements. This allows the contribution to be covered under the annual exclusion for purposes of gift tax, GST tax and gift tax reporting. As a result, taxpayers who meet the safe harbor will not be required to file a gift tax return reporting such contributions.
- Income tax. Individuals’ contributions to TAs are not tax deductible. They are made after tax (unless made under a pre-tax salary deferral program through an employer).
- Impact on other IRAs. TA contributions will not impact the contribution limit for other IRAs.
- Contribution limit. TAs are subject to a $5,000 annual limit on contributions. This limit applies to gifts made by individuals and contributions under an employer-sponsored program. Government, including state, local, and tribal organizations, and non-profit contributions are not included in the limit.
- Federal seed contribution. As outlined above, the federal government will provide a $1,000 seed contribution for children who meet the eligibility requirements.
What Are the Rules Around Distributions From Trump Accounts?
No distributions may be taken from a Trump Account (including hardship withdrawals) during the growth period.
When the child turns 18, they fully own the account, regardless of who made the contributions. They can choose to leave the funds in the TA, roll the account into a traditional IRA or a qualified employer plan if applicable, or withdraw the funds.
Keep in mind, TA withdrawals are generally treated like traditional IRA distributions.
For example:
- Earnings and any pre-tax contributions will be taxed as ordinary income
- Early withdrawals (before age 59 ½) are subject to a 10% penalty
What Is the Difference Between a Trump Account and a 529 Savings Plan?
Trump Accounts and 529 Savings Plans are both long-term savings vehicles that can accept contributions from individuals and employers. However, their purpose and the regulations governing them are distinct and could have a major impact on future planning.
| Trump Account | 529 Savings Plan | |
|---|---|---|
Primary Purpose |
Retirement savings |
Education expenses |
Beneficiary Age Limit |
18 |
No limit |
Limits on Contributions from Individuals |
$5,000 (annual)1 |
No federal limit; state programs may establish lifetime maximums |
Tax Deductibility of Contributions for Individuals |
Not applicable |
Not applicable for federal tax; most states offer some form of tax advantage (e.g., deduction or credit) |
Federal Government Contributions |
One-time $1,000 contribution for an “eligible child” |
Not applicable |
State and Local Government Contributions |
May contribute |
Some states provide direct contributions (e.g., a limited dollar-for-dollar match or seed money) |
Distribution Timing |
No distributions until the calendar year the child turns 18 |
Can be made at any time |
Taxation of Distributions |
Subject to IRA rules (e.g., early withdrawal penalty for distributions before age 59 ½) | Qualified distributions tax-free for federal income tax purposes. Non-qualified distributions typically subject to penalty. |
1 Contributions from the federal government, states, Indian tribal governments, non-profits, and qualified rollover contributions will not count toward this limit.
Next Steps
Before implementing any wealth or tax planning strategies, connect with your advisors and legal team. The vehicles covered in this article could have a significant impact on your family’s long-term planning.
The Goldman Sachs Ayco team will be monitoring for ongoing updates related to Trump Accounts and other regulatory changes that could impact wealth planning.
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