04 Jun What You Need to Know About Trump Accounts

By now, you may have heard about 530A accounts, aka Trump Accounts. These are new, tax-advantaged savings vehicles designed for minor children. They were signed into law in 2025 and are launching on July 4, 2026.

While some details are still being finalized, enough is known to understand where these accounts might fit in your (and your child’s) financial plan.

What Are They and Why Do They Matter?

For many years, families have had limited options when it comes to tax-advantaged savings for their children. Custodial accounts allow you to invest on a child’s behalf, but they’re generally taxable. A 529 plan offers tax advantages, but funds must be used for educational expenses only. And while kids can contribute to traditional and Roth IRAs, they need earned income to do so – something many children simply don’t have.

530A accounts aim to fill that gap. Structurally, they are a type of custodial account. That means that they’re owned by the child but administered by an adult until the child reaches age 18. They provide tax-advantaged growth without restrictions on how funds can be used once they’re withdrawn. And they don’t require children to have earned income.

For some children, there will be a built-in head start. Children born between Jan 1, 2025 and Dec 31, 2028 are eligible for a one-time federal contribution of $1,000 to be deposited directly into their 530A accounts. In addition, up to 25 million children age 10 or younger who live in zip codes with median incomes below $150,000 may receive a separate $250 deposit through a charitable contribution from the Michael & Susan Dell Foundation.

How Do They Work?

While some aspects of 530A accounts are still in flux, the broad framework is clear.

• Accounts can be opened by parents, legal guardians, adult siblings or grandparents, provided the child has a Social Security number and is younger than 18 on Dec 31 of the year the account is opened. Family members can open accounts online at https://form.trumpaccounts.gov/ or by filing IRS Form 4547. Note: there is much confusion around other family members opening these accounts. Do not open an account for your grandchild or family member if you are not their legal guardian. See further discussion at the end of this article.
• Contributions can be made until the child turns 18.
• The annual contribution limit is capped at $5,000. The $1,000 government seed contribution that some children are eligible for doesn’t count toward the annual limit. For minors who do have earned income, contributing to a 530A account doesn’t prevent contributions to a traditional or Roth IRA.
• Investment options within 530A accounts will likely be limited. The government is expected to offer a narrow menu of low-cost funds, similar to its approach to federal employee retirement accounts. Limited investment options should be considered when deciding between this account versus a standard custodial account.
• Individual contributions are not tax-deductible, but growth inside 530A accounts is tax-deferred. Employers can offer matching contributions, which are tax-deductible up to $2,500 and count toward the annual limit. Taxes are only owed when funds are withdrawn. Earnings in the account, as well as any employer and government contributions, will be taxed as ordinary income. It would be a very good idea to track your cost basis in these accounts.
• Withdrawals can’t be made until the child turns 18. Beginning that year, the account resembles a non-deductible traditional IRA. Contributions withdrawn are tax-free. Earnings withdrawn will be subject to a 10% penalty for withdrawals before age 59 ½.
• If the young adult has little taxable income at age 18, converting the account to a Roth IRA at that point could generate a modest tax bill while locking in decades of tax-free growth going forward.

What Are the Long-Term Benefits?

When used thoughtfully, this new savings vehicle could help build a stronger, more flexible financial foundation over time. What’s more, these accounts can work in tandem with other savings vehicles such as 529 plans and IRAs to give children an even bigger financial leg up.

If your child qualifies for the $1,000 federal seed contribution, opening an account costs you nothing and gives your child a head start on long-term savings. After all, time is one of the most powerful elements behind compound growth. Over time, that $1,000 can grow into a substantial amount, especially if you continue to contribute.

Over 60 years, the initial $1,000 contribution could grow to nearly $58,000, assuming a 7% annual growth rate. That’s not bad. But with an added $50 a month, that same account could be worth nearly $550,000 after 60 years.

For educational and illustrative purposes; based on hypothetical returns and simplified assumptions.

Some analysis still needs to be done on whether this is more beneficial to the child than opening up a custodial account. Certainly, the free $1,000 from the government or any employee contributions should be claimed if you qualify, but having all of this growth be taxed as ordinary income might not be as beneficial as having it taxed at capital gains rates. This is a conversation worth having if you have a qualifying child.

A Note for Grandparents

We are hearing more and more about grandparents wanting to set up Trump Accounts for their grandchildren. The intention is generous and the accounts are getting a lot of attention, but the IRS rules around who can actually open one of these accounts are more complicated than most people realize. And there is a real risk that grandparents are signing forms under penalty of perjury without understanding what they are agreeing to.

Here is what the proposed IRS regulations actually say:

There can only be one Trump Account per child. The rules also set out a strict order of who is allowed to open one.

If your grandchild was born on or after January 1, 2025, a grandparent can open a Trump Account and claim the $1,000 federal government contribution at the same time, but only if the grandchild is claimed as a dependent on the grandparent’s tax return. If the grandchild is not your dependent, you are not authorized to open the account.

If your grandchild was born before January 1, 2025, grandparents are actually last in line. The IRS puts legal guardians first, then parents, then adult siblings, and then grandparents. That means a grandparent cannot legally open a Trump Account for a grandchild born before 2025 unless there is no legal guardian, parent, or adult sibling who is “available” to do so. And here is where it gets murky: neither the IRS regulations nor the Form 4547 instructions define what “available” means. Does it mean deceased? Not legally responsible for the child? Simply hasn’t acted yet? We don’t know.

Now for the perjury concern, and this is the part I want you to pay attention to.

According to the proposed regulations, when a grandparent makes this election, they are representing under penalty of perjury that they are authorized to open the account and that no one with a higher priority is available to do so. That is a significant legal statement.

The problem is that Form 4547 and the IRS website do not spell this out. The form only asks the grandparent to certify that the form is true, correct, and complete to the best of their knowledge. There is no warning anywhere on the form that by signing it, the grandparent is also implicitly representing that no parent, guardian, or adult sibling exists and is available. A grandparent could sign in good faith, not knowing they just made a representation they cannot support. If it turns out someone with higher priority was available, the election may be invalid, and there is a real question of whether the grandparent unknowingly committed perjury.

The bottom line for now: Until we have clearer guidance from the IRS, grandparents should pause before trying to establish 530A accounts through Form 4547 or the IRS website. If your grandchild was born before 2025 and has a living parent, legal guardian, or adult sibling, you are most likely not the person authorized to open this account. If your grandchild was born in 2025 or later, you can only open the account and claim the $1,000 if the child is your dependent.

I will keep you posted as we learn more. If you have questions about opening a 530A account, please reach out. As always, we’re happy to help!