The IRS has released initial guidance on a new type of retirement-style savings account, the Trump Account. These accounts are designed to help eligible children begin building long-term savings early, with special rules that apply until the child reaches adulthood. Below is a summary of what families should know as this program takes shape.
What Is a Trump Account
A Trump Account is a new form of traditional IRA created exclusively for the benefit of an eligible child. An eligible child is defined as an individual who is under age eighteen at the end of the election year and who has a valid Social Security number issued before the election date.
These accounts operate under a special growth period that ends on December 31st of the year before the child turns eighteen. During this growth period, additional contribution limits, investment rules, distribution restrictions, and reporting requirements apply. After the growth period ends, the account generally follows the standard rules for a traditional IRA.
When Trump Accounts Can Be Established and Funded
To establish a Trump Account, an authorized individual must file IRS Form 1047 or complete the election through the official Trump Accounts website, once available. Only one initial Trump Account may be established per eligible child.
Although accounts may be elected earlier, funding cannot begin until July 4, 2026, at the earliest. This includes both government pilot contributions and contributions from other permitted sources.
Federal Pilot Program Contribution
As part of a federal pilot program, the U.S. Treasury will make a one-time $1,000 contribution to eligible children. To qualify, the child must be a U.S. citizen born between January 1, 2025, and December 31, 2028, and a valid election must be made.
Pilot program contributions will not be deposited before July 4, 2026.
Types of Contributions Allowed During the Growth Period
During the growth period, the following types of contributions may be made to a Trump Account.
First, the one-time Treasury contribution for the pilot program.
Second, qualified general contributions funded by states, the federal government, tribal governments, or certain tax-exempt organizations for eligible groups.
Third, employer contributions under Section one two eight that are excluded from the employee’s taxable income.
Fourth, qualified rollover contributions.
Fifth, contributions from parents, beneficiaries, or other individuals.
Pilot program contributions and qualified general or rollover contributions are not subject to an annual dollar limit. However, employer contributions and individual contributions are subject to an aggregate annual limit of five thousand dollars, with cost-of-living adjustments beginning after two thousand twenty-seven.
Investment Restrictions During the Growth Period
Trump Account funds may only be invested in eligible investments during the growth period. Eligible investments are limited to mutual funds or exchange-traded funds that track an index of primarily U.S. companies, do not use leverage, and have annual fees and expenses capped at one-tenth of one percent.
Money market funds and cash are generally not allowed except as temporary holding options. Trustees are required to monitor compliance and automatically invest idle funds into approved investments.
Distribution Rules
Distributions during the growth period are highly restricted. Generally, funds may only be distributed for qualified rollovers, excess contribution corrections, or upon the death of the account beneficiary.
If the beneficiary dies during the growth period, the account ceases to qualify as a Trump Account, and the fair market value may be taxable to the recipient.
After the child reaches age eighteen, the account is treated similarly to a traditional IRA. At that point, early withdrawals may be subject to the standard ten percent additional tax.
Reporting Requirements
During the growth period, Trump Accounts follow specialized reporting rules under Internal Revenue Code Section 53A. These rules require detailed reporting of contributions, distributions, account value, and basis.
After the growth period ends, standard IRA reporting rules apply.
How Trump Accounts Coordinate With Other IRAs
Once the growth period concludes, Trump Accounts generally follow traditional IRA rules for contributions, rollovers, taxation, and required minimum distributions. However, Trump Accounts remain separately designated and cannot receive contributions through SEP or SIMPLE IRA plans.
In addition, IRA aggregation rules apply separately to Trump Accounts and other IRAs.
What Happens Next
The IRS has announced plans to issue formal regulations and is currently requesting public comments on several technical aspects of the program. Comments must be submitted by February 19th, 2026.
How Bayerkohler Can Help
Trump Accounts introduce new planning opportunities and compliance considerations for families, employers, and organizations. As guidance continues to evolve, Bayerkohler is monitoring developments closely and can help you understand how these accounts may fit into your broader tax and financial strategy.
If you have questions about eligibility, planning opportunities, or future implementation, please contact our team for personalized guidance.