Trump Accounts Explained

• A Trump account is a new type of traditional IRA, a tax-deferred investment account, for children under the age of 18. It is also known as a 530A account.  

• A child qualifies for a Trump account if they have a valid Social Security number and if they will not turn 18 by the end of the calendar year.  

• A Trump Account acts as a traditional IRA, so investment earnings grow tax-deferred.  

• Children born after December 31, 2024 and before January 1, 2028 are eligible for a free government contribution of $1,000.  

• Children born after January 1, 2016 and before January 1, 2025 who live in a zip code with a median family income of $117,300 or less are eligible for a free contribution of $250 from the Michael & Susan Dell Foundation.  

• On October 1, 2026, all eligible children who did not have an active Trump account were automatically enrolled by the U.S. Treasury. You must claim your child’s Trump Account through the Trump Accounts app or the Trump Accounts web portal at trumpaccount.com. You will be asked to provide a few details to verify your identity.  

• To receive the $1,000 government contribution you will need to submit Form 4547 through the Trump Accounts app or web portal.  

• You must be the child’s legal guardian to claim and manage the account. Only one guardian can claim a child’s account.  

• Anyone can contribute to a child’s Trump Account. Contributions made by parents, grandparents, or other individuals are made with after-tax dollars and are not tax-deductible. Contributions made by an employer to the Trump Account of an employee’s child are not included in the employee’s taxable income.  

• Employer contributions are limited to $2,500 per employee annually. Total contributions to each Trump Account are limited to $5,000 annually. This includes all contributions made by family, friends, and employers. Contributions made by governments and charities are not included in the $5,000 annual limit. 

• Contributions into a child’s Trump Account are invested automatically. Parents may make adjustments to the investments but only within strict federal guidelines until the year the child turns 18. The investment choices are limited to specific low-cost U.S. equity index funds or exchange-traded funds (EFTs).  

• On January 1 of the year the child turns 18, the funds in the Trump Account will be transferred into a traditional IRA.  

• On January 1, the account will no longer be restricted to the limited investment options of a Trump Account. However, the account remains in the parent or guardian’s control until the child’s 18th birthday. On their 18th birthday, the child becomes the responsible party on the account and will be prompted to set up their own login information. The parent or guardian will no longer have access to the account.  

• The rules for a traditional IRA apply. Withdrawals before age 59½ are taxed as ordinary income and may be subject to a 10% early withdrawal penalty if they are not used for a qualified purpose. Required minimum distributions (RMDs) begin at age 73.  

• The child may choose to covert the traditional IRA into a Roth IRA any time after they turn 18. When converting to a Roth IRA, the kiddie tax may apply if the child’s earned income is less than or equal to half of their support.  
  
  As we navigate changes, JHM aims to be our client’s trusted source. If you have any questions or concerns, please reach out to your JHM contact and we would be happy to assist you. 

Article written by Katie Tipton.