When it comes to raising financially responsible children, few lessons are more valuable than learning how to save, invest, and let money grow over time. A new option for families, known as Trump Accounts, offers an opportunity to introduce children to those principles while potentially building a foundation for their financial future.
Regardless of your political affiliation or opinion of the legislation that created these accounts, it’s worth understanding how these accounts work and whether your family can benefit.
What Are Trump Accounts?
Trump Accounts are a new type of individual retirement arrangement (IRA) established for eligible children under age 18 who have a valid Social Security number. They are designed to give children a head start on long-term investing, with special rules governing contributions, investments, and withdrawals.
One of the most talked-about features is a one-time $1,000 contribution from the federal government for eligible U.S. citizens born between January 1, 2025, and December 31, 2028. Families must elect to receive this contribution; it is not automatic simply because an account exists.
How Do You Open an Account?
As of October 2026, eligible children have been automatically enrolled by the Treasury Department. Parents or guardians must still claim and activate their child’s account before managing it or arranging family contributions.
The process begins with the official Trump Accounts app or website at TrumpAccounts.gov. You will need identifying information for yourself and your child, including the child’s Social Security number and date of birth. You will also be required to upload a valid form of identification as the child’s parent or legal guardian. Follow the instructions to verify your identity, claim the account, and complete activation. If your child qualifies for the $1,000 government contribution, make sure you also elect to receive it.
How Can Families Add Money?
Parents, grandparents, relatives, and friends can help build the account through contributions, subject to applicable annual limits. The general annual limit for contributions from individuals and employers combined is $5,000 per child, with certain exceptions. Employers may contribute up to $2,500 annually toward an employee’s account or a dependent’s account, subject to the rules and limits. Employer contributions can offer an additional way to help a child get started.
During childhood, the money must be invested in eligible mutual funds or exchange-traded funds (ETFs) that track broad indexes of primarily U.S. companies. This means the account is designed for long-term market investing rather than frequent trading or choosing individual stocks. As with any stock-market investment, balances can fluctuate and losses are possible.
The opportunity for financial education may be just as important as the money itself. Parents can show children how regular contributions, investment growth, and compounding work over time. A child who watches an account grow may develop an appreciation for patience, saving, and making informed financial decisions.
When Can the Money Be Withdrawn?
Trump Accounts are not intended to be a source of spending money during childhood. Generally, withdrawals are prohibited before the calendar year in which the child turns 18, with limited exceptions. Once the special growth period ends, most traditional IRA rules apply.
At that point, the account can become part of a young adult’s broader financial plan. However, it isn’t a penalty-free account for every purpose. Traditional IRA rules generally impose a 10% additional tax on taxable early distributions before age 59 1/2 unless an exception applies. Certain qualified expenses or circumstances may qualify for exceptions, but the details matter.
What About Taxes?
Trump Accounts generally follow traditional IRA tax rules, with special provisions during childhood. Investment earnings grow tax-deferred, meaning taxes generally are not owed annually on dividends or capital gains inside the account. Contributions made by parents or other individuals are generally not deductible, and employer contributions have separate tax treatment.
When money is withdrawn, the taxable portion is generally included in the beneficiary’s income. Depending on the child’s age, the reason for the withdrawal, and applicable exceptions, an additional tax may also apply. Families should review the rules with a financial advisor or tax professional before taking distributions.
A Tool Worth Understanding
No single account will address every family’s financial needs, and Trump Accounts should be compared with other savings options such as 529 plans, Coverdell education plans, and custodial accounts. Still, these accounts provide another opportunity to introduce children to investing and long-term planning. I think we’d all agree that additional financial literacy is a win for our children.
Tracy L. Campbell is a partner and financial advisor at Meriwether Wealth and Planning, an independent Registered Investment Adviser (RIA) firm headquartered in downtown Minden, La. E-mail Tracy at tracy@meriwether.com. Disclaimer: This content is for general knowledge and education, not a substitute for professional advice.