(UNITED STATES) — President Trump’s the one big beautiful bill act Affects Federal Tax Brackets for Single-Income H‑1B Families”>family tax legislation created trump accounts, a new tax‑advantaged savings account for children that can come with a one‑time $1,000 federal deposit for eligible babies born 2025–2028 if parents elect the benefit and open the account properly.
The program is designed to give children a long‑term investment account that grows tax‑deferred until withdrawal under ira‑like rules, with the government describing the 2025–2028 birth cohort as a pilot.
Parents and legal guardians will be able to establish and fund trump accounts starting July 4, 2026, while Treasury will begin sending activation information for elected accounts starting in May 2026.
Trump Accounts are a new type of IRA‑style account for children under 18, created by the One Big Beautiful Bill Act / Working Families Tax Cuts. The accounts are meant to function as an investment vehicle that compounds over time, with tax‑deferred growth until money is taken out.
To qualify for the government’s one‑time $1,000 “seed” or pilot program contribution, a child must be born between January 1, 2025, and December 31, 2028, be a U.S. citizen with a valid Social Security number, and have a Trump Account elected and opened. Families who do not set up the account will not receive the deposit.
Children born before 2025 and still under 18 can have a Trump Account, but they do not receive the $1,000 seed deposit. Eligibility also hinges on age: the child must be under age 18 for the entire calendar year in which the election is made.
Opening the account and claiming the seed deposit requires an election using IRS Form 4547. Parents can make the election with a tax return or separately, after which IRS and Treasury send instructions to activate the account through a designated financial agent starting in May 2026.
Only parents or legal guardians can open a Trump Account for a child under 18. The rules also require the child to have a valid Social Security number.
Families can contribute up to $5,000 per child per year while the child is under 18, a cap that combines family and employer contributions. The $1,000 government seed does not count toward the $5,000 limit.
Employers may contribute up to $2,500 per year per child for employees or their dependents, and employer contributions are excluded from the employee’s taxable income. Guidance language differs on how employer contributions interact with the annual cap, and IRS may clarify, but the described framework includes employer deposits within the $5,000 per‑child limit.
The contribution rules are broader than those of traditional IRAs. Contributions are allowed even if the child or parent has no earned income, and there are no income or filing‑status limits for parents to open or contribute to the account.
While the child is a minor, contributions are not tax‑deductible. Investments inside the account grow tax‑deferred until withdrawal.
After the account converts to a standard IRA at adulthood, future contributions by the child may be tax‑deductible subject to normal IRA rules. Funds are generally invested in broad stock‑market index–type options or other IRA‑style investments, typically through banks or financial institutions acting as Treasury agents.
Rules on access are designed to prevent early spending. The framework described in professional guidance bars withdrawals before age 18, except for limited disability‑type exceptions.
Around age 18, the Trump Account transitions to traditional IRA rules and the child becomes the full account owner and the only person who can make new contributions. Early withdrawals, before traditional retirement age, are generally taxed as ordinary income and may incur additional penalties, with limited exceptions.
Some professional analyses also describe a structure where up to 50% of the balance might be accessible for “qualified uses” after 18, more liberal access by age 25, and any remaining funds automatically treated as distributed and taxed by around age 31. These details reflect interpretations of draft guidance; for binding rules, families should rely on IRS and Treasury regulations as finalized.
The White House has promoted the accounts as a way to expand savings and investing among families who may not otherwise open a child investment account.
“give the next generation a jump start on saving.”
The White House explainer says Trump Accounts are designed to “give the next generation a jump start on saving.” White House explainer
The same explainer addresses limits on who can receive the seed deposit.
“this benefit goes only to eligible American children.”
It says limiting the $1,000 pilot to U.S. citizens with Social Security numbers is justified as a safeguard to ensure “this benefit goes only to eligible American children.”
Supporters and critics have framed the accounts as a version of “baby bonds,” federally seeded child accounts aimed at reducing wealth inequality, though the Trump Accounts structure emphasizes market investment and IRA‑style features rather than a guaranteed bond. The pilot design for children born 2025–2028 makes the federal seed contribution time‑limited, even as the account itself can be opened for other minors who meet the requirements.
The Council of Economic Advisers has projected how balances could build over time under different assumptions. For a baby born in 2026, it estimates that with maximum contributions each year, a Trump Account could reach about $303,800 by age 18 and $1,091,900 by age 28 under average stock‑market returns.
With no contributions beyond the $1,000 seed, the Council of Economic Advisers estimate says the balance could still reach about $5,800 by age 18 and $18,100 by age 28. A White House fact sheet, referencing the Dell family gift and fully funded accounts, says a child’s account “could grow to as much as $1.9 million by age 28” if fully funded and left untouched. White House fact sheet
Private companies are also tying benefits to the program’s federal seed, announcing matches for employees with newborn children who qualify. Charles Schwab said it will
“match the U.S. government’s one-time $1,000 contribution to eligible newborn children of the company’s U.S. employees, providing an additional $1,000 per eligible child.”
BNY announced a similar plan:
“As one of the first financial services companies to join the program, BNY will match the federal government’s $1,000 contribution for eligible newborns of its eligible U.S. employees, doubling the investment in each child’s future.”
Charter Communications also pledged a match around the time Trump Accounts were created.
A White House release also highlights outside funding aimed at supplementing balances for children beyond what many families can contribute. It points to a $6.25 billion gift from the Dell family that will
“give millions of low- and middle-income children an even stronger shot at achieving the American Dream”
by supplementing Trump Accounts. The Dell family gift funding is referenced in the White House fact sheet above.
For parents, the near‑term timeline centers on election and activation rather than immediate deposits into a brokerage account. Treasury will begin sending activation information for elected accounts starting in May 2026, while accounts can first be established and funded starting July 4, 2026.
Practical eligibility checks focus on citizenship and documentation, since the seed deposit is restricted to U.S. citizens with valid Social Security numbers. Families also must ensure the child falls within the birth window for the pilot contribution, and that the election is made while the child meets the under‑18 requirement for the entire calendar year.
Employer participation could shape how quickly balances grow for some children. Employers can contribute up to $2,500 per year per child, and those contributions are excluded from the employee’s taxable income, a structure that companies have used to advertise a match to the federal seed. Charles Schwab match, BNY match, and Charter Communications pledge are examples of private matches noted in the White House materials.
Families weighing whether to open an account must also consider how long money could remain locked up. Withdrawals are generally barred before age 18, with limited disability‑type exceptions, and the account shifts into traditional IRA rules at adulthood, with tax and potential penalty consequences for early withdrawals.
The program’s structure, including a time‑limited federal seed deposit and later conversion to an IRA, sets it apart from familiar custodial accounts, while keeping a central promise: a federally seeded start for eligible children, and a set of annual contribution channels that can include parents, grandparents, friends, employers, and some government or charitable programs.
For those eligible babies born 2025–2028, the key step is making the election and opening the account so the one‑time federal seed is actually delivered. Without that election, the $1,000 deposit is not paid.
Trump Accounts are a new federal initiative providing a $1,000 seed deposit for children born 2025–2028 to encourage long-term investing. These IRA-style accounts feature tax-deferred growth and allow contributions up to $5,000 annually. While restricted until age 18, the program aims to reduce wealth inequality by providing a foundation for compound growth, supported by both government funding and potential private employer matches.
