Trump Accounts: Understanding and Optimizing the New Children’s Savings Accounts

On July 4, 2026, the long-advertised Trump Accounts were launched, with more than 6 million accounts being pre-registered ahead of the holiday. Some have been enticed by the prospects of free contributions from the government or private donors (notably Michael Dell). Others view the accounts as opportunistic long-term savings vehicles for young family members.

Amid the enthusiasm, many questions remain about how these accounts work, who can contribute, and whether they make sense as part of a broader family wealth strategy. We will try to unpack these questions below.

What Are Trump Accounts?

Trump Accounts are effectively “starter IRAs” for children. They are tax-advantaged investment accounts that can be opened for any children under age 18. This is an attractive premise, as most children under 18 do not have earned income and thus can’t contribute to their own retirement accounts.

The accounts can be funded up to $5,000 per year and invested in low-cost ETFs. Assets grow on a tax-deferred basis while the child is a minor. Upon reaching age 18, the account transitions to a Traditional IRA and ownership transfers directly to the child.

How to Sign Up?

Only a parent or legal guardian may establish a Trump Account for a child under age 18. Other family members and friends can contribute, but they cannot open an account independently. Any grandparents or other relatives must coordinate with the child’s parent before making contributions.

Enrollment begins through the official Trump Account website: https://trumpaccount.com/. It is a straightforward registration similar to other online enrollment processes. During registration, the main nuance is being temporarily routed to the IRS website to virtually submit a Form 4547 (Trump Account Elections). This involves entering information for the parent and child – it must be completed before finalizing online enrollment.

How to Contribute?

Contributions can come from four main sources:

1) Parents: They can contribute through their online portal after registering. A bank account can be linked for one-time or recurring contributions.

2) Friends and Family: The child’s parent can share a secure link allowing others to contribute to the existing Trump Account. A non-parent cannot establish their own account, and the total limit remains $5,000 per year, per child.

3) Employers: Employers can contribute $2,500 annually per employee (not per child). This counts towards the annual limit of $5,000 per child. Many employers have already instituted contribution programs, with some taking a ‘matching contributions’ approach, similar to a 401k.

4) Government and Private Donors (The Free Money!): There are two main forms of free contributions. First, the government will contribute $1,000 of seed money for any child born between January 1, 2025, and December 31, 2028. This does not count towards the $5,000 annual cap. You can enroll in this grant when registering. Second, some private donors like Michael Dell and Ray Dalio have pledged $250 per child in certain eligible zip codes. Eligibility is generally for those in lower- to middle-income areas.

The Contribution Recipe (Annual Contributions + Roth Conversion)

Those looking to maximize Trump Account savings should consider two components to a successful savings plan:

1) Contribute $5,000 Annually: This can occur each year until the child turns 18, totaling up to $90,000 of contributions.

2) After the child turns 18, convert the IRA to a Roth: While not required, this is a critical part of the process to make the strategy worthwhile.

The Trump Account will transition into a Traditional IRA at age 18. If left as a Traditional IRA, all tax-deferred growth will eventually be distributed as ordinary income in retirement. Relative to other savings vehicles, this large income tax liability diminishes the attractiveness of the Trump Account.

However, if the Trump Account is converted after age 18, when the balance is much smaller, the dynamic shifts. It then becomes a fantastic retirement savings vehicle.

The conversions occur in the same fashion as any other Traditional IRA. For example, let’s assume a child receives $90,000 of cumulative contributions before age 18 (18 years x $5,000). Assuming a 7.69% rate of return, the account would grow to ~$196,000 by age 18. The presumption is the account will be invested reasonably aggressively to match the long-term investment horizon. The account is then eligible for conversion to a Roth, creating taxable income of $106,000 ($196,000 less the $90,000 of contribution basis). Assuming a 25% tax rate, this could result in a $26,500 tax liability. During the planning process, it is imperative to anticipate this future tax liability and have a strategy to pay this tax bill. This tax cannot be paid from the IRA itself. In most situations, the party that made contributions during childhood should also anticipate paying this liability from non-Trump Account assets.

Note: Kiddie tax rules must be considered at the time of Roth conversion. Children attending college are generally considered dependents until age 24. A Roth conversion between the ages of 18-23 would likely trigger an unwanted Kiddie Tax (meaning the $106,000 taxable income would be taxed at the parents’ marginal rate rather than the child’s). The safer assumption is to complete the Roth conversion at the child’s age 24, when Kiddie Tax rules no longer apply.

Should I Use Trump Accounts?

Now comes the hard question: Should I use them?

If the sole goal is to optimize a child’s future retirement savings, the answer is ‘yes’. There are no other tax-advantaged retirement accounts available to children before their working years. This is a powerful way to create tax-advantaged growth from birth. Assuming historical growth rates of 7.69% rate of return and inflation of 2.89%, a fully funded and converted Trump Account could become a $1M+ Roth IRA in today’s dollars by the time the child retires (or the equivalent of $6M+ in future value). Many find this opportunity hard to pass up.

Unfortunately, life can be a little more nuanced.

I suggest taking a step back to assess the broader stages of the child’s future. What are your priorities for the child in all stages of life? Have you saved enough for college via 529 plans? Will you want the flexibility to support the child during their young adult years (such as with an account that could fund a down payment on a home)? Would they instead appreciate more support when they have a young family of their own?

You should also consider the responsibility that will fall to the child at age 18. Consider how they might respond knowing that they already have $196,000 in a Roth IRA. Will this create unintended consequences for the child’s work ethic?

These are deeply personal questions that must be considered with the family, especially the child’s parents.

Other Considerations

• While the child is under age 18, the account can only be invested in low-cost domestic ETFs with expense ratios below 0.10%. International funds are not available. These restrictions are removed once transitioned to an IRA.

• Contributions must be made by December 31 of the contribution year. This differs from an IRA, where contributions are due by the tax return due date (April 15 of the following year).

• Any contributions count towards the annual gift limits of $19,000 per person.

• Most states have aligned their tax code to treat Trump Accounts as tax-deferred. Seven states (CA, HI, KY, MA, PA, SC, and WI) will not consider these tax-deferred accounts. Instead, they will be taxed like regular brokerage accounts. This may create some administrative hurdles but should not shift the long-term attractiveness of the strategy.

Funding Trump Accounts can be a powerful retirement savings jumpstart for young friends and family members. That said, they must still be considered within the broader generational wealth strategy for your family. I recommend you connect with your JMG advisor to discuss the appropriateness of Trump Accounts within your family’s plan. We invite you to share this article with others who may also find it useful.

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