Key Takeaways
- Trump Accounts are long-term, tax-deferred savings accounts designed specifically for children
- Parents or guardians manage the account until the child turns 18, after which the child takes over
- Certain children (especially those born between 2025 and 2028) may qualify for government seed money
- Contributions and withdrawal rules are different from traditional retirement accounts, especially before age 18
You may have heard about the new “Trump Accounts” and wondered: Is this just another savings account, or is it actually a better way to build savings early for my children?
After all, every step you take to secure your family’s future counts. Especially with a potential $1,000 government head start on the line.
So, let me walk through with you what I’m advising my New Castle County clients on with these accounts: what they are and how they work.
What are Trump Accounts?
Trump Accounts are a new type of savings account created specifically for children. The defining feature is tax-deferred growth. Money in the account can grow without being taxed each year, and taxes are generally triggered only when funds are withdrawn later.
These accounts are designed to evolve over time. The rules are more focused on long-term savings during childhood. Then, once they turn 18, the structure aligns more closely with traditional retirement rules once your child is older.
You may also hear about a “Trump baby savings account.” That’s not a separate account type. It’s a special provision tied to Trump Accounts for newborns.
It means that if your child is born between 2025 and 2028, they can receive a one-time $1,000 government contribution to jump-start their account.
On top of parents and family members, you can receive contributions from the government, nonprofits, and even employers.
How do Trump Accounts work?
In some ways, Trump Accounts resemble custodial Traditional IRAs. A parent or guardian opens and manages the account, and the investments inside the account grow tax-deferred.
But there’s no earned income requirement to contribute. That’s a major difference from IRAs and is what allows you, as the parent, along with grandparents and others, to fund the account while your child is young.
Contributions are not tax-deductible while the child is under 18. Deductibility only becomes relevant once your child reaches adulthood and the account transitions to standard Traditional IRA-type rules.
Withdrawal rules are also stricter early on. Before your child starts adulting at age 18, no distributions are allowed at all.
Any child who is under 18 at year-end and has a Social Security number can qualify. Only a parent or legal guardian can open the account on the child’s behalf.
There are no income limits for parents and no special filing-status requirements just to open the account.
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How do I open a Trump Account for my child?
When we file your 2025 tax return, the option to open a Trump Account for a qualifying child is built into the process. During tax prep, we’ll confirm if you’re eligible or not.
The account is established using Form 4547. If you file it with your return, the setup process begins automatically.
But if not, you can open the account later through a government online portal (once it’s available). An online application at trumpaccounts.gov is scheduled to launch in mid-2026.
After we submit the form, a custodian handles your actual account creation and sends you confirmation. And ongoing tracking and management will eventually happen through the government’s portal.
Contributions (yours and the $1,000 government seed deposit for qualifying newborns) can only begin after July 4, 2026.
Do Trump Accounts have contribution limits?
Before age 18, total contributions are capped at $5,000 per year per child. And of that amount, up to $2,500 may come from an employer. (The $1,000 government contribution doesn’t count toward this annual limit.)
If contributions exceed the limit, the excess must be removed… which can create unnecessary paperwork and potential tax issues. So make sure to coordinate your contributions amongst your family members.
After age 18, the account follows normal Traditional IRA contribution limits and rules.
Final thoughts
Of course, you should talk to your Delaware financial advisor and compare other options (like a 529 college savings plan) to see what makes the most sense for your family’s situation.
But if a Trump Account turns out to be the right fit, we can handle the setup for you as part of your tax appointment. Which you should definitely schedule, if you haven’t gotten to it yet:
FAQs
“How does a Trump Account differ from a standard IRA?”
A Trump Account is a tax-deferred savings vehicle designed specifically for children. Unlike a Traditional IRA, which requires the child to have earned income (like from a job) to contribute, a Trump Account has no earned income requirement. So parents, grandparents, and even employers can contribute to a child’s savings from birth, regardless of whether the child is working.
“How do I get the $1,000 government contribution for my baby?”
To qualify for the one-time $1,000 Trump Account seed deposit, your child must be born between 2025 and 2028. Which does not count toward your annual $5,000 contribution limit and is handled through the account setup process.
“Can I deduct Trump Account contributions on my taxes?”
No. While your child is under the age of 18, contributions to a Trump Account are not tax-deductible. The primary tax benefit during these years is tax-deferred growth, meaning you don’t pay taxes on the investment gains each year. Tax deductibility only becomes an option once the child reaches age 18 and the account transitions into a standard Traditional IRA structure.
“Can I withdraw money from my child’s Trump Account if we need it?”
No. One of the strictest rules of the Trump Account is that no distributions are allowed before the child reaches age 18. Once the child turns 18, the account begins following traditional IRA rules, which generally involve penalties for early withdrawals before age 59 and a half.
“When can I start putting money into the Trump Account?”
Even if you establish the account early during the 2025 tax season, you cannot physically deposit funds (and the government will not deposit the $1,000 seed money) until after July 4, 2026.
“Who owns and manages the Trump Account?”
The account is opened and managed by a parent or legal guardian on behalf of the child (the beneficiary). The child must have a valid Social Security number and be under age 18 at the end of the year the account is opened. Once the child turns 18, the account transitions to their control under standard IRA-type rules.