Starting this year, families will have a new way to save for their children’s financial futures: the 530A account, more commonly referred to as a Trump account. This tax‑advantaged IRA is designed specifically for children; each account is owned by a child and administered by an adult until the child turns 18.

Trump accounts become available July 5.

Initially, the Treasury Department will establish and administer each account. After that, families will have the option to roll the account over to another financial institution. The government will make a one‑time $1,000 contribution for American children born between Jan. 1, 2025, and Dec. 31, 2028. Additional contributions may be made by individuals, employers, and charities. Investments are limited to low‑cost index funds.

While some details about Trump accounts are still forthcoming, we’ve addressed some of the key questions below.

What are Trump accounts?

A Trump account is a tax-advantaged account with IRA-like rules, established for a child under age 18. The child is both the beneficiary and the legal owner of the account, while an adult (typically a parent or guardian) acts on the child’s behalf until age 18. These accounts are intended to help families begin saving and investing early. The Treasury Department will create and administer the initial accounts.

Who is eligible?

Children under the age of 18 with a Social Security number are eligible; only one account per child is allowed. The government will seed each account with a one-time $1,000 contribution for U.S. citizens born between Jan. 1, 2025, and Dec. 31, 2028, when a tax election is filed on the child’s behalf. Children who aren’t eligible for the $1,000 contribution can still have an account.

Who can contribute and how much?

The new account is designed to be flexible for families. Contributions can come from parents or other individuals, employers, and even charitable organizations. Each source can be treated differently for tax purposes.

The amount that can be contributed is capped at $5,000 per year; this will be indexed for inflation after 2027. The initial $1,000 seed contribution from the government does not count towards this annual limit.

There is no earned-income requirement for the child. Contributions made on an after-tax basis are not taxed again when withdrawn. In some cases, employers may offer a pre-tax payroll deduction, but availability will vary by employer and plan.

Employer-funded contributions: An employer may choose to contribute up to $2,500 per employee per year. If an employee has multiple children, the employer may split the contribution among children.

Employer salary reduction: Employees can elect to direct part of their pay, on a pre-tax basis, into a Trump account. Combined employer and employee contributions cannot exceed $5,000 per child, per year.

Taxes on withdrawals depend on the source of the contribution, making accurate recordkeeping important. In general, all investment earnings are taxable when withdrawn, while the tax treatment of the principal depends on whether contributions were made before or after taxes.

When can you withdraw funds?

Withdrawals are generally not permitted before age 18, except for rollovers. On Jan. 1 of the year the child turns 18, the account may be transitioned into a traditional IRA, though this is not required.

Early withdrawals are typically taxable and may be subject to a 10% penalty unless used for qualifying expenses, such as education, a first-time home purchase, birth or adoption, or eligible medical expenses.

Once the beneficiary turns 18, there are several options:

1. Keep the account as a Trump account under IRA rules. Trump accounts are not grouped with IRAs when determining how much of a withdrawal is taxable.

2. Roll over the balance into a traditional IRA or another eligible retirement account. A Trump account will not automatically become a traditional IRA; you may need to take action for that to happen.

3. Convert the account to a Roth IRA if it’s appropriate for the child.

How do you open a Trump account?

Opening a Trump account starts with an election process through the IRS, either by filing Form 4547 or using this online tool. Elections are scheduled for mid-2026, with accounts becoming available July 5. Once the election is complete, the Treasury will provide instructions on how to activate the account.

How can the money be invested?

Investment options are straightforward:

• Mutual funds or exchange-traded funds (ETFs): Investments must be in funds that track the S&P 500 or another equity index, with at least 90% invested in U.S. companies.
• No leverage: Borrowed money cannot be used to buy investments inside the account.
• Expense ratio: Eligible funds must have an expense ratio of .10% or less.

The bottom line

Trump accounts offer a simple, low‑cost way to invest for a child’s long‑term future. If you have a newborn or plan to grow your family in the next three years, coordinating this new account with your overall education and retirement strategy may help maximize its impact.

The CD Wealth Formula

We help our clients reach and maintain financial stability by following a specific plan, catered to each client.

Our focus remains on long-term investing with a strategic allocation while maintaining a tactical approach. Our decisions to make changes are calculated and well thought out, looking at where we see the economy heading. We are anticipating and moving to those areas of strength in the economy and in the stock market. 

We will continue to focus on the fact that what really matters right now is time in the market, not out of the market. That means staying the course and continuing to invest, even when the markets dip, to take advantage of potential market upturns. We continue to adhere to the proven disciplines of diversification, periodic rebalancing, and forward-looking strategies, while avoiding reliance on stale retrospective data.

It is important to focus on the long-term goal, not on one specific data point or indicator. Long-term fundamentals are what matter. In markets and moments like these, it is essential to stick to the financial plan. Investing is about following a disciplined process over time.

Sources: Fidelity, Vanguard, Trumpaccounts.gov