A Parent’s Guide to Trump Accounts for Minors

Key takeaways

All U.S. children under 18 can have a Trump Account, with almost anyone able to contribute annually.

Babies born between January 1, 2025, and December 31, 2028, with a valid Social Security number, will get a $1,000 federal grant, which grows tax-deferred over time.

The account complements 529 plans and custodial accounts, offering a flexible path to long-term savings.

The Trump Account is a tax-advantaged savings and investment account built to help families give their kids a financial head start. Instead of waiting until college or adulthood to think about long-term savings, you can start growing their investments early and give that money more time to work for them. And because these accounts will be available to every U.S. child under 18 when they launch in 2026, it’s something to bear in mind whether you’re welcoming a new baby or planning for your teenager’s future.

The new way to build generational wealth, starting at birth

For years, families have relied on tax-advantaged accounts like IRAs and 401(k)s to build long-term wealth. Now there’s a new option: the Trump Account. It gives parents a way to start saving for their kids from day one.

Created under the One Big Beautiful Bill Act (OBBBA), this account gives eligible U.S. children (until the year they turn 18) the chance to start their savings. Understanding how it works — and how it fits with things like 529 plans and custodial accounts — can help you make smarter choices for your child’s financial future.

Who qualifies for a Trump Account?

All children under the age of 18 who are U.S. citizens or residents qualify for the account.

The federal grant of $1,000 is automatically deposited for children born January 1, 2025, to December 31, 2028.

The limit is $5,000 per year per child, with parents and other family members able to contribute up to the full amount, and employers up to $2,500 per year, generally tax-free to the employee.

Governments and charities can also contribute, and these contributions won’t be part of the annual $5,000 limit.

How a Trump Account works

The money in a Trump Account is invested in low-cost index funds or ETFs (Exchange-Traded Fund), so it has the chance to grow over time without being taxed each year. Contributions and any earnings compound, meaning your child’s balance can grow faster the longer it stays invested. The key is time in the market. The earlier you start, the more compounding works for your child.

Because the account is long-term, starting early lets the growth work for your child. Withdrawals later are taxed as ordinary income, and there may be limits on taking money out before adulthood.

Contribution rules for Trump Accounts for minors

Total annual contributions are $5,000 per child. Out of that, the parents’ employers can contribute up to $2,500, and family contributions can make up the rest, though you have the flexibility to add as much or as little as you want. 

“If you have a child born between January 1, 2025, to December 31, 2028, and that child is a United States Citizen with a valid Social Security number, they are eligible to receive an exempt contribution of $1,000 from the Secretary of the Treasury. This amount would not be counted towards the $5,000 annual contribution limit.”

— Jotika Teli, CPA, TurboTax Lead

Investment rules for Trump Accounts for children under 18

Investments are limited to low-cost mutual funds or ETFs that track broad U.S. market indexes. That helps keep fees low and creates a steadier path for long-term growth. If you’d prefer more choice in how money is invested, a custodial account offers more flexibility, though fees are usually higher. 

Taxes on Trump Accounts for minors

Investment earnings are tax-deferred, and withdrawals aren’t allowed until the child turns 18. Then, only family contributions made with after-tax dollars are free. The initial $1,000 deposit, employer contributions, and investment earnings are taxed as ordinary income.

Unlike a 529 plan, withdrawals are not tax-free for education.

How does it compare to other child savings options?

It’s worth comparing the Trump Account with the two most common existing accounts for child savings: the 529 Plan and the Custodial Account (UGMA/UTMA)¹. Each offers distinct tax benefits, withdrawal rules, and flexibility:

529 Plans

Designed for education expenses.

Withdrawals are tax-free for qualified education expenses.

Some states offer tax benefits in the form of credits or deductions.

529 Plans are the most tax-efficient way for parents to save for their children’s education.

Custodial Accounts (UGMA/UTMA)

Flexible: funds can be used for anything that benefits the child.

Earnings may trigger the Kiddie Tax² annually.

Control passes to the child at the age of majority.

Custodial accounts are flexible in terms of spending, but they don’t benefit from tax-deferred growth.

Trump Account

Universal eligibility for children under 18.

$1,000 federal grant for 2025 to 2028 newborns.

Tax-deferred growth with low-cost index funds.

The Trump Account comes with a clear perk: a $1,000 federal deposit and the chance for money to grow tax-deferred over time. But keep in mind, any earnings are taxed as ordinary income, and there are rules about when the money can be used. That makes it a long-term savings option — not just for college — sitting somewhere between a flexible custodial account and a retirement-style IRA.

How the Trump Account benefits families

The Trump Account gives every U.S. child under 18 a chance to start building wealth. Even a modest deposit or contribution can grow significantly by adulthood, but it’s important to understand how it fits into other savings tools.

It’s not a replacement for existing plans and accounts, but it offers a new option that can help support your children’s long-term financial stability.

Understanding how the Trump Account works can help you make informed decisions about whether to contribute more or simply allow the initial deposit to grow. With clear information and thoughtful planning with the help of TurboTax and TurboTax Experts, you can plan how to use this new tool along with your broader savings strategy.

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