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SuraLinkWritten by Sarah Shirley, BMSS Supervisor
Move over, piggy banks! The One Big Beautiful Bill Act (OBBBA) introduces a new way for kids to save, and it’s making quite the entrance. These new accounts combine traditional IRA concepts with child-focused rules, offering families a structured way to grow savings from an early age. Let’s break down the basics of Trump Accounts.
What is a Trump Account?
A Trump Account is a new, tax-advantaged savings vehicle for children that functions like a traditional IRA but comes with special rules, limits, and investment restrictions until the child turns 18.
Who is Eligible?
A Trump Account may be set up for a child who:
- Has not turned 18 by the end of the calendar year the election is made, and
- Has a valid Social Security number issued before the election is made
Only one Trump Account is allowed per child.
Who can make the election? And how is it made?
The following individuals can make an election to create an account on a child’s behalf, in order of priority:
- Legal guardian
- Parent
- Adult sibling
- Grandparent
To make the election, taxpayers can elect-in via Form 4547 when e-filing their tax return or through the official Trump Accounts website portal. The registration portal isn’t expected to launch until mid-2026, but taxpayers can add their emails to a Trump account email list to receive updates.
How do the accounts work?
Accounts can be created and funded starting July 4, 2026. Once created, Trump Accounts go through a designated “growth period” that lasts until January 1 of the year the beneficiary turns 18. During this time, the account is subject to special rules for its investments, contributions, and distributions. Once the growth period ends, the account then will transition to traditional IRA-style rules.
Contributions may come from any individual, but they are limited to $5,000 of non-exempt contributions annually. Certain contributions from qualifying charities or government programs do not count toward the $5,000 limit.
For children born January 1, 2025 through December 31, 2028, the Secretary of the Treasury will make a one-time $1,000 pilot program contribution to the child’s Trump Account. This will be treated as an exempt contribution not subject to the limit and will be made after the account has been opened and the election has been made.
Unlike traditional IRAs, contributions to Trump Accounts must be made by December 31 of the contribution year. Additionally, there is no tax deduction allowed on contributions made before the beneficiary turns 18.
In almost all cases, distributions are not allowed during the growth period. The only exceptions to this rule include a rollover to another Trump account, rollover to an ABLE account when the child turns 17, withdrawal of excess contributions, or distribution upon the child’s death. Distributions made after the growth period are taxed under the rules for a traditional IRA.
As new rules continue to emerge, it’s important to understand how Trump Accounts may fit into your family’s financial plan. If you have questions, a BMSS Advisor is happy to help. Call (833) CPA-BMSS or reach out to your BMSS professional for more information.