Big Changes for Families: Understanding the New Trump Accounts for Children

Starting in 2025, a new savings tool—officially called Trump Accounts—will be available for just about every American child born between 2025 and 2028. Here’s what every parent, caregiver, and household should know.

What Are Trump Accounts?

• The government automatically opens an account for each qualifying child and contributes $1,000 to it at birth.
• The account functions like an IRA (Individual Retirement Account), meaning money earned grows tax-deferred until used.
• You cannot open it as a Roth IRA—special rules apply, especially for children under 18.

Who’s Eligible?

• Children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a Social Security number qualify automatically.
• Parents don’t need Social Security numbers, unlike their child.

What Can Be Contributed, and When?

• Starting July 4, 2026, anyone—including parents, relatives, friends, nonprofits, or employers—can contribute to the account.
• Contributions must be after-tax (not tax-deductible) and are capped at $5,000 per year per child, adjusted for inflation starting 2028.
• Certain contributions, like the initial government $1,000 or rollovers, don’t count toward that $5,000 limit.

Employer Contributions: A Bonus

• Employers can contribute up to $2,500 per year per eligible dependent under a formal Trump Account plan.
• These contributions are excluded from the employee’s taxable income—similar to educational assistance programs.
• This $2,500 cap is also inflation-adjusted starting 2028.

What Happens to the Money?

• Funds in the Trump Account grow tax-deferred—much like a traditional IRA.
• Withdrawals are allowed after age 18. Using the money before age 18 comes with penalties unless for certain expenses (the precise rules are still under development).
• Trump Account funds are treated separately from other IRAs for withdrawal rules. You can roll over Trump Account funds tax-free into an ABLE account (for disability savings) during the year the child turns 17.

Quick Example:

• A child born in 2026 gets $1,000 from the government at birth.
• By 2030, family and friends have added $3,000 (under the $5,000 cap).
• All that money grows tax-deferred until the child turns 18.
• In their adult years, the funds can be withdrawn for retirement, education, or other needs.

Why It Matters

Trump Accounts are designed to kick-start long-term savings for young Americans—potentially closing the wealth gap early. While they don’t replace options like 529 plans, they offer a new, flexible way to save.

Final Thoughts

• Eligible newborns automatically receive $1,000, and families can build on that with after-tax contributions up to $5,000/year after 2026.
• These accounts grow tax-deferred and are accessible starting at age 18.
• They may be a smart option alongside other savings plans like 529s or custodial accounts.

Need Help Making This Work for Your Family?

At Velin & Associates, Inc., we help creators, freelancers, medical professionals, and local businesses plan smarter—whether it’s retirement, homeownership, or securing your child’s financial future. Let us show you how Trump Accounts can fit into your family’s long-term plan.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org