The IRS has released its first major guidance on how to set up and manage the new “Trump Accounts”, a tax-advantaged savings vehicle created under the OBBA legislation. These accounts are designed to give children a financial head start as they move into adulthood — but the rules are unique and much stricter than standard IRAs.
At Velin & Associates, Inc., we work with a wide range of families — from YouTubers and Shopify sellers to doctors, dentists, Amazon business owners, and high net worth individuals — many of whom want to build long-term financial legacies for their children. This new account type introduces both opportunities and responsibilities that parents and guardians must understand.
Below is a clear, practical overview, plus hypothetical examples based on the types of clients we serve.
What Exactly Is a Trump Account?
A Trump Account is a special type of traditional IRA designed exclusively for children born from 2025 through 2028.
Key features include:
✔ A One-Time $1,000 Federal Pilot Contribution
Eligible children may receive a single $1,000 government contribution, but only if the parent or guardian makes the formal election.
✔ Strict Rules During the “Growth Period”
This is the period from when the account is opened until December 31 of the year before the child turns 18.
During this time:
- Only specific, “eligible” investments are permitted
- Contribution limits are different from regular IRAs
- Distributions are generally prohibited
- Contributions by individuals are not tax-deductible
When the child reaches 18, standard IRA rules take over.
✔ Who Can Open the Account?
In order of eligibility:
- Legal guardians
- Parents
- Adult siblings
- Grandparents
The custodian remains in control until the end of the growth period or until the child turns 18.
How to Open a Trump Account
You can open an account using:
- IRS Form 4547 (Trump Account Elections)
- The online portal at TrumpAccounts.org
The same form/portal is used to request the $1,000 pilot contribution.
Important:
Only the taxpayer who claims (or expects to claim) the child as a dependent may submit the pilot contribution election.
Contribution Limits
For 2025 and 2026:
- $5,000 annual contribution limit
- Limit is separate from traditional IRA limits
- Adjusts annually for inflation starting in 2027
- Contributions must be made by December 31 (not April 15 like IRAs)
Distribution Restrictions During the Growth Period
Withdrawals are not allowed, unless:
- Excess contributions must be removed
- The child beneficiary dies
- You perform a qualified rollover
- You make a qualified ABLE rollover during the year the beneficiary turns 17
Practical scenarios representing the types of clients we typically support.
Example 1: YouTuber / Content Creator Parents Wanting to Build Early Investment Funds
A couple running a successful YouTube channel wants to open a Trump Account for their child born in 2026. They assume they can add $5,000 whenever they have the cash.
But Trump Account contributions must be made by December 31, not during tax season.
How we could help:
We could explain the timing rules and help them plan their contributions in line with their variable online income, ensuring they don’t miss the annual deadline.
Example 2: Shopify Store Owner Trying to Claim the $1,000 Pilot Contribution
A Shopify Store Owner expects their newborn (2027) to qualify for the pilot contribution but didn’t realize they must actively elect the payment using Form 4547.
How we could help:
We could guide them through making the election properly and ensure they meet dependency and timing requirements.
Example 3: Dentist or Doctor Planning Long-Term Tax Benefits
A dentist with a newborn in 2025 wants to use Trump Accounts as part of a larger wealth-building plan but assumes the growth period allows flexible investing.
Trump Accounts restrict investments only to eligible assets during the growth phase.
How we could help:
We could review the approved investment list and coordinate it with their broader financial and retirement goals.
Example 4: Amazon Business Owner Making Contributions Incorrectly
An Amazon seller believes they can claim Trump Account contributions as deductions on their return.
But contributions are not tax-deductible during the growth period.
How we could help:
We could clarify contribution rules and help them structure deductible retirement contributions through SEP IRAs, solo 401(k)s, or traditional IRAs instead.
Example 5: High Net Worth Individuals Using Trump Accounts for Estate Strategy
A high net worth family with several children wants to maximize contributions for each child — and mistakenly assumes that Trump Account limits reduce IRA contribution room.
They don’t.
Trump Accounts have their own separate limits.
How we could help:
We could incorporate Trump Accounts into an overall tax-efficient investment and estate plan, ensuring all allowable accounts are fully used.
Key Takeaways for Parents & Guardians
✔ Children born 2025–2028 may qualify for a $1,000 federal pilot contribution
✔ Accounts must be opened via Form 4547 or TrumpAccounts.org
✔ Only specific family members can act as custodians
✔ Strict rules apply until age 18
✔ Contributions are not deductible and must be made by December 31
✔ Contribution limits do NOT affect IRA limits
✔ No distributions allowed, except in limited cases
Trump Accounts can be a powerful tool — but only if you fully understand the rules.
At Velin & Associates, Inc., we help families navigate these new regulations and make smart long-term financial decisions. For more information about our tax planning services, contact us today: visit our website.
Velin & Associates, Inc
8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org
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