The New “Trump Accounts”: What Families Should Know for 2025–2028
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
CPA for YouTubers | CPA for Shopify Store | CPA for Online Commerce | CPA for Creators | Shopify Store CPA | CPA for Filmmakers | CPA for Amazon Business | Amazon Business CPA | CPA for Dental Practice | Dentist CPA | Dental Business CPA | Online Commerce CPA | CPA for TikTokers | CPA for Doctors | CPA for Medical Practice | CPA for High Net Worth Individuals
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.