Trump Accounts for Children: Everything Families Need to Know
Dustin A. Husarik, CFP®
Executive Vice President – Financial Advisor
Magnan Family Wealth Management
What Are Trump Accounts?
TA’s are a new type of tax-deferred investment account created under President Donald Trump’s “One Big Beautiful Bill Act” (OBBBA). According to the IRS, the accounts are available for any U.S. child under age 18 with a valid Social Security number, as long as the parent or guardian elects to open the account during tax filing.
The program’s most notable feature is its $1,000 pilot contribution for eligible children born between January 1, 2025 and December 31, 2028. This federal seed deposit is automatic once the account is created and verified. It’s important to note that those born outside this window are still eligible to create an account, however they do not receive the initial $1,000 contribution.
How Do Parents Open an Account?
Unlike some government programs, TA’s do not open automatically. Parents must actively enroll by selecting the program on a new IRS form, Form 4547, when filing their taxes. The window to open these accounts starts this tax filing season (2025), with the accounts officially launching July 5th, 2026. If you believe your child is eligible make your CPA aware, or be on the lookout if you file your taxes yourself.
**There has not yet been a list of official institutions named as participants as of the writing of this article. Once that information becomes available, I will update**
How Do Contributions Work?
Families can contribute up to $5,000 per year to a TA. Contributions are made with after tax dollars and earnings are tax-deferred, meaning investment growth is not taxed while the money remains in the account.
Investment options are limited to approved, low-fee funds, typically tied to major U.S. stock indexes such as the S&P 500.
Philanthropic contributions have also become a major part of the program. Most notable are Michael and Susan Dell (Founder of Dell Computers). They recently made a substantial donation to expand access, providing an additional $250 to many families in qualifying ZIP codes. It’s worth double checking if you qualify for this additional contribution.
How Do Withdrawals Work?
TAs are built for long‑term savings, and the withdrawal rules reflect that purpose. In general, funds cannot be accessed before age 18 without triggering penalties, much like early withdrawals from traditional retirement accounts. Once the child turns 18, they gain full control of the account, but that doesn’t mean the money becomes freely accessible. Withdrawals are allowed, yet only certain uses qualify for penalty‑free treatment — and even then, taxes still apply to the earnings portion.
“Qualified withdrawals” include expenses such as education costs, a first‑time home purchase, certain medical expenses, and disability‑related needs. These categories mirror the exceptions available in retirement accounts, where the IRS waives the early‑withdrawal penalty but still requires income tax on any investment gains. For all other purposes, withdrawals before age 59½ remain both taxable and subject to penalties.
At age 59½, the account becomes fully accessible for any type of spending without penalties, though withdrawals are still taxed as ordinary income. This structure reinforces the account’s primary goal: encouraging long‑term compounding rather than short‑term spending.
It’s also important to recognize that while TAs offer flexibility, they are not the most tax‑efficient tool for education planning. 529 plans remain the strongest option for covering school expenses because most states provide tax credits or deductions for contributions, and investment earnings can be withdrawn completely tax‑free when used for qualified educational costs. For families focused specifically on education savings, a 529 plan continues to offer the most favorable tax treatment.
Additional Insights
TA’s can be a nice option to have for long‑term savings, but in practice, we believe 529 plans and UTMA (Custodial) accounts tend to serve families’ needs more effectively. For education‑related goals, 529s are hard to beat—they offer tax‑free growth and withdrawals for qualified expenses, making them the most efficient tool for funding schooling. And for broader financial goals, a UTMA account can accomplish much of what a TA aims to do, but without the strict withdrawal restrictions that lock funds up until age 59½.
Together, 529s and UTMAs generally provide more flexibility and practicality for most families’ planning needs.
Brian and I remain committed to keeping you up to date on everything new that is happening in our world. While the IRS has provided guidance on the basic logistics of TA’s, the rules may look much different in the future. Please consult with Brian or myself if you’re considering establishing one of these accounts for your children.
Make 2026 a great year!
S&P 500 Index is a capitalization-weighted index calculated on a total return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies.
Wells Fargo Advisors Financial Network is not a legal or tax advisor.
Executive Vice President – Financial Advisor
Magnan Family Wealth Management
The federal government is preparing to launch its new savings program. Trump Accounts (TA), a new tax-advantaged investment vehicle, is designed to give children a financial headstart. Set to open in 2026, these accounts combine public funding, private philanthropy, and long-term investment incentives to help families build wealth for their children’s futures. Here’s a comprehensive breakdown of how the program works, who qualifies, and what parents need to do to participate.
What Are Trump Accounts?
TA’s are a new type of tax-deferred investment account created under President Donald Trump’s “One Big Beautiful Bill Act” (OBBBA). According to the IRS, the accounts are available for any U.S. child under age 18 with a valid Social Security number, as long as the parent or guardian elects to open the account during tax filing.
The program’s most notable feature is its $1,000 pilot contribution for eligible children born between January 1, 2025 and December 31, 2028. This federal seed deposit is automatic once the account is created and verified. It’s important to note that those born outside this window are still eligible to create an account, however they do not receive the initial $1,000 contribution.
How Do Parents Open an Account?
Unlike some government programs, TA’s do not open automatically. Parents must actively enroll by selecting the program on a new IRS form, Form 4547, when filing their taxes. The window to open these accounts starts this tax filing season (2025), with the accounts officially launching July 5th, 2026. If you believe your child is eligible make your CPA aware, or be on the lookout if you file your taxes yourself.
Once the form is submitted:
1. A participating financial institution receives the child’s information
2. The institution opens the account
3. The Treasury deposits the $1,000 seed contribution for eligible children.
**There has not yet been a list of official institutions named as participants as of the writing of this article. Once that information becomes available, I will update**
How Do Contributions Work?
Families can contribute up to $5,000 per year to a TA. Contributions are made with after tax dollars and earnings are tax-deferred, meaning investment growth is not taxed while the money remains in the account.
Investment options are limited to approved, low-fee funds, typically tied to major U.S. stock indexes such as the S&P 500.
Philanthropic contributions have also become a major part of the program. Most notable are Michael and Susan Dell (Founder of Dell Computers). They recently made a substantial donation to expand access, providing an additional $250 to many families in qualifying ZIP codes. It’s worth double checking if you qualify for this additional contribution.
How Do Withdrawals Work?
TAs are built for long‑term savings, and the withdrawal rules reflect that purpose. In general, funds cannot be accessed before age 18 without triggering penalties, much like early withdrawals from traditional retirement accounts. Once the child turns 18, they gain full control of the account, but that doesn’t mean the money becomes freely accessible. Withdrawals are allowed, yet only certain uses qualify for penalty‑free treatment — and even then, taxes still apply to the earnings portion.
“Qualified withdrawals” include expenses such as education costs, a first‑time home purchase, certain medical expenses, and disability‑related needs. These categories mirror the exceptions available in retirement accounts, where the IRS waives the early‑withdrawal penalty but still requires income tax on any investment gains. For all other purposes, withdrawals before age 59½ remain both taxable and subject to penalties.
At age 59½, the account becomes fully accessible for any type of spending without penalties, though withdrawals are still taxed as ordinary income. This structure reinforces the account’s primary goal: encouraging long‑term compounding rather than short‑term spending.
It’s also important to recognize that while TAs offer flexibility, they are not the most tax‑efficient tool for education planning. 529 plans remain the strongest option for covering school expenses because most states provide tax credits or deductions for contributions, and investment earnings can be withdrawn completely tax‑free when used for qualified educational costs. For families focused specifically on education savings, a 529 plan continues to offer the most favorable tax treatment.
Additional Insights
TA’s can be a nice option to have for long‑term savings, but in practice, we believe 529 plans and UTMA (Custodial) accounts tend to serve families’ needs more effectively. For education‑related goals, 529s are hard to beat—they offer tax‑free growth and withdrawals for qualified expenses, making them the most efficient tool for funding schooling. And for broader financial goals, a UTMA account can accomplish much of what a TA aims to do, but without the strict withdrawal restrictions that lock funds up until age 59½.
Together, 529s and UTMAs generally provide more flexibility and practicality for most families’ planning needs.
Brian and I remain committed to keeping you up to date on everything new that is happening in our world. While the IRS has provided guidance on the basic logistics of TA’s, the rules may look much different in the future. Please consult with Brian or myself if you’re considering establishing one of these accounts for your children.
Make 2026 a great year!
-Dustin A. Husarik
Sources:
https://trumpaccounts.gov/
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of [Wells Fargo Advisors / Wells Fargo Advisors Financial Network] or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of [Wells Fargo Advisors / Wells Fargo Advisors Financial Network] or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
S&P 500 Index is a capitalization-weighted index calculated on a total return basis with dividends reinvested. The index includes 500 widely held U.S. market industrial, utility, transportation and financial companies.
Wells Fargo Advisors Financial Network is not a legal or tax advisor.