Entity Setup
Setting Up a Trump Account: What Parents and Guardians Should Know
Understand the new Trump Account from the Working Families Tax Cuts—how to set one up, safe harbors, and benefits including a $1,000 pilot contribution for eligible children.
By NomadicTax Research Team • 5-8 min read • July 20, 2026
## What Is a Trump Account?
Trump Accounts are a type of **individual retirement account (IRA)** introduced under the Working Families Tax Cuts law. They’re meant to benefit eligible children whose parents or guardians make an election before their 18th birthday. Initial calculations start once election forms are filed. ([irs.gov](https://www.irs.gov/newsroom/working-families-tax-cuts-individuals-and-workers?utm_source=openai))
## Key Features of Trump Accounts
- **Opening the Account**: Parent or guardian makes the election using **Form 4547, Trump Account Election(s)** in their IRS Individual Online Account before the child’s 18th birthday. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-safe-harbor-for-certain-contributions-to-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- **Pilot Contribution**: A one-time **$1,000 pilot program contribution** provided by the federal government for U.S. citizens born between Jan 1, 2025 and Dec 31, 2028. Parents may also contribute (qualified contributions) up to an aggregate limit, as well as employer contributions. Annual contributions will be indexed starting after 2027. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations?utm_source=openai))
- **Investment Options**: Funds must be invested in certain mutual or exchange-traded funds that track the S&P 500 or similar U.S. equity indices. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations?utm_source=openai))
- **Withdrawals & Access**: Generally, funds cannot be withdrawn until January 1 of the year the child turns 18. At that point, the account becomes like a traditional IRA with standard rules about distributions. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations?utm_source=openai))
## Safe Harbor for Gift Tax Reporting
In late June 2026, the IRS issued **Revenue Procedure 2026-25**, which provides a **safe harbor** so that certain contributions to Trump Accounts **will not need gift tax reporting**—*if specific requirements are met*. This addresses concerns among donors that such contributions could trigger gift tax obligations. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-safe-harbor-for-certain-contributions-to-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## Step-by-Step Setup Example
**Scenario**: Parent Maria has a child born in March 2025. She wants to open a Trump Account and contribute.
1. Verify child is U.S. citizen born between Jan 1, 2025 and Dec 31, 2028.
2. Using her IRS Individual Online Account, complete and submit **Form 4547, Trump Account Election(s)** before the end of the calendar year in which the child turns 18.
3. If eligible, check the box for the $1,000 pilot contribution.
4. Make any qualified contributions up to $5,000 annually (cumulative across donors). Ensure not over that aggregate limit.
5. Use the safe harbor under Rev Proc 2026-25 to avoid gift tax reporting—follow those specific rules and keep documentation.
## Common Questions & Pitfalls
- **Can siblings have separate Trump Accounts?** Yes, each eligible child can have a separate account.
- **What happens if contributions exceed limits or rules not met?** Exceeding contribution limits or failing to meet investment or timing conditions may lead to penalties or loss of safe harbor protections.
- **Coordination with other IRAs or withdrawals?** Once child turns 18, it behaves like traditional IRA rules for distribution and taxation of future activities.
## Bottom Line
Trump Accounts are an innovative way for families to build retirement savings early for their children—with upfront government support and protections. If you're a parent or guardian of an eligible child, consider setting one up sooner rather than later—and take advantage of the safe harbor and pilot contributions available in the near term.