Entity Setup
Setting Up & Managing Trump Accounts for Children: Retirement Planning Under the OBBB
The One Big Beautiful Bill introduced ‘Trump Accounts’ for children born 2025-2028—this article explores what they are, how to open them, rules for contributions, and tax planning opportunities.
By NomadicTax Research Team • 5-8 min read • June 30, 2026
## What Is a Trump Account?
Trump Accounts are new individual retirement accounts created for children under the OBBB Act (signed July 4, 2025).([irs.gov](https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions-individuals-and-workers?utm_source=openai)) Parents or guardians can open them, electing via **Form 4547**, before the calendar year in which the child turns 18. Children born between **Jan 1, 2025** and **Dec 31, 2028** are eligible for a **$1,000 pilot program contribution**.([taxpayeradvocate.irs.gov](https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2026/06/JRC27_FullReport.pdf?utm_source=openai))
## How to Open & Use a Trump Account
- Fill out **Form 4547 – Trump Account Election(s)** via the IRS Individual Online Account.([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))
- If elected before the calendar year the child turns 18, the account is set up with the child’s Social Security number.([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))
- Eligible individuals may make contributions; the pilot $1,000 contribution is made when properly elected. Contributions follow typical retirement account rules (e.g. beneficiary, tax treatment).
## Tax Implications & Planning Opportunities
- The pilot contribution is **not subject to gift tax reporting** under a safe harbor (Revenue Procedure 2026-25).([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))
- Parents can contribute additional amounts (depending on account structure), but need to ensure contributions comply with gift tax rules. Using the safe harbor reduces paperwork/time costs.\
- Important for siblings, guardians: safe harbor applies only if requirements in the revenue procedure are met. Be sure to review conditions.([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))
## Examples & Considerations
**Example 1**: Alex’s parents elect to open a Trump Account for him in 2026 (born 2025). They make the election using Form 4547 before his birth year ends. The $1,000 pilot contribution is irrevocably applied without causing a gift tax filing obligation. Later, they add $2,000 extra under general contribution limits—but those may trigger gift tax if exceeding annual exclusions.
**Example 2**: Morgan wants to open one for a niece born in 2024—since she falls outside the Jan 1, 2025–Dec 31, 2028 window, Morgan cannot use the pilot contribution but may still open Trump Account for future eligibility or retirement savings via similar vehicles.
## Pros, Cons & Best Practices
**Pros**:
- Early retirement savings, tax-favored.
- Pilot contribution serves as seed money without gift tax reporting if safe harbor rules are followed.
**Cons**:
- Family may inadvertently exceed gift tax exclusion when combining pilot + additional gifts.
- Investment selection, fees, account custodial terms vary among providers.
**Best Practices**:
- Read safe harbor provisions fully before contributing beyond $1,000 pilot.
- Use financial institutions with clearly defined terms and low fees.
- Maintain records of all election forms and contributions.
- Consult tax or legal advice if combining with other gift giving or estate planning.
Trump Accounts offer a new tool for parents to start financial planning early in children’s lives. With the right setup and compliance, they can deliver lasting benefits.