Tax Planning
Understanding Trump Accounts: Planning Opportunities & Safe Harbor Rules
Trump Accounts, a new IRA variant under the One, Big, Beautiful Bill, introduces novel features and safe harbor rules—this article explains how these work and how to use them in your financial planning.
By NomadicTax Research Team • 5-8 min read • July 16, 2026
## What Are Trump Accounts?
Under the One, Big, Beautiful Bill Act (OBBBA), Trump accounts are a new type of **traditional IRA** for children under age 18 with valid Social Security Numbers. Key characteristics include: a **growth period** lasting until the year the child turns 18, during which normal IRA rules are modified.([irs.gov](https://www.irs.gov/irb/2026-29_irb?utm_source=openai))
## Key Rules & Features
- **Annual contribution limit** (excluding certain types like qualified general contributions, employer section 128 contributions, and pilot contributions) is **$5,000** during the growth period (2026–2027), adjusted for inflation after.([irs.gov](https://www.irs.gov/irb/2026-29_irb?utm_source=openai))
- **Eligible investments** during growth period must track a broad U.S. index, avoid leverage, and have fees ≤ 0.1% per annum.([irs.gov](https://www.irs.gov/irb/2025-52_IRB?utm_source=openai))
- **Distributions** during the growth period are heavily restricted; general distributions are not allowed unless due to death or excess contributions, rollovers are allowed under defined circumstances.([irs.gov](https://www.irs.gov/irb/2026-29_irb?utm_source=openai))
## Safe Harbor for Gift Tax Reporting
On June 29, 2026, the IRS issued **Revenue Procedure 2026-25**, providing safe harbor for donors who contribute to Trump accounts. If certain requirements are met, **such contributions will be treated as completed gifts**, eligible for the annual exclusion, and **won’t require filing Form 709** for gift tax reporting.([irs.gov](https://www.irs.gov/irb/2026-29_irb?utm_source=openai))
### Requirements to Qualify
- Donor must be an **individual**. |
- Gifts must be **only contributions** to Trump accounts, and made before the beneficiary turns 18. |
- Total gifts to each Trump account beneficiary (including the account contribution) must **not exceed the annual exclusion ($19,000 in 2026)**. |
- Donor must have no other gifting obligations requiring Form 709 for that year. |
## Tax Planning Implications
- **Early savings**: Parents can begin funding retirement accounts for eligible children, taking advantage of decades of compound growth under IRA-style tax deferral. |
- **Avoiding gift tax paperwork**: With the safe harbor, contributions can be cleanly managed without triggering gift tax return filing—if within limits. |
- **Employers can contribute**: Under section 128 employer contributions, which are excludable from employees’ income—subject to a $2,500 limit—if a Trump account contribution program is established.([irs.gov](https://www.irs.gov/irb/2025-52_IRB?utm_source=openai))
## Practical Examples
- *Example 1*: Parent contributes $4,000 to each of their three eligible children’s Trump accounts in 2026. Total per child is under the $19,000 exclusion. Donor makes no other gifts. These contributions are safe under the new procedure—no Form 709 needed. |
- *Example 2*: An employer launches a section 128 program to contribute up to $2,500 per year to employees’ children’s Trump accounts. Those employer contributions are excludable from wages. |
## Action Steps for You
- If your child is born between 2025–2028 and has an SSN, consider opening a Trump account to lock in eligibility.([irs.gov](https://www.irs.gov/individuals/get-ready-to-file-your-taxes?utm_source=openai))
- Monitor and manage total gifts per beneficiary to stay below the annual exclusion. |
- Keep investment choices within the strict eligible investment criteria. |
- For employers considering offering programs tied to Trump accounts, understand the rules of section 128 and how to set up a Trump account contribution plan.
**Bottom line:** Trump accounts open a fresh arena in the retirement savings landscape. With good compliance and strategic use—especially under the new safe harbor rules—they offer a plausible way to benefit from early, tax-advantaged savings without unintended gift tax exposure.