Entity Setup

What Every Parent Needs to Know About Trump Accounts: Saving & Tax Rules for New Child IRAs

New rules for Trump Accounts under the One, Big, Beautiful Bill: how eligible investments work, contribution limits, and when kids take over.

By NomadicTax Research Team • 5-8 min read • August 29, 2026

## What are Trump Accounts? “**Trump Accounts**” are a new tax‐advantaged savings vehicle introduced by the **One, Big, Beautiful Bill** (OBBB). They function as a type of traditional IRA for **children** under age 18 with special rules during a “growth period.” ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai)) Key features: - Eligible individuals are children who have **not attained age 18** by the end of the year, with a Social Security number. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai)) - Funds **cannot be withdrawn** during the growth period—except in limited cases (rollovers, ABLE rollovers, excess contributions, or death). ([irs.gov](https://www.irs.gov/pub/irs-drop/n-25-68.pdf?utm_source=openai)) - A one‐time **$1,000 pilot contribution** from the government is available for children born in **2025-2028**. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-can-now-view-and-submit-trump-account-elections-in-their-irs-individual-account?utm_source=openai)) ## Investment restrictions during growth period - Only **eligible investments** are allowed. These are typically mutual funds or ETFs that track a **qualified U.S. equity index** without leverage, and with fees under 0.1%. ([irs.gov](https://www.irs.gov/pub/irs-drop/n-25-68.pdf?utm_source=openai)) - Money market funds and holding cash are mostly **off limits**, except temporarily as part of transitions (e.g. after a fund sale). ([irs.gov](https://www.irs.gov/pub/irs-drop/n-25-68.pdf?utm_source=openai)) ## Contribution and limit rules - **All contributions** from employers under section 128 and other sources count toward a **$5,000 annual aggregate limit** (subject to cost-of-living adjustments after 2027). ([irs.gov](https://www.irs.gov/pub/irs-drop/n-25-68.pdf?utm_source=openai)) - Pilot government contribution does **not** count towards that $5,000 limit. ([irs.gov](https://www.irs.gov/pub/irs-drop/n-25-68.pdf?utm_source=openai)) ## How parents and guardians interact with Trump Accounts - Authorized individuals such as legal guardians, parents, adult siblings, or grandparents may **make the election** to open an initial Trump Account using **Form 4547**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-how-to-open-initial-trump-accounts-under-the-one-big-beautiful-bill?utm_source=openai)) - The one making the election becomes the **responsible party** until the child reaches legal capacity. They handle investment election, rollovers, and successor party designations. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-how-to-open-initial-trump-accounts-under-the-one-big-beautiful-bill?utm_source=openai)) ## Example A parent elects a Trump Account for their child born in **2025**. They choose eligible investments (a low-fee S&P-500 ETF), applying for the pilot program contribution of **$1,000**, while ensuring their own funds contributed do not exceed $5,000 in total aggregate for 2026. They also appoint themselves as responsible party. The child at age 18 then can begin managing as a traditional IRA under standard IRA rules. ## Key takeaways - Trump Accounts offer new ways to build savings and wealth for children, with tax benefits and constraints. - They come with strict rules—investment eligibility, contribution caps, no withdrawals during growth. - Parent or guardian involvement is central—making elections, choosing investments, keeping track of pilot contributions. — **Bottom line:** If you have a child eligible for a Trump Account, electing early and choosing your contributions and investments wisely could yield long-term benefits.