Since the passage of the Big Beautiful Bill (OBBBA), we have received a lot of questions about Trump Accounts. What are they, and how can someone open one? These questions have increased over the last few months with announcements by both the Dell family and, most recently, by Ray Dalio, that they would make major contributions to these accounts on behalf of eligible children. The Dells have pledged an astounding $6.25 billion ($250 for up to 25 million eligible children), and Dalio pledged $75 million for children in Connecticut, his home state. Several employers have also signed on to make matching contributions to their employees’ contributions, including our own firm, BlackRock, Schwab, BNY Mellon, Dell, and others.
So, what is a Trump Account and how does it work? Essentially, it is an Individual Retirement Account (IRA) for children under 18 who have a valid Social Security number, without them needing to have earned income to contribute. The government will make a one-time contribution of $1,000 to the account for children born between January 1, 2025, and December 31, 2028. Children’s parents, grandparents, etc., can make their own contributions to the accounts in 2026 up to a combined limit of $5,000 per year, which will index for inflation starting in 2028. Employer matches can be made up to $2,500 per year, but those matching contributions do count towards the $5,000 total limit, unlike government contributions. The good news is that matches are not treated as taxable income to the employee. Contributions to Trump Accounts also do not affect regular IRA contribution limits, meaning that in addition to the $5,000 you can contribute to the Trump Account, you can also contribute up to $7,500 to another IRA. Trump account contributions are not tax-deductible, as they might be for other traditional IRAs.
Logistics of the accounts include no withdrawals before age 18, other than rollovers. Once the child turns 18, the account converts to a traditional IRA. Distributions are allowed, but they follow the same IRA rules, which means unless they meet the strict criteria of exceptions (higher education, first home purchase, or disability). Then, withdrawals prior to age 59 ½ are subject to a 10% penalty along with ordinary income tax. After age 59 ½, distributions are taxable but no longer subject to penalties.
Accounts can be opened starting sometime in the middle of 2026 via an online portal at https://trumpaccounts.gov/. Contributions can begin on July 4, 2026. There will be a list of funds and ETFs that the accounts are permitted to hold, but will mostly be made up of low-cost index-type funds.
Starting early with investing is the ultimate benefit. The magic of compound interest is the reason it is so important to start as soon as possible, and Trump Accounts make starting early even more attractive.
Frequently Asked Questions About Trump Accounts?
1. What is a Trump Account?
A Trump Account is a new type of retirement savings account designed for children under age 18. It functions similarly to an IRA but does not require earned income to contribute, making it easier to start saving and investing early for a child’s future.
2. Who is eligible to open a Trump Account?
Children under 18 with a valid Social Security number are eligible. Additionally, children born between January 1, 2025, and December 31, 2028 qualify for a one-time $1,000 government contribution to help jumpstart the account.
3. How much can be contributed to a Trump Account?
- Up to $5,000 per year can be contributed by family members (starting in 2026)
- Employers may contribute up to $2,500 annually (counts toward the $5,000 limit)
- Government contributions do not count toward this limit
- These contributions are separate from traditional IRA contribution limits
4. What are the main benefits of a Trump Account?
The biggest advantage is starting early. With contributions beginning in childhood, the account has decades to grow through compound interest. This can significantly increase long-term savings and help set up a strong financial foundation for the future.