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Trump Accounts: A Guide for Parents and Employers

ARTICLE | February 18, 2026

Introduction

Trump Accounts, created under the One Big Beautiful Bill Act in July 2025, offer American families a new tax-advantaged savings option for children under 18. The federal government provides a one-time $1,000 contribution for eligible children born between 2025 and 2028, and accounts can receive additional contributions from parents, grandparents, employers, and charitable organizations.

These accounts operate under unique rules during a "growth period" lasting until the child turns 18, with specific investment restrictions and gift tax implications. This guide covers what parents and employers need to know as the July 4, 2026, contribution start date approaches.

What Are Trump Accounts?

Trump Accounts are specialized Individual Retirement Accounts for children under 18 with valid Social Security numbers. Unlike standard IRAs, they don't require the child to have earned income. The account operates under special rules during the "growth period" (from opening through December 31 of the year the child turns 17), then transitions to function like a traditional IRA.

Eligibility Requirements:

• Child must be under 18 at year-end when the account opens (for 2026, born after December 31, 2008)
• Valid Social Security number issued before filing, valid for employment
• Only one Trump Account per child

Key Timeline:

• January 2026: File IRS Form 4547 with 2025 tax returns
• April 15, 2026: Tax filing deadline
• May 2026: Treasury sends activation instructions
• Mid-2026: Online portal at trumpaccounts.gov launches
• July 4, 2026: First contributions accepted; pilot contributions deposited

Opening a Trump Account

Who Can File: An "authorized individual" can open accounts following this hierarchy: legal guardian (if appointed), either parent, adult sibling, or grandparent. To claim the $1,000 pilot contribution, you must claim the child as your dependent on your tax return.

Using IRS Form 4547: The form has four parts requiring your information, the child's details, pilot contribution election, and your signature. You can e-file it with your 2025 tax return (recommended) or mail it separately. Critical: Check the box on Line 7 to claim the $1,000 pilot contribution for eligible children, or you'll forfeit it.

Online Portal Alternative: The trumpaccounts.gov portal launching mid-2026 offers an alternative for families who miss tax filing deadlines or have children born later.

The $1,000 Federal Pilot Contribution

Eligibility Criteria:

• Born between January 1, 2025, and December 31, 2028
• U.S. citizen (permanent residents don't qualify)
• Valid Social Security number
• Claimed as your qualifying dependent
• No prior pilot contribution received

The pilot contribution is entirely tax-free when deposited and when distributed. Children born outside the 2025-2028 window can still open Trump Accounts but won't receive the federal seed money.

Family Contribution Rules

Annual Limits: All individual sources combined can contribute $5,000 per child annually (indexed for inflation starting 2028). This limit is separate from other IRA limits and applies through December 31 of the year the child turns 17.

Exempt Contributions (Don't Count Toward $5,000):

• The $1,000 federal pilot contribution
• Qualified rollover contributions
• Qualified general contributions from charities or government entities

Example: A child could receive $1,000 (federal) + $250 (philanthropic donor) + $5,000 (family) + $2,500 (employer) = $8,750 in one year.

Tax Treatment: Individual contributions are made with after-tax dollars (not deductible) but create "basis" that can be withdrawn tax-free later. Growth and non-basis contributions are taxed as ordinary income upon distribution.

Gift Tax Implications: Unlike 529 plans, Trump Account contributions don't qualify for the annual gift tax exclusion. Every contribution requires filing IRS Form 709, regardless of amount, and counts against your lifetime gift and estate tax exemption. This is a significant administrative burden, though most families won't owe actual gift tax due to the high lifetime exemption ($13.6 million in 2025).

Employer Contribution Programs

Overview: Employers can contribute up to $2,500 per employee annually (not per child, indexed for inflation after 2027). These contributions are excluded from the employee's gross income and should be deductible as business expenses. Major employers like BlackRock and BNY Mellon have already announced programs.

Cafeteria Plan Integration: Programs can be offered through Section 125 cafeteria plans, allowing employees to make pre-tax salary deferrals to their dependents' accounts (but not their own). Employers can also structure flexible benefits where employees direct a flat dollar amount to Trump Accounts or other benefits.

Compliance Requirements:

• Adopt a separate written plan document meeting dependent care assistance program standards
• Satisfy nondiscrimination testing requirements annually
• Clearly communicate eligibility, benefits, and procedures to employees
• Maintain detailed records of contributions, elections, and testing calculations
• Affirmatively inform account trustees that contributions are Section 128 employer contributions

Design Challenges: The program only benefits employees with children under 18, potentially creating equity concerns. Solutions include offering choices through cafeteria plans or positioning Trump Accounts as part of comprehensive benefits serving diverse employee needs.

Questions? Navigating Trump Accounts requires careful attention to tax treatment, gift tax reporting, and compliance requirements that can significantly impact your family's or business's financial strategy. Contact the tax and retirement planning professionals at Heard, McElroy & Vestal to discuss how Trump Accounts fit into your comprehensive financial plan and ensure you're maximizing benefits while meeting all regulatory obligations.

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Sources

"How to Open a Trump Account with IRS Form 4547" - A comprehensive guide to the account opening process, Form 4547 requirements, eligibility criteria, and key deadlines for families establishing Trump Accounts.

"Trump accounts: Top 5 considerations for individuals and employers" by RSM US LLP (December 17, 2025) - Professional analysis covering contribution rules, tax treatment, gift tax implications, employer program design, and compliance requirements.

"Trump Accounts: What to Know" by Charles Schwab - Educational overview of Trump Account features, investment projections, and general account information for families and investors.

For the most current information and official guidance, visit IRS.gov for Form 4547 and related tax guidance, or trumpaccounts.gov for the official online portal (launching mid-2026).

This publication does not, and is not intended to, provide audit, tax, accounting, financial, investment, or legal advice. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Readers should consult a qualified tax advisor before taking any action based on the information herein.