Trump Accounts are a new type of tax-advantaged retirement account for minors, established under the One Big Beautiful Bill signed into law on July 4, 2025. With contributions of up to $5,000 per year and a potential $1,000 government seed contribution for eligible children, these accounts offer a powerful head start on long-term, tax-efficient retirement savings.

Trump Accounts by the Numbers

• 4 million+  children have registered for a Trump Account (IRS estimate)
• 1 million+  children covered by the $1,000 pilot program election
• $5,000  maximum annual contribution per account
• $1,000  government seed contribution for eligible children
• ~$1.7 million  projected account value at age 74 (4.5% return, max contributions)

What Is a Trump Account?

A Trump Account is a tax-deferred retirement savings account that can be opened for any eligible minor; no earned income is required, unlike a traditional IRA. Parents, guardians, relatives, friends, employers, state governments, and philanthropic organizations can all contribute. Contributions begin on July 4, and accounts are established by filing Form 4547, Trump Account Elections.

Eligibility requirements:

• The child must have a Social Security number
• The child must not have turned age 18 before the end of the calendar year in which the election is made

The $1,000 Government Seed Contribution

As part of a pilot program, children born between 2025 and 2028 may be eligible for a $1,000 government contribution to their Trump Account. According to the IRS, claiming the contribution is straightforward:

“Families with eligible children…just need to check the box on a form to stake their claim for the $1,000 contribution. It’s that simple.”

IRS CEO Frank J. Bisignano

The election is made by filing Form 4547 with your tax return. The IRS has designed the process to be completed on a single page.

Contribution Rules and Limits

The combined annual contribution limit is $5,000 per Trump Account. Key details:

• Contributors can include parents, relatives, friends, employers, state governments, and philanthropic organizations
• Employer contributions of up to $2,500 per year into an employee’s dependent’s account are excluded from the employee’s gross income under a qualifying written plan
• Employer contributions count toward the $5,000 combined family maximum
• The $2,500 individual contribution limit will be adjusted for inflation beginning after 2027

Note: It is currently unclear whether contributions to Trump Accounts qualify as annual exclusion gifts for gift tax purposes. Consult your advisor for guidance specific to your situation.

How Trump Accounts Grow: Tax Treatment and Distribution Rules

Trump Accounts provide tax-deferred growth, meaning no taxes are owed on earnings while the funds remain in the account. Key distribution rules:

• No qualified distributions are permitted before the child reaches age 18
• At age 18, traditional IRA rules apply—the balance can be converted to a Roth IRA
• After conversion, future earnings grow tax-free, provided withdrawals are deferred until qualified retirement age
• Taxes apply only to the initial contributions and growth accrued prior to the Roth conversion

The Power of Compounding: A 74-Year Projection

To illustrate the long-term value of a Trump Account, consider this scenario: An account opened in a child’s first year of life, funded at the maximum $5,000 annually through age 17, then converted to a Roth IRA at age 18 with a conservative 4.5 percent annual return could grow to approximately $1.7 million by age 74. Taxes would apply only to the original contributions and pre-conversion growth — the remainder would be entirely tax-free.

Next Steps for Families and Employers

Whether you are a parent looking to secure your child’s financial future, an employer considering contributions to employees’ dependents’ accounts, or a family member wanting to give a lasting gift, Trump Accounts offer a compelling tax-efficient vehicle worth exploring.

For more information regarding how Trump Accounts may benefit your family members or employees, please contact a member of your Zinner & Co. Client Service Team.