Key Takeaways
- Trump Accounts are a new type of tax-advantaged account that will be available starting July 5, 2026.
- The primary advantage of a Trump Account is a free $1,000 contribution to the account from the U.S. Treasury, available to children born between 2025 and 2028.
- If you or someone in your family had a baby last year, or is expecting this year, it will be worth your time to read further, because opening a Trump Account will make you eligible for the free government contribution.
- If a child wasn’t born into your family last year and you’re not expecting one anytime soon, you’ll want to stop reading here, because, unless you’re eligible for the free government contribution, there are other existing account types (529s, Uniform Transfer to Minors Accounts, etc.) that are a better fit for most financial planning objectives related to children (saving for college, saving to purchase a home, saving for retirement, etc.).
About Trump Accounts
The One Big Beautiful Bill Act, signed into law on July 4, 2025, created a new, tax-advantaged savings account that is designed to help families build long-term wealth. The new accounts, called “Trump Accounts,” are codified under Section 530a of the tax code.
As the Treasury Department launches Trump Accounts, they are sponsoring a pilot program in which children born between 2025 and 2028 will receive a $1,000 contribution to their new account. Several private individuals have announced additional contributions, such as an extraordinary $6.25 billion gift from Michael & Susan Dell, through which they will contribute $250 to 25 million Trump Accounts of children living in zip codes with an average income below $150,000.
Before we discuss the role of Trump Accounts in clients’ financial planning, here are a few more specifics on how the accounts work:
- Trump Accounts will be available starting July 5th of this year. Initially, accounts will be custodied with the Treasury Department, with rollover options through leading custodians like Charles Schwab expected over time.
- Anyone can contribute $5,000 per year to a Trump Account.
- Contributions to Trump Accounts are made after-tax (not tax-deductible, like contributions to a 401k).
- As mentioned previously, the U.S. Treasury will contribute $1,000 to the accounts of children born between 2025 and 2028, with private grants increasing the amount available for some accountholders.
- Trump Accounts can only be invested in broad-market equity index funds.
- Trump Accounts grow tax-deferred, like an IRA (not tax-free, like a ROTH IRA), with no taxes on dividends or capital gains, and with withdrawals taxed as income.
- With a few very narrow exceptions (eg: death of the beneficiary), withdrawals are not allowed for any purpose until the beneficiary turns 18.
- When the beneficiary turns 18, the account is generally treated like an IRA, with the owner having several options, including paying taxes on the growth and converting the account to a ROTH IRA.
- If you had a child last year, file IRS Form 4547 with your 2025 tax return. This form will establish your eligibility for a Trump Account and the pilot program contribution.
Continuity’s View on Trump Accounts
Continuity Wealth Group celebrates the creation of Trump Accounts. America’s financial markets are one of our great institutions, and investors who own a share of corporate profits have enjoyed extraordinary success over time… so much so that a wealth gap between those who own equities and those who don’t has become one of the great economic challenges of our time. Giving newborn children ownership in U.S. equities will narrow that wealth gap over time, however slightly, and is therefore a good thing.
Saving our clients time is an important part of our role, and our objective in this letter is to quickly let you know how Trump Accounts fit (or don’t fit) into your existing account lineup.
Since other types of accounts offer either more flexibility, more powerful tax benefits, or both, the primary benefit of Trump Accounts – the thing these accounts do that no other type of account can do – is the free government seed money. As a result, families who are eligible for the government or private grants should open a Trump Account and families who aren’t shouldn’t.
With the new Trump Accounts added to the mix, here are what we see as the leading financial planning use cases of the various types of accounts available to parents and grandparents:
- If you’re saving for private school and college tuition, a 529 will remain your strongest option. Unlike Trump Accounts, with distributions taxed as income, 529 withdrawals are completely tax free when used for qualified expenses. 529s became even more appealing this year, as the amount that families can withdraw tax-free for private school expenses increased from $10,000 to $20,000.
- If you want to invest money that your child might eventually use to buy a home – or to generally build long term wealth — a Uniform Transfer to Minors (UTMA) custodial account is the best available option. Even with Trump Accounts’ tax-deferred growth, many investors will still be better off paying the lower capital gains tax rate than the higher income tax rate on distributions.
- If helping a minor save for retirement, the best strategy is to wait until the child has earned income and then make contributions to a tax-free ROTH IRA.
- If a child is born in your family between 2025 and 2028, or if you are eligible for a private grant, open a Trump Account to receive the free grant money. Over 18 years, any initial contribution could triple or quadruple, so it’s worth opening an account to take advantage of this benefit. In the meantime, as a bonus, your Trump Account will provide a great opportunity for your child to learn about investing and build a sense of ownership in the U.S. economy.
In conclusion, only families who had a child last year need to put Trump Accounts on their “to do” list. If you did have a child last year (or if you welcomed a new grandchild into the family), speak with your tax advisor and ask them to file Form 4547 with your return. For everyone else, the Trump Account is something to cheer on, as it makes investments available to those who might not otherwise be able to afford them, but does not require any action at this time. For all, you can count on us at Continuity to watch developments with Trump Accounts – and all types of accounts – and to keep you informed.
Sources:
Internal Revenue Code 530a:
IRS Trump Accounts page:
Trump Accounts | Internal Revenue Service
IRS Form 4547:
Instructions for Form 4547 (12/2025) | Internal Revenue Service