Trump Accounts for kids: What to know and how to sign up
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Trump Accounts for children went live July 4, and the government's one-time $1,000 contributions are now landing in accounts for eligible kids.
The big picture: Families are latching onto the new IRA-style accounts for kids, with 6.5 million signups so far, per the U.S. Treasury Department. Here are answers to parents' common questions.
What is a Trump Account? A government-backed investment account for U.S. children.
Who is eligible? Any U.S. citizen under 18 with a valid Social Security number.
- Parents and legal guardians can open and contribute to accounts on behalf of their children.
How do I create and manage an account? By downloading a Trump Account app (details here) or via this IRS webpage.
- Either path requires submitting IRS Form 4547.
- There is no charge to open an account.
How much can be contributed? A total of $5,000 per year until the year the child turns 18.
- Contributions may come from parents/guardians, their employers, or other family and friends.
Who is eligible for a one-time $1,000 government contribution? Children born from 2025 to 2028.
- This does not count against the $5,000 annual contribution limit.
Can employers contribute? Yes, up to $2,500 per employee per year.
- These contributions may go toward the accounts of employees under age 18, or to the accounts of adult employees' dependent children.
- These contributions do not count as taxable income for the employee, and companies can deduct them as a compensation expense.
- Employer contributions count toward the annual $5,000 cap.
What happens when the child turns 18? Management of the account is turned over to the child. Some options then include:
- Continuing as-is. The account would be managed using traditional IRA rules.
- Rolling into a traditional IRA or converting to a Roth IRA.
- Withdrawing funds penalty-free for a qualified purpose, such as for education or down-payment on a first home.
- Withdrawing for other purposes, which would be subject to applicable taxes and penalties.
Can funds be withdrawn before the child turns 18? Typically no, beyond a narrow set of circumstances, such as the death of the child.
Between the lines: Trump Account contributions are made with after-tax dollars and, unlike traditional IRA contributions, are not tax-deductible.
What we're watching: The Social Security Administration is pursuing ways to automatically enroll newborns in Trump Accounts at birth, though the process remains manually opt-in at this time.
- The federal government has invited states to contribute to Trump Accounts — similar to how states such as California contribute additional money to residents' 529 plans — though these would be state-by-state decisions.
- The U.S. Department of Education has yet to weigh in on how Trump Account funds would affect federal financial aid for college (FAFSA).
