A Quick Guide to Trump Accounts
The One Big Beautiful Bill Act (OBBBA), introduced last year, rolled out a list of changes to federal taxes, credits, and deductions. Many of those updates kicked in earlier this year, but one item that’s still causing plenty of head‑scratching is the new Trump Accounts.
Let’s break down what they are, how they work, and what families should be thinking about.
What is a Trump Account?
Trump Accounts is a tax-deferred investment account for children born between 2025 and 2028, where each eligible child will receive $1,000 in federal seed money. Contributions aren’t required, but family, friends, and even employers can chip in—up to $5,000 total per year, and employers capped at $2,500.
If you’re familiar with 529 plans, Trump accounts will feel somewhat similar. Once funded, the account enters what they call the growth period and will stay locked up until the child turns 18. At this point, ownership transfers to the child, and the Trump Account can be rolled into an IRA. Standard IRA rules would then apply, and the funds can then be used for education or big adult milestones—think first home purchase.
How do you open a Trump Account?
Although contributions won’t be allowed until July 5th, 2026, families can get a jump start. To open an account and receive the $1,000 federal contribution, an election can be made on the IRS Form 4547. The Form 4547 can be filed with your 2025 tax return or filed anytime separately.
Because this is a new form, it’s important to ask your accountant or confirm that your tax software supports it, so you don’t miss the opportunity. The official Trump Account website (trumpaccounts.gov) has also created a page to complete the Form 4547 and submit it directly.
Once the form has been received, the Department of Treasury will transfer the information to a participating financial institution to open and manage the account. This process is expected to start in May 2026.
What kind of investments will Trump Accounts hold?
The accounts will be invested in low-cost (expense ratio of 0.10% or less) U.S. stock index mutual funds or ETFs, with no leverage.
How will Trump Accounts be taxed?
The account will hold two types of dollars, each treated differently:
After‑tax contributions (from you, Grandma, Uncle Joe, etc.):
The contributions will be withdrawn tax‑free since taxes were already paid on the way in.Pre‑tax contributions (investment earnings, $1,000 federal seed money, employer contributions)
This portion will be taxed as ordinary income when withdrawn. If it’s taken out for nonqualified reasons before age 59½, it may be subject to a 10% early‑withdrawal penalty—no fun there.
Because distributions blend these two types of funds, it will be important to keep track of all after-tax contributions since withdrawals will include both taxable and tax-free amounts.
The Bottom Line
Trump Accounts are still new, and additional details are expected as we get closer to the rollout. But for families welcoming children between 2025 and 2028, it’s worth keeping an eye on these accounts and consider whether they may play a role in long-term financial planning.
The information given herein is taken from source that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities, LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but is not guaranteed by us as to accuracy or completeness. This is for information purposes only and in no event should be construed as an offer to sell or solicitation or an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP's express prior written consent.
