Recent tax legislation includes new provisions that allow for the establishment of new investment accounts for children ages 18 or younger. The goal of the account is to have funds available for them when they become adults. While not yet available to create, news out of the IRS in early December makes it important to stay up to date on the rules and benefits as they develop. Here is what you need to know.

The Basics of the Account

Starting after July 4th, 2026, you may begin contributing to a Trump Account for eligible children. Here are the rules as we currently know them:

• Annual contribution. Deposit up to $5,000 per year for the benefit of a child under age 18. This will be indexed for inflation after 2027.
  
  
• No withdrawals. The funds MUST stay in the account until January 1st of the year of the child’s 18th birthday. There are very few exceptions, but it includes disbursement of account funds in the event of the beneficiary’s (child’s) death.
  
  
• The funds in the account must be invested using strict rules. You may not place funds in basic bank accounts. An eligible investment is generally a mutual fund or exchange traded fund (ETF) that tracks an index of primarily U.S. companies.
  
  
• Only one account per beneficiary. Each child may only have one account. There’s also published priority on who can open the account. The order of priority is:

1. 1. Legal guardians, then
   2. Parents, then
   3. Adult siblings, then
   4. Grandparents
      
      

At age 18 the Trump Account ceases to exist. The funds are then to be rolled over or distributed. Distributions are treated similar to a traditional IRA.

The benefits: Pay attention here!

The idea of the account is to help young people start their adult life with something of value so that the concept of the American Dream is still available to the next generation. To that end there are incentives that should not be missed:

• $1,000 in free money for new births. For any child born on or after January 1, 2025 through December 31, 2028, your child’s account will receive a $1,000 deposit from the federal government’s pilot program contribution to be invested and grow over time.
  
  
• Employer contributions. Regulations allow employers to contribute up to $2,500 per year to their employee’s Trump Accounts. These contributions will not add to the employee’s taxable wages. So stay tuned if your employer is looking to add this benefit.
  
  
• $250 in free money to children. 25 million children ages 10 and under will receive a $250 gift courtesy of Micheal and Susan Dell (Dell Computers) if they live in a zip code whose median income is less than $150,000.
  
  

What to do now

As a new program, details of the Trump Account will continue to evolve, but given the anticipated popularity it is important to do the following right now:

• Get program announcements. If interested in keeping informed, go to www.trumpaccounts.gov and sign up to receive email updates on the status of the program. This should tell you when applications for the accounts are open.
  
  
• Sign up as soon as possible. The IRS notice says signing up for the account can be done using IRS Form 4547 or online at www.trumpaccounts.gov. You’ll want to do this as soon as they are made available.
  
  
• Apply for the bonus deposits. You cannot do this yet, but when you can, treat it like buying tickets to a Taylor Swift concert. There will be separate applications to get these deposits. But also stay alert. There may be other philanthropists willing to help the next generation get a head start financially.
  
  

To recap

If you wish to take advantage of this new benefit for your kids or grandkids:

• Keep informed
• Set up the account as soon as possible
• Apply for additional account funding as soon as possible