Trump Accounts: A New Way to Save for Your Child's Future

What Are Trump Accounts?

Trump Accounts are a new type of savings account created by federal law in 2025, designed to help families start saving money for their children early in life. Think of them as "starter retirement accounts" for kids.

These accounts will be available starting July 4, 2026.

Here's the basic idea: The account belongs to your child, but an adult (usually a parent or guardian) manages it until the child turns 18.

Who Can Get a Trump Account?

Any child under 18 with a Social Security number can have a Trump Account.

Bonus for newborns: Children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 contribution from the government to get their account started. This is like a gift from the government to help kickstart your child's savings.

Children born outside this window can still open a Trump Account—they just won't receive the $1,000 starter money.

How Do Trump Accounts Work?

Who Can Put Money In?

Multiple people and organizations can contribute to a child's Trump Account:

• Parents, grandparents, or any adult – Anyone can contribute on behalf of the child
• Employers – Some employers may offer this as a workplace benefit, similar to how they might match retirement contributions
• Charities and local governments – These organizations can also contribute

How Much Can Be Contributed Each Year?

• $5,000 per year is the maximum contribution limit
• The government's $1,000 starter gift does not count toward this limit
• Contributions from charities also do not count toward the limit

This means in a good year, a child could receive:

• $1,000 government starter (for eligible newborns)
• $5,000 from family contributions
• Additional money from charities

Employer Contributions (A Special Feature)

If your employer offers this benefit:

• Your employer can contribute up to $2,500 per year toward your child's account
• You can also have money taken directly from your paycheck (before taxes) and put into your child's account
• If you have multiple children, employer contributions can be split among them

What Can the Money Be Invested In?

Trump Accounts keep investing simple:

• Money can only be invested in low-cost index funds or ETFs (these are investments that track the overall stock market)
• At least 90% must be invested in U.S. companies
• Fees are capped at 0.10% (very low compared to many investment options)
• No risky borrowing strategies are allowed

This design helps families grow their money steadily over time without complicated choices or high fees.

When Can You Take Money Out?

Before age 18: Generally, no withdrawals are allowed. This money is meant to grow for the long term.

After age 18: The account follows regular retirement account rules. Here's what that means:

• Withdrawals before age 59½ are usually taxed and may have a 10% penalty
• However, there are important exceptions where you can withdraw money early without the penalty

Using a Trump Account for a House Down Payment

One of the most valuable features of a Trump Account is that once your child turns 18, they may be able to use some of the money to buy their first home.

The First-Time Home Buyer Exception

Under traditional IRA rules (which Trump Accounts follow after age 18), there's a special rule for first-time home buyers:

• Your child can withdraw up to $10,000 to put toward a down payment on their first home
• This withdrawal avoids the usual 10% early withdrawal penalty
• The money will still be taxed as regular income, but there's no extra penalty

How This Could Help Your Child

Let's say you start contributing to your child's Trump Account when they're born:

• If you contribute $5,000 each year for 18 years
• And the investments grow at an average rate of 7% per year
• Your child could have a significant nest egg by the time they're ready to buy a home in their 20s or 30s

Even if they only use $10,000 for a down payment, having this money available could:

• Help them qualify for a mortgage sooner
• Allow them to avoid private mortgage insurance (PMI) with a larger down payment
• Give them a financial head start that many young adults don't have

Important Considerations

• The $10,000 first-time home buyer exception is a lifetime limit, not an annual limit
• "First-time home buyer" generally means someone who hasn't owned a home in the past two years
• Your child should consider whether using retirement savings for a home is the right choice for their situation
• Even after taking out $10,000, the remaining balance can continue growing for retirement

Other Penalty-Free Withdrawal Options After Age 18

Besides buying a first home, your child can also withdraw money early without the 10% penalty for:

• Qualified education expenses
• Birth or adoption costs (up to $5,000)
• Certain medical expenses
• Disability or terminal illness

How Is This Different From Other Savings Options?

How to Open a Trump Account

1. File an election with the IRS using Form 4547 or through the website trumpaccounts.gov
2. Elections begin mid-2026, with accounts opening on July 4, 2026
3. The Treasury Department will create and manage the initial accounts
4. Later, you can transfer (roll over) the account to a financial institution of your choice