The One Big Beautiful Bill Act, signed into law July 4, 2025, created a new tax-favored savings vehicle for children called Trump Accounts, a form of individual retirement account (IRA) designed specifically for eligible minors. On December 2, 2025, the Department of the Treasury and Internal Revenue Service issued Notice 2025-68, providing the first official guidance on how Trump Accounts will operate and announcing the agency’s intent to issue proposed regulations in early 2026.
There are specific rules regarding eligibility for Trump Accounts (“Accounts”) and account establishment. Accounts can be established for eligible children under age 18 (must have a valid U.S. Social Security number and not have turned age 18 by year-end of Account election year). An Account is created by making an election using IRS Form 4547, “Trump Account Election(s)” or via an online portal once available (e.g., trumpaccounts.gov). Authorized individuals (generally parents or legal guardians) will make the election on behalf of the child.
Accounts may be funded via one of two methods. The Federal Pilot Contribution is available to each eligible child. The child will receive a one-time $1,000 Federal contribution to the Trump Account as part of a pilot program. In order to qualify for the Federal Pilot Contribution, the child must be born between January 1, 2025 and December 31, 2028. This contribution is not automatic and must be elected on Form 4547.
Additional contributions of up to $5,000 may be made per year, aggregated across all contributors. The annual contribution limit will be indexed for inflation beginning after 2027.
Employers may contribute up to $2,500 per year under a Trump Account Contribution Program (such contributions do not count as employee taxable income). Employers may also allow employees to make their own pre-tax contributions of up to $2,500 annually to their dependents’ Trump Accounts as cafeteria plan contributions. The limit for all employer-related contributions is $2,500 per employee, not per dependent. The limit per dependent would be lower if the employee elects the benefit for multiple dependents.
Eligible contributions may include those from relatives or others.
Contributions made in the year the beneficiary turns 19 are not taken into consideration in applying non-Trump Account IRA contribution limits.
Contributions will be permitted beginning July 4, 2026.
There are specifications relative to Account investments and distributions. Investments must be in eligible low-cost mutual funds or exchange-traded funds (ETFs) tracking broad U.S. equity indices (e.g., S&P 500). Distributions are generally prohibited before age 18, with exceptions limited to the following permitted events:
- Rollovers to another Trump Account
- Return of Excess Contributions
- Death of the beneficiary
Once the beneficiary turns 18, the account is generally treated like a traditional IRA subject to the usual IRA tax and distribution rules. Distributions of amounts allocated to basis are tax-free and distributions of amounts allocated to investment earnings are subject to tax.
Trump Accounts may provide a tax-efficient savings device for many of our clients, but they are not advisable for every family. If you are interested in learning more about how you may use this vehicle, please reach out to a member of the MP CPAs team.