Trump Accounts are tax-advantaged investment accounts for minors, allowing families to save and invest for a child's future.
New investment accounts for children
As part of the One Big Beautiful Bill Act, Congress created a new custodial-style Traditional Individual Retirement Account (IRA) for children. Referred to in the Act as “Trump Accounts,” they have special rules for eligibility, contributions, investments, and distributions while the child is under age 18. After that, standard Traditional IRA rules generally apply.
A Trump Account is an investment account for children under age 18 that must be designated as such when opened. The child owns the assets, while an authorized adult manages the account until the child reaches adulthood. Initial accounts are opened through the Treasury Department and the primary trustee, and may later be rolled to a secondary trustee that offers Trump Accounts.
Who is eligible for a Trump Account?
A Trump Account can be opened for any child who is:
- Under the age of 18 at the end of the year the account is elected, or
- A U.S. citizen with a valid Social Security number
A child may have only one funded Trump Account. There are no income limits or phase-out ranges, unlike traditional IRAs.
Who can elect or open a Trump Account?
A parent, legal guardian, adult sibling, or grandparent may open the account by making an official election with the IRS. The child remains the account owner and beneficiary.
The election may be made by filing IRS Form 4547 (Trump Account Election) or at TrumpAccounts.gov.
Once the election is made, the account is opened with the government’s primary trustee. New Trump Accounts were able to be opened starting July 4, 2026.
What financial institutions can custody Trump Accounts?
Trump Accounts are initially established through the primary trustee. Later, the balance may be moved to a rollover Trump Account at a secondary trustee. Because only one funded Trump Account is allowed, the full balance must transfer to the new custodian.
Who can contribute to a Trump Account?
Contributions may come from individuals, employers, or charitable organizations.
- Government seed contribution: A one-time $1,000 contribution for eligible children born between January 1, 2025 and December 31, 2028.
- Individual contributions: Up to $5,000 per child per year, indexed for inflation, until the year the child turns 18.
- Employer contributions: Up to $2,500 per year on a pre-tax basis, counted toward the $5,000 annual limit.
- Charitable contributions: States, local governments, and 501(c)(3) organizations may also contribute, subject to application requirements.
What are the investment choices for Trump Accounts?
Trump Accounts have investment restrictions. Eligible investments are limited to mutual funds or exchange-traded funds (ETFs) that meet all of the following criteria:
- Investments made up of at least 90% U.S. equities (e.g. the S&P 500 index)
- Expense ratios at or below 0.1%
- Funds that are not leveraged
When are distributionsFootnote1 allowed from a Trump Account?
In most cases, distributions are not allowed until the child reaches age 18, reflecting the account’s long-term investing purpose rather than short-term spending.
What happens to Trump Accounts when the child turns 18?
At the end of the year the account owner turns 18, the account transitions to Traditional IRA treatment, the beneficiary takes full control, and future withdrawals generally follow standard Traditional IRA tax rules.
Important note: Additional regulatory guidance is still needed on how Trump Accounts will transition to Traditional IRAs. Account holders may need to take action to roll over or convert the account. As more guidance is released, related FAQs may change.
Why would families consider a Trump Account?
Families may consider a Trump Account because it offers tax-deferred growth without the earned income requirement that applies to IRA contributions. The long-term investment horizon, low-cost investment options, and potential government, employer, or charitable funding may make it attractive for some families. However, Trump Accounts may not be the right choice for every family. Before deciding, families should evaluate the range of savings and investment options available for their children and consult with their financial and tax advisors to determine which approach best aligns with their circumstances.
Where can I learn more about Trump Accounts?
Please visit the official government website: TrumpAccounts.gov
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed. Tax laws or regulations are subject to change at any time and can have a substantial impact on an actual client situation.
Investment involves risk, including possible risk of principal. Past performance does not guarantee future results.
Mutual Funds are subject to risks of the underlying investments in the fund. Investment returns may fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost.
Exchange-Traded Funds (ETFs) are subject to risks similar to those of stocks. Investment returns may fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed, or sold, may be worth more or less than their original cost. Exchange Traded funds may yield investment results that, before expenses, generally correspond to the price and yield of a particular index. There is no assurance that the price and yield performance of the index can be fully matched.
Income tax will apply to Traditional IRA distributions that you have to include in gross income and may be subject to an IRS 10% additional tax for early or pre-59 ½ distributions.
