What is a Trump Account (IRC §530A) and Who Can Benefit?

A new savings opportunity could help parents, grandparents, and employers build long-term wealth for children—with a potential $1,000 head start from the federal government.

 Who Might Benefit Most?

 A Trump Account may be attractive for:

Parents, especially those with children born between 2025 and 2028, may qualify for the $1,000 federal contribution. Opportunities may also exist for children born before 2025.

Grandparents who want to make annual gifts for long-term wealth accumulation.

Business owners who are interested in employer-sponsored contribution programs.

Families who already maximize 529 plans and want an additional tax-advantaged savings vehicle.

Eligible children born from 2025 through 2028 may qualify for the one-time $1,000 federal contribution, and eligible children generally may have up to $5,000 annually contributed on their behalf—even if they have no earned income.

 Understanding the Basics of a Trump Account

On July 4, 2025, Congress created IRC §530A under the One Big Beautiful Bill Act to establish a new type of account for children known as a “Trump Account.” While commonly referred to by that name, the account is technically governed by IRC §530A and is treated as a specialized form of traditional IRA. At its core, a Trump Account is a long-term savings and investment vehicle designed to help children build wealth over time.

A Trump Account is technically a traditional IRA under IRC §408(a), but it operates under a unique set of statutory rules during the child’s growth period. Many traditional IRA rules do not apply until the growth period ends. It is not a Roth IRA and follows a unique set of rules during the child’s growth period, although investment earnings continue to accumulate on a tax-deferred basis within the account. The “growth period” generally lasts until December 31 of the year before the child turns 18, and after that point, most of the special restrictions fall away, and ordinary traditional IRA rules generally begin to apply.

Who is eligible?

A child is eligible to establish an account if:

• They have not reached age 18 by the end of the calendar year in which the election is made and
• They have a valid Social Security number.

How to Establish an Account

Establishing an account for an eligible child is straightforward. Just follow the steps below:

Step 1: Log Into Your IRS Account

Go to the IRS website and:

• Sign in to your ID.me IRS account (or create an account)
• Navigate to the Trump Accounts section

Step 2: Submit the Required Form (Form 4547)

Form 4547 is used to elect to establish the child’s initial Trump Account and, if eligible, to elect the $1,000 “Pilot Program” contribution.

By Submitting Form 4547:

• Registers your child
• The IRS will create the account
• Triggers the $1,000 “Pilot Program”

$1,000 “Pilot Program”?

If you’re expecting a child—or planning to grow your family sometime soon— the federal government will provide a one-time $1,000 Pilot Program Contribution for eligible children who are U.S. citizens, were born between January 2025 and December 31, 2028, and for whom the required election is made. If your child is eligible, you can make the Pilot Program Contribution election by simply marking a box in line 7 on Form 4547.

Children born before 2025

These children may still be eligible for a Trump Account if they have not attained age 18 before the end of the calendar year in which the election is made and have a valid Social Security Number, but they generally are not eligible for the $1,000 Pilot Program Contribution, which is limited to eligible children born after December 31, 2024, and before January 1, 2029.

When Contributions Can Begin — and How Much Can Go In

Once an account has been established, contributions can begin on July 4, 2026. The annual contribution limit on non-exempt contributions is $5,000, with inflation adjustments after 2027.

Who can make Contributions

Beneficiaries, parents, relatives, and others may contribute, subject to a combined annual non-exempt contribution limit of $5,000. The beneficiary does not need compensation for contributions to be made during the growth period.

Employers may contribute under a written Trump Account contribution program, but employer contributions count toward the combined annual non-exempt contribution limit of $5,000.

An employer may contribute up to $2,500 annually per employee under a qualifying Trump Account Contribution Program. These contributions may be excluded from the employee’s taxable income under IRC §128, but they still count toward the child’s overall §530A annual contribution limit.

Tax Treatment of Contributions

Family contributions made during the growth period are generally not deductible by the contributor, even though the account is structured as a traditional IRA.

Employers may be able to deduct qualifying contributions made through a Trump Account Contribution Program. Business owners and related-party employees should monitor forthcoming IRS guidance. Please contact a Polk advisor for updates regarding owner-employees, related-party situations, and other employer contribution planning opportunities.

Investment Restrictions During the Growth Period

Unlike custodial brokerage accounts, Trump Accounts cannot be invested in individual stocks, speculative investments, or most actively managed funds. During the growth period, investments generally must be held in qualifying low-cost U.S. stock index funds or ETFs that track eligible broad-market indexes.

Distributions are heavily restricted before age 18

IRC §530A is not designed to function like a normal custodial spending account. Restrictions end on January 1 of the calendar year in which the beneficiary turns 18. IRS guidance identifies only a few narrow exceptions, including qualified rollover contributions, qualified ABLE rollovers, distributions of excess contributions, and distributions upon the death of the beneficiary.

One especially technical rule allows a qualified ABLE rollover contribution in the calendar year, the beneficiary turns 17, but only if the transfer is a direct trustee-to-trustee transfer of the entire balance to the beneficiary’s ABLE account. After the growth period ends, ordinary traditional IRA rules generally apply, and the IRS notice says this includes standard traditional IRA concepts such as Roth conversions, ordinary income taxation, and a 10% additional tax on early distributions unless an exception applies.

Why §530A matters

The bigger story behind IRC §530A is that it blends features of retirement accounts, child savings accounts, and public policy incentives into one framework. It gives families a federally recognized vehicle for long-term investing in a child’s name, offers a limited federal seed contribution for some children, and forces the money into low-cost broad-market investments while the child is young. At the same time, it is not as flexible as a regular brokerage account or a 529 plan, because the rules on investments, withdrawals, and contributions are tighter during the growth period.

Gift tax considerations

Unlike 529 plans, Trump Accounts do not expressly provide that contributions are treated as present-interest gifts for purposes of the annual gift tax exclusion. As a result, donors making significant contributions should evaluate whether gift-tax reporting considerations may apply. Additional guidance may be needed in this area. Until further guidance or technical correction is issued, donors should evaluate whether Form 709 reporting may be required. Please contact a Polk representative for further guidance.

Conclusion & Disclaimer

Trump Accounts are new, and additional IRS guidance is expected. Families should evaluate them alongside 529 plans, custodial accounts, Roth IRAs for working children, and other planning strategies. Please contact your Polk advisor to discuss whether a Trump Account, 529 plan, custodial account, or combination of strategies may fit your family’s long-term goals.

Polk & Associates

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