What They Are, Key Limits, and Important Dates
Trump Accounts are new, tax‑favored savings accounts for children under age 18 created by the One Big Beautiful Bill Act (H.R. 1, 119th Congress). They work much like custodial IRAs with special rules before age 18, and very limited investments. Most mechanics are set by statute; some operational details will come from forthcoming IRS/Treasury guidance.
Government kickstart:
- $1,000 automatic contribution for children born between January 1, 2025, and January 1, 2029.
- Paid as a refundable tax credit directly into the account.
- Both parent and child must have Social Security numbers.
Annual contribution power:
- $5,000 per year per child before they turn 18.
- No contributions allowed until July 4, 2026, exactly 12 months after the law’s enactment.
- Certain contributions (rollovers, government, employer) don’t count toward the limit.
Smart investment structure:
- Conservative but growth-focused: Only low-fee, broad-based US stock index funds or ETFs.
- S&P 500 or similar indexes only until the child turns 18.
- No high-risk investments or leverage allowed.
Who Can Benefit
- Any child under 18 with a Social Security number can have a Trump Account.
- Only one account allowed per child.
Who benefits most:
- Young professional couples starting families with stable income.
- Business owners who can systematically contribute over 18 years.
- Multi-generational families where grandparents can also contribute.
- Employees whose companies offer Trump Account contributions as benefits.
The Withdrawal Rules
Strict but protective:
- No withdrawals before age 18 except for specific rollovers or if the child dies.
- At age 17: Entire account can roll tax-free to an ABLE account for the same child.
- Excess contributions: Must be withdrawn, and earnings on excess are taxed at 100%.
Employer Benefits You Should Know
- If you’re an employee: Your employer can contribute up to $2,500 per year to your child’s Trump Account, and this is tax-free income to you.
- If you’re an employer: Consider this as a unique, tax-efficient employee benefit that provides substantial value to working parents on your team.
Tax Treatment
Generally tax-deferred like traditional IRAs:
- Government and charitable contributions are excluded from gross income.
- Family contributions are made with after-tax dollars.
- Growth is tax-deferred until withdrawal.
- Distributions after age 18 are taxed under normal IRA rules.
Special Contribution Opportunities
- Charitable organizations can make “qualified general contributions” to groups of Trump Accounts (for example, all children in a community or birth year).
- Rollovers between Trump Accounts for the same child are allowed.
Action Steps for Kansas Families
If You’re Expecting or Have Young Children
Immediate (2025):
- Ensure Social Security numbers for all family members.
- Plan for Trump Account availability starting July 4, 2026.
- Calculate potential contribution strategies for your family budget.
Starting July 4, 2026:
- Open Trump Accounts as soon as available.
- Develop systematic contribution plans for maximum growth.
- Coordinate with employer benefits if offered.
- Track contributions carefully to avoid excess contribution penalties.
Why Professional Guidance Matters
- The rules are specific: Contribution limits, investment restrictions, and penalty provisions require careful attention.
- The opportunity is time-sensitive: Starting in 2026 gives you the maximum benefit window.
- The coordination possibilities: Trump Accounts work best when integrated with overall family financial planning.
Ready to start building your children’s financial future? Contact us to discuss how Trump Accounts fit into your family’s wealth-building strategy and ensure you’re positioned to take full advantage starting in 2026.
