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Saving for a child’s future is about to get a new option. Starting July 5, 2026, Trump Accounts will join other ways to save for children like 529 plans, UGMA/UTMA accounts, and custodial Roth IRAs. But they come with unique rules and benefits. If you’re wondering what Trump Accounts are, who qualifies, and how they work, here’s what is known so far. Some details are still to come.
A Trump Account is a traditional IRA established for a child and designated as a Trump Account at the time of opening, according to IRS guidance. The child for whom the account is opened is the beneficiary and the legal owner of the account.
Think of Trump Accounts as starter IRAs for kids. These new accounts operate in a custodial-style structure: The assets are owned by the child, while an adult—typically a parent or guardian—is authorized to act on the child’s behalf until the beneficiary reaches age 18.
Trump Accounts are designed to help families start saving and investing for a child’s future early, using a familiar retirement-account framework.
Read Fidelity Smart Money: What is a traditional IRA?
Under the new program, the Treasury Department will create and administer the initial accounts. Over time, families will be able to roll over the account to a financial provider that has a Trump Account product.
Children under age 18 with a Social Security number are eligible for Trump Accounts. The Treasury’s pilot program adds a one-time $1,000 seed contribution for US citizens born between January 1, 2025, and December 31, 2028, when a tax election is filed on the child’s behalf. Only one funded Trump Account is allowed per child.
Children who aren’t eligible for the seed contribution can also get a Trump Account—they just won’t receive the $1,000 contribution. Families may still find good reasons to consider it.
Trump Accounts operate much like a custodial IRA, but with special rules for contributions, withdrawals, and investments. Families can fund the account through individual contributions, employer programs for both employee and employer contributions, or even charitable sources—each with its own tax treatment.
Several sources can fund a Trump Account, making it flexible for families. Contributions can come from individuals, employers, and even charitable organizations. Each source has its own rules and tax treatment, so it’s important to understand how they work.
The total that can be contributed to a Trump Account is $5,000 per year. Multiple sources can contribute each year. Contribution limits apply across all sources combined with one exception: The government seed amount and qualified general contributions (i.e., from charitable organizations) don’t count toward the annual limit, which can make a big difference for eligible families.
Important: Contribution sources determine how future taxes apply to distributions. Keeping accurate records is essential. Regardless of source, earnings are taxable when withdrawn.
Trump Accounts are designed for long-term savings so withdrawals are highly restricted before age 18.
Before that age, distributions are generally not allowed except for limited rollovers.
On January 1 of the year the beneficiary turns 18, the account could transition to a standard traditional IRA but it is not a requirement and will be dictated by the terms of the IRA agreement with the custodian or trustee. The standard rules for traditional IRAs include a limit on withdrawals before age 59½. Early withdrawals are typically taxable and may face a 10% penalty unless an exception applies—such as certain education expenses, first-time home purchase (up to $10,000), birth or adoption costs (up to $5,000), qualifying medical expenses, disability, or terminal illness.
Visit IRS.gov to learn more about the exceptions: Retirement topics – Exceptions to tax on early distributions.
Required minimum distribution (RMD) rules apply.
Once the beneficiary reaches age 18, families have several options:
Investment options for Trump Accounts are intentionally straightforward:
This design aims to promote long-term, broad market exposure with very low costs and minimal complexity.
Opening a Trump Account starts with an election process through the IRS—either by filing Form 4547 or using the upcoming online tool at trumpaccounts.gov. Elections are scheduled for mid-2026, with accounts becoming available July 5, 2026. Once the election is complete, the Treasury will provide instructions to activate the account.
The IRS is expected to issue more guidance for rollover accounts at financial institutions, which can only be opened after the initial Treasury account exists. These details will be clarified as the program expands.
This hypothetical example assumes the following: (1) annual contributions of $5,000 on January 1 of each year for ages 1 through 18, with no withdrawals through age 18, (2) an annual nominal rate of return of 7%, and (3) no taxes on any earnings within the account. The ending values do not reflect taxes, fees, or inflation. If they did, amounts would be lower. Earnings and pre-tax contributions from Trump Accounts are subject to taxes when withdrawn. Distributions before age 59½ may also be subject to a 10% penalty. Systematic investing does not ensure a profit and does not protect against loss in a declining market.
This example is for illustrative purposes only and does not represent the performance of any security. Consider your current and anticipated investment horizon when making an investment decision, as the illustration may not reflect this. The assumed rate of return used in this example is not guaranteed. Investments that have potential for a 7% annual nominal rate of return also come with risk of loss.
The Trump administration has indicated plans for significant rollout activity focused on the $1,000 pilot seed contribution, employer programs, and charitable contributions. Early signals include:
Financial institutions—including brokers, banks, and recordkeepers—have expressed interest in roles ranging from initial trustees to rollover trustees. Expect more details to be posted on trumpaccounts.gov as the Treasury finalizes trustee selections, technical standards, and proposed regulations.
When deciding how to save for a child, consider your goals, flexibility, taxes, and investment options. Choosing an account depends on your goals and circumstances. Here’s how common choices compare to Trump Accounts:
To learn more, read Fidelity Viewpoints: 2 ways to help kids invest
Trump Accounts are distinctive in that they do not require earned income to receive individual contributions, limit investments to low-cost index funds/ETFs, and enforce no withdrawals before 18, followed by IRA rules thereafter.
That combination may make them a complement to Roth IRAs, 529s, and UTMAs depending on the family’s goals. Details and guidance from the IRS are still needed to better understand how to make the most of these new accounts and how they may work with existing accounts.
Wondering how Trump Accounts are taxed? Here’s what to know. Because of the tax on a child’s investment and other unearned income, also known as the kiddie tax, a seemingly small withdrawal from a Trump Account could have a larger-than-expected tax bill.
The kiddie tax applies when kids have unearned income, not wages. Withdrawals from accounts funded with pre-tax dollars count as unearned income, so a portion of those withdrawals could be taxed at the parent’s tax rate—not the child’s (presumably) lower tax rate.
This can be particularly crucial for college students and their parents. To learn more, read Fidelity Viewpoints: What to know about the kiddie tax
Why it matters: Even allowable withdrawals that avoid penalties can trigger the kiddie tax. It does not apply to qualified withdrawals from a Roth IRA or 529 plan. Other accounts—like UGMAs/UTMAs and teen brokerage accounts—can also be subject to kiddie tax treatment on investment gains.
Trump Accounts could offer families a straightforward, low-cost path to begin investing for a child’s future—with strict no-withdrawal rules before age 18 and traditional IRA rules thereafter. If you’re planning for a newborn or young child, keep an eye on official launch dates and tools. Coordinating with your education, retirement, and tax strategies can help you make the most of this new account.
As more details are finalized, Fidelity will share practical guidance on elections, funding, investments, and rollovers, and how a Trump Account can fit into a family’s broader financial plan.
Open a flexible, tax-advantaged 529 college savings plan.
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Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them).
Please carefully consider the plan’s investment objectives, risks, charges, and expenses before investing. For this and other information on any 529 college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money.
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