Trump Accounts Are Open. Here's What Parents and Grandparents Need to Know.

What a Trump Account is

A Trump Account is a tax-advantaged investment account for children, created by the tax law passed in July 2025. Some people also call them 530A accounts or Invest America accounts.

A few basics:

• Any child under 18 with a Social Security number may be eligible.
• Each child can have one Trump Account.
• A parent or guardian opens it and manages it until the child turns 18.
• The money is invested in low-cost U.S. stock index funds.
• The money generally can't be withdrawn until the year the child turns 18.
• At 18, the account generally becomes a traditional IRA.

In plain terms: it's a long-term investment account for a child, with a head start from the government for some kids, and strict rules about when the money can come out.

Who gets the $1,000

The federal government will put $1,000 into a Trump Account for children who:

• Were born between January 1, 2025, and December 31, 2028
• Are U.S. citizens
• Have a valid Social Security number

This is part of a pilot program. The $1,000 is a one-time deposit.

Here's the part that trips people up. The $1,000 isn't automatic. You have to elect it when you open the account. If you don't, your child may miss out on free money.

The $250 deposit for older kids

There's also a separate private gift. The Michael and Susan Dell Foundation committed $6.25 billion to fund $250 deposits for up to 25 million children. To qualify, a child generally has to be 10 or younger, born before January 1, 2025, and living in a ZIP code with a median income below $150,000.

Since these kids were born before 2025, they aren't eligible for the $1,000 government deposit. The $250 is meant to help fill that gap. Other charitable organizations may offer similar gifts, with their own rules.

How to open an account and claim the money

There are two main ways:

1. IRS Form 4547. You can file this form to open the account and elect the $1,000 deposit if your child qualifies. You can file it at any time, including along with your tax return.
2. Online at trumpaccounts.gov. The government's website lets you set up the account online.

To open an account, you'll generally need your child's Social Security number and date of birth, plus your own Social Security number, date of birth, and contact information.

There's a deadline to open an account: December 31 of the year the child turns 17.

The Treasury Department is running the program with BNY Mellon and Robinhood in its first phase. After the account is set up, families can use the official app to manage it. Treasury materials indicate parents may later be able to move the account to another eligible brokerage firm through a trustee-to-trustee transfer.

Who can contribute, and how much

Beyond the government deposit, family members, friends, and even employers can add money to a child's Trump Account.

• The combined limit from family, friends, and employers is $5,000 per child per year.
• Starting in 2028, that limit will be adjusted for inflation.
• The $1,000 government deposit doesn't count toward the $5,000 limit.
• Contributions from state and local governments and qualifying charities also don't count toward the limit.
• Contributions can be made through the end of the year the child turns 17.

Employer contributions

Employers can contribute up to $2,500 per employee per year toward an employee's child's Trump Account, and that amount is excluded from the employee's income. Not every employer offers this. It's worth asking your HR or benefits office whether yours does or plans to.

Grandparents

Grandparents and other relatives can contribute too, as long as the total from everyone stays within the annual limit. For grandparents who want to help a grandchild without handing over cash, it's one more option to consider alongside a 529 plan.

How the money is invested

This is one of the most unusual parts of Trump Accounts. The investment choices are intentionally narrow.

By law, the money can only go into mutual funds or ETFs that:

• Track the S&P 500 or another broad index made up primarily of U.S. companies
• Don't use leverage
• Charge annual fees of no more than 0.10% of the balance

That fee cap is very low. On a $1,000 balance, it means no more than $1 a year in fund expenses.

Treasury announced that the default investment for accounts is a low-cost S&P 500 index fund, and said families will be able to choose among a few other eligible funds over time.

You can't pick individual stocks, bonds, international funds, or other investments while the child is a minor.

What that means

The good part is simplicity and low cost. There's no temptation to chase hot stocks, and fees can't eat up a small balance.

The trade-off is that the account is 100% invested in U.S. stocks. There are no bonds and no international stocks inside it. That means it can rise a lot in good markets and fall a lot in bad ones. And as I wrote about recently, S&P 500 funds today are heavily weighted toward a small number of very large companies. For a child with 18 years before they can touch the money, that volatility may matter less. But it's worth understanding what the account actually holds.

What happens at 18

On January 1 of the year the child turns 18, the account generally becomes a traditional IRA, and the child becomes the owner.

At that point, traditional IRA rules generally apply:

• The child can withdraw money, but withdrawals are generally taxed as ordinary income.
• If they withdraw before age 59½, they may also owe a 10% early withdrawal penalty, unless an exception applies.

The exceptions

The 10% penalty generally doesn't apply to withdrawals used for certain purposes, including:

• Qualified higher education expenses
• A first-time home purchase, up to $10,000
• Birth or adoption expenses, up to $5,000 per child
• Emergency expenses, up to $1,000 a year
• Certain medical expenses

Income tax may still apply even when the penalty doesn't.

How the taxes work

This part gets a little technical, but it matters.

• Money contributed by parents and relatives is after-tax money. The child generally won't pay tax again on those contributions when they're withdrawn, only on the growth.
• The $1,000 government deposit and any employer contributions weren't taxed going in. So when they come out, both the contribution and the growth are generally taxable.

In plain terms: after-tax family money comes back out tax-free, but the growth on everything, plus the government and employer money, generally gets taxed when withdrawn.

How Trump Accounts compare to other options

A Trump Account isn't the only way to save for a child, and it isn't always the best fit. Here's how it stacks up against a few common choices.

A 529 plan

A 529 plan is designed for education. Money grows tax-deferred, and withdrawals are tax-free when used for qualified education expenses. Florida offers 529 options, including prepaid and savings plans.

Where a 529 may be better: if the main goal is paying for college, trade school, or other education, a 529's tax-free withdrawals for those expenses are hard to beat.

Where a Trump Account may be better: if the goal is longer-term savings that could be used for a first home, retirement, or other purposes, and especially if your child qualifies for the free $1,000.

A custodial Roth IRA

If a child has earned income, from a job, a business, or NIL deals, they may be able to contribute to a Roth IRA. For 2026, the limit is the lesser of their earned income or $7,500. Roth money grows tax-free, and qualified withdrawals in retirement are tax-free.

Where a Roth may be better: for a child with earned income, the Roth's tax-free growth can be very powerful over decades.

Where a Trump Account may be better: a Trump Account doesn't require the child to have earned income. Anyone can contribute for any eligible child.

A custodial account (UTMA)

A custodial brokerage account lets you invest for a child with few restrictions on investments. But there's no special tax treatment, and the money legally becomes the child's to control at the age set by state law.

Where a custodial account may be better: more flexibility in what you invest in and how the money is used.

Where a Trump Account may be better: tax-deferred growth and the potential government deposit.

Using more than one

These accounts aren't mutually exclusive. A family might open a Trump Account to capture the $1,000, use a 529 for education, and add to a custodial Roth once a child starts earning. The right mix depends on your goals and your budget.

A simple timeline for new parents

If you have a baby on the way, or a newborn at home, here's how the steps usually line up.

At the hospital. Most parents apply for their baby's Social Security number as part of the birth certificate paperwork. The card typically arrives in the mail a few weeks later. You'll need that number to open a Trump Account.

Once the Social Security card arrives. Open the account through trumpaccounts.gov or with IRS Form 4547, and elect the $1,000 pilot deposit if your child qualifies. Many parents find it easiest to handle this in the first few months so it doesn't get forgotten.

At tax time. If you haven't opened the account yet, you can file Form 4547 with your tax return. It's worth checking your return that year to make sure the election was actually made.

Every year after. Decide whether you'll add money, and how much. Some families set up small automatic contributions. Others add a lump sum on birthdays or holidays, and ask relatives to contribute instead of buying another toy.

Common mistakes to avoid

A few mistakes are already showing up with these accounts.

Assuming the $1,000 is automatic. It isn't. The election has to be made. If you opened an account but aren't sure the election went through, check.

Going over the contribution limit. The $5,000 annual limit covers parents, grandparents, other relatives, friends, and employers combined. If several family members are contributing without talking to each other, it's easy to go over. Excess contributions have to be corrected.

Treating it like a college fund. A Trump Account can help with education costs, but withdrawals are generally taxed. If college is the main goal, a 529 plan's tax-free withdrawals for education may be a better fit for at least part of your savings.

Forgetting who controls it at 18. On January 1 of the year your child turns 18, the account generally becomes theirs. They'll decide what to do with it. That's worth a conversation long before it happens.

Falling for scams. Anytime free government money is involved, scammers follow. The official website is trumpaccounts.gov. Be wary of anyone who calls, texts, or emails asking for your child's Social Security number or charging a fee to "claim" the deposit.

A few things still being worked out

Trump Accounts are brand new, and some details are still evolving.

• Financial aid. How Trump Accounts will be treated for college financial aid purposes is still being clarified.
• Investment menu. Treasury has said more fund options are coming.
• Future changes. Like any program created by law, the rules could change.

That's a reason to go in with clear eyes, not a reason to skip free money if your child qualifies.

Should you open one?

I'm not going to tell you whether a Trump Account is right for your family. But here's a simple way to think about it.

If your child was born between 2025 and 2028 and is a U.S. citizen with a Social Security number, opening the account and electing the $1,000 is generally worth looking into, since the deposit is free money. Whether you add your own money beyond that is a separate decision.

If your main goal is paying for college, a 529 plan may deserve a closer look first.

If your child has earned income, a custodial Roth IRA may be worth considering alongside or instead.

If you're a grandparent, a Trump Account is one more way to help, but it's worth coordinating with the parents so contributions don't exceed the annual limit and fit their overall plan.

What I'm not going to do

I'm not going to tell you how much a Trump Account will be worth when your child turns 18. That depends on how much goes in and how the stock market performs, and nobody can predict that.

I'm also not going to tell you it's the best account for every family. It has real advantages and real limits.

What I will say is this. When it comes down to it, the most common mistake with Trump Accounts right now isn't choosing the wrong investment. It's not claiming the $1,000 at all. If your child qualifies, don't leave it sitting there.

The short version

• Trump Accounts launched July 4, 2026, as tax-advantaged investment accounts for children.
• Kids born 2025 through 2028 who are U.S. citizens with a Social Security number can get a one-time $1,000 government deposit, but you have to elect it.
• Open an account with IRS Form 4547 or at trumpaccounts.gov, by December 31 of the year the child turns 17.
• Family, friends, and employers can contribute up to $5,000 a year combined.
• Money must be in low-cost U.S. stock index funds and generally can't be withdrawn until 18.
• At 18, the account generally becomes a traditional IRA, with income tax on most withdrawals and possible penalties before 59½.

If you're trying to figure out how a Trump Account, a 529, and your own retirement savings fit together for your family, I'm happy to help you sort it out.

Frequently asked questions

Who qualifies for the $1,000 Trump Account deposit?

U.S. citizen children with a valid Social Security number born between January 1, 2025, and December 31, 2028. The deposit must be elected when opening the account.

How do I open a Trump Account?

You can file IRS Form 4547 or set up the account online at trumpaccounts.gov. You'll need your child's Social Security number and date of birth, plus your own.

How much can I contribute to a Trump Account?

Family, friends, and employers can contribute up to $5,000 per child per year combined. The $1,000 government deposit and certain government or charitable contributions don't count toward that limit.

When can my child use the money in a Trump Account?

Generally not until January 1 of the year they turn 18. At that point the account generally becomes a traditional IRA, and withdrawals are generally taxable, with a possible 10% penalty before age 59½ unless an exception applies.

Is a Trump Account better than a 529 plan?

It depends on your goal. A 529 plan offers tax-free withdrawals for qualified education expenses. A Trump Account offers tax-deferred growth, a possible $1,000 government deposit, and more flexible uses, but withdrawals are generally taxed.

What can a Trump Account invest in?

Only mutual funds or ETFs that track the S&P 500 or another broad U.S. stock index, use no leverage, and charge annual fees of 0.10% or less.

Educational content only. Not individualized investment, tax, or legal advice. Benowitz Wealth Management is a brand of Joy Financial Group LLC, a Florida state-registered investment adviser. Consult a qualified tax professional regarding your specific situation.

Neither Joy Financial Group LLC nor Benowitz Wealth Management is affiliated with, endorsed by, or employed by the Florida Retirement System, the Florida Division of Retirement, the State Board of Administration of Florida, MyFRS, or any government agency. FRS members may obtain free, unbiased guidance from the MyFRS Financial Guidance Line at 1-866-446-9377.