As a father of young children, financial planning for the future can feel overwhelming due to the many options available. The introduction of a new savings option — 530A accounts, known as Trump Accounts — has only compounded that feeling. Let’s walk through this new account and see how it stacks up to other investment vehicles that could be beneficial for you and your family as you plan for the future.
What is a 530A “Trump” Account?
A 530A or Trump Account is advertised as a starter retirement account for kids, available to open and fund starting July 4, 2026. There are two important time periods to be aware of:
- Birth to age 18 is referred to as the growth period.
- Any time after age 18 is considered the post-growth period.
Contributions can be made prior to the year the beneficiary turns 18. Withdrawals can be made penalty-free after the beneficiary turns 59 ½ (or convert to a Roth IRA before that time). Accounts are opened and custodied at trumpaccounts.gov or on the mobile app, which was built by BNY Mellon and Robinhood.
What are the rules for the Growth Period of a Trump Account?
There are four types of contributions allowed during the growth period:
Direct Contributions — anyone can contribute on the child’s behalf.
- Up to $5,000 total contributions per year (expected to be indexed to inflation after 2027).
- This $5,000 is reduced by the amount of employer contributions made.
- Non-deductible direct contributions must be made by December 31 of the contribution year. Note that this is different from the April 15 of the following year rule that is in place for IRAs/Roth IRAs/HSAs.
Employer Contributions — employers can contribute up to $2,500 per year (expected to be indexed to inflation after 2027) to employees or their dependents.
- $2,500 contribution is per employee, not per dependent or account.
- Any employer’s contributions count towards the $5,000 direct contribution limit.
Qualified General Contributions — made by charitable organizations or government entities (no annual dollar limit).
- Does not count against the $5,000 direct contribution limit.
- Must be distributed equally among a broad class of eligible beneficiaries.
- Example: $100 contribution to every child whose parents’ income is under $75,000/year and who lives in XYZ zipcode.
$1,000 Pilot Program Contributions — for children born January 1, 2025, to December 31, 2028.
- Does not count against the $5,000 direct contribution limit.
- The election must be made on Form 4547 or at trumpaccounts.gov.
Eligible Investment Types include Mutual Funds or ETFs that track a U.S. equity index (for example: U.S. Large Cap index or U.S Small Cap index).
What are the rules for the Post-Growth Period for a Trump Account?
There are three options for the Trump Accounts once the beneficiary reaches their 18th birthday:
Distribute
Most IRA rules apply:
- Direct contributions are treated as after-tax dollars.
- Other contributions and growth dollars are pre-tax.
- Distributions are pro-rata, pre- and after-tax.
- Early withdrawal penalty (before age 59 ½) and common exceptions for educational expenses, first-time homebuyers, etc.
Rollover to Traditional IRA
Trump Accounts can be rolled over to a traditional IRA after the growth period.
Convert to Roth IRA
- Roth conversions can be done any time after the growth period.
- The owner and beneficiary owe tax on the non-basis growth.
- The conversion begins the Roth IRA’s 5-year waiting period for tax-free withdrawals of principal.
- Conversion ideally happens once the kiddie tax rules no longer apply, but before the beneficiary has a high income. Additional consideration will be needed for who will pay the tax on the conversion.
Additional Considerations for Trump Accounts
Gift Tax Exclusion
The annual gift tax exclusion currently allows individuals to gift up to $19,000 per recipient in 2026 without triggering gift tax reporting. Under current law, Trump Accounts are not subject to this exclusion. Since the beneficiary cannot access the funds until the year they turn 18, contributions are technically gifts of future interests. Only present-interest gifts qualify for the exclusion.
Since the contributions don’t currently qualify for the exclusion, they are considered a taxable gift and must be reported on tax form 709, as well as count against one’s lifetime gift exemption. Contributions to Trump Accounts can count as taxable gifts, but that doesn’t mean you’ll owe tax. Gifts reduce your lifetime gift and estate exemption, and you only pay tax if you go over that limit (about $15 million in 2026). Still, it’s important to report them properly so you don’t run into issues with your estate plan later.
The American College of Trust and Estate Counsel (ACTEC) has formally submitted comments to the IRS (in November 2025 and again in January 2026), urging a technical correction that would treat contributions as gifts of a present interest.
Taxes
Federally, Trump Accounts will be treated similarly to after-tax Traditional IRAs. Due to the mix of pre-tax and post-tax dollars, tracking cost basis should be done, which can add some complexity. It is recommended that you talk with your CPA and/or tax professional about the tax implications of opening a Trump Account.
At least seven states plan not to recognize Trump Accounts as IRAs, but instead will tax capital gain distributions and/or interest annually (California, Hawaii, Kentucky, Massachusetts, Pennsylvania, South Carolina, and Wisconsin). These states do not have the same federal tax exemptions for child savings accounts and, as a result, treat annual investment earnings as taxable income rather than allowing for tax-deferred growth.
How can individuals with young children get the most out of Trump Accounts?
It is important that your investment vehicle aligns with your goal-based savings strategy. It makes sense to open an account for children who qualify for the $1,000 federal seed contribution. It may make sense to open an account to be eligible for qualified general contributions or employer contributions.
If giving a beneficiary a head start on retirement savings is a priority, opening and funding a Trump Account is a great way to get started on that goal. You may want to look into converting the dollars to Roth when there is an opportunity.
What are other savings options for child savings goals?
There are other types of accounts to consider, such as 529 plans for education, UTMA/UGMA or parent-owned taxable accounts for early-life purchases like a home, and custodial Roth IRAs or Trump Accounts to set your beneficiary on the right track towards retirement. Each type of account has its own rules, benefits, and drawbacks, so it is a good idea to consult with a financial advisor.
While new options like Trump Accounts can add complexity, they can also create opportunities for families who are thinking intentionally about their children’s future. Our goal at Greenspring Advisors is to help you understand your options. We encourage you to connect with an advisor to walk through what makes the most sense for your family’s situation.
Sources:
https://trumpaccounts.gov/
https://www.irs.gov/trumpaccounts
https://home.treasury.gov/news/press-releases/sb0508
https://www.investor.gov/introduction-investing/investing-basics/investment-accounts/tax-advantaged-accounts/trump-accounts
https://revenue-pa.custhelp.com/app/answers/detail/a_id/4264/~/how-are-530a-accounts-%28aka-%E2%80%9Ctrump-accounts%E2%80%9D%29-taxed-for-purposes-of-the-pa
https://www.fidelity.com/retirement-ira/roth-ira-kids
https://www.schwab.com/custodial-account
https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes
https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2023-2024/application-and-verification-guide/ch3-expected-family-contribution-efc
https://www.irs.gov/instructions/i4547
https://www.washingtonpost.com/business/2026/02/26/trump-accounts-state-taxes/
