For months, we’ve been talking with families about the new Trump Accounts on the horizon. As of July 4, they’re officially live, and many of you have asked the same question: what do we do now?
This guide walks through how the accounts work, who can contribute, and the questions worth raising before you open one.
Think of it as an IRA-style investment account for a child. Like a traditional IRA, the money grows tax-deferred, but special rules apply during the “growth period,” the first 18 years of a child’s life.
The account belongs to the child. The parent, guardian, or other authorized adult who opens it serves as custodian until the child turns 18. Contributions from individuals are made with after-tax dollars.
The child must be a U.S. citizen with a valid Social Security number, and no child may have more than one account.
Children born between January 1, 2025 and December 31, 2028 may also qualify for a one-time $1,000 federal seed contribution. To claim it, the person opening the account must be able to claim the child as a dependent for the child tax credit.
If the child isn’t eligible for the seed, the account can be opened by a parent, legal guardian, adult sibling, or grandparent. The child must be under age 18 at the end of the year the account is opened.
Setting up an account takes two steps:
The Social Security Administration is also rolling out automatic enrollment for newborns when parents request a Social Security number during birth registration.
We’ve put together a handout that walks through each step and answers the most common questions. Reach out and we’ll send you a copy.
Once an account is open, the circle of helpers is wide:
Family, friend and employer contributions combined can’t exceed $5,000 per year per account (indexed from 2027). Government and nonprofit gifts don’t count toward that limit.
Contributions go into low-cost, broadly diversified U.S. stock index funds or ETFs with an expense ratio of 0.10% or less. The default fund is the State Street SPDR Portfolio S&P 500 ETF (SPYM), with an expense ratio of 0.02%. Four additional funds (IVV, VTI, SPTM and ITOT) are expected soon.
Accounts are held at Robinhood, which manages them together with BNY, and a companion app lets families track the investments. Please note that the default fund is the program’s stated default, not a recommendation from Crestview.
Withdrawals generally can’t begin until the year the child turns 18, and they’re taxed as ordinary income at the child’s rate. How much is taxed depends on where the money came from:
At 18, a Trump Account essentially becomes a traditional IRA. Withdrawals before age 59½ may face income tax plus a 10% early-withdrawal penalty. The penalty is waived for certain qualified expenses, including higher education, a first home purchase (up to $10,000), birth or adoption costs (up to $5,000 per child), emergencies (up to $1,000 per year), and certain medical expenses.
Even modest contributions have a long runway, and 18 years of tax-deferred growth can make a real difference. But just as valuable is what the account teaches.
Watching a balance grow gives a child a first, real lesson in compound interest, saving, and stewardship, habits that tend to last a lifetime. For grandparents and parents thinking about legacy, that’s the point: passing on not only assets, but the skills and attitudes that protect them.
A Trump Account isn’t the only option. A 529 plan allows tax-free withdrawals for qualified education costs, and a Roth IRA offers tax-free retirement withdrawals with a higher annual contribution limit. The right fit depends on your goals, tax situation and timeline.
It’s also worth knowing that outcomes aren’t guaranteed. Contributions, employer participation and market performance all affect what a child may have at 18. Analysts have noted the accounts may be of greater use to families able to contribute beyond the seed, and open questions remain about whether balances could affect eligibility for benefits such as Pell Grants or SSI. If the beneficiary is disabled, the family may roll the money into a tax-advantaged ABLE account at age 17.
If you’d like help deciding whether a Trump Account belongs in your family’s plan, we’d be glad to sit down with you. Schedule a Clear Path consultation at (469) 338-5333 or visit crestviewwm.com. We’re at 6540 Alliance Dr, Ste 120, Rockwall, TX.
Crestview Wealth Management, LLC (CWM) is a Texas-registered investment advisor. CWM is a member of Ethos Financial Partnership, a Securities and Exchange Commission registered investment advisor. Content contained herein is not intended and should not be construed as personalized investment advice or an offer for the purchase or sale of any security, insurance, or other investment product. Investments involve the risk of loss, including possible loss of principal. Please consult with a qualified financial, tax, accounting, or legal professional before implementing any ideas or strategies discussed here. Content provided may be obtained from sources believed to be reliable but cannot be guaranteed as to its accuracy or completeness.