Trump Accounts — Section 530A Child Savings Accounts
Starting in 2026, every child born in the United States can have a federally established investment account — funded at birth by a $1,000 government seed contribution, topped up by parents or employers, and locked into broad stock market index funds until the child turns 18. Section 530A, enacted as part of the 2025 tax legislation, creates "Trump accounts": IRA-like savings accounts for children under 18 that grow tax-deferred inside a narrow menu of low-cost index funds, then convert into fully functional individual retirement accounts when the beneficiary reaches adulthood. The $1,000 government seed contribution under § 6434 is a pilot program for children born between January 1, 2025 and December 31, 2028 — parents claim it on their tax return and it flows directly into the child's account. Employers can separately contribute up to $2,500 per year tax-free under § 128. The result is a new category of federally managed child savings that, at maximum funding, could give every 18-year-old in America a meaningful head start in a retirement account funded entirely from childhood.
Current Law (2026)
| Parameter | Value |
|---|---|
| Core statute | 26 U.S.C. § 530A |
| Account type | IRA-like; treated as traditional IRA after beneficiary turns 18 |
| Contribution limit (child years) | $5,000/year (inflation-adjusted after 2027); contributions before age 18 are NOT deductible |
| Government seed contribution | $1,000 per child under § 6434 (pilot: children born 2025–2028 only) |
| Employer contribution | Up to $2,500/year tax-free to employee or dependent's Trump account (§ 128) |
| Eligible investments (under 18) | Index mutual funds or ETFs tracking broad U.S. equity indexes (S&P 500 or equivalent); expense ratio ≤ 0.1%; no leverage |
| Withdrawal restriction | No distributions before the calendar year the beneficiary turns 18 |
| After age 18 | Account becomes regular traditional IRA; normal IRA contribution and distribution rules apply |
| ABLE rollover | At age 17, entire balance can roll over to an ABLE account tax-free |
| Death provision | If beneficiary dies before 18, account ceases to be a Trump account; FMV is includible in heir's income |
| Account creation | Secretary of Treasury can automatically create accounts for eligible children based on tax records; parents may also elect manually |
Legal Authority
- 26 U.S.C. § 530A — Trump accounts: establishes the account structure, eligible investment restrictions, $5,000 contribution cap before age 18, prohibition on withdrawals before 18, rollover rules, and the requirement that the Secretary select trustees based on reliability, customer service, and cost; after age 18 the account functions as a traditional IRA
- 26 U.S.C. § 6434 — Trump accounts contribution pilot program: parents of a "qualifying child" (under § 152(c)) born after December 31, 2024 and before January 1, 2029 may elect to receive a $1,000 tax credit payment deposited directly into the child's Trump account; the child must be a U.S. citizen with a Social Security number; the election is made on the parent's tax return
- 26 U.S.C. § 128 — Employer contributions to Trump accounts: employers may contribute up to $2,500 per year to a Trump account for an employee or the employee's dependent; the contribution is excluded from the employee's gross income; inflation-adjusted after 2027; employers must maintain a written plan with nondiscrimination requirements similar to dependent care assistance programs (§ 129)
How Trump Accounts Work
Automatic creation: The Secretary of Treasury is authorized — and expected — to automatically create Trump accounts for eligible children using information from parents' tax returns. A parent whose return shows a qualifying child born after 2024 can trigger a $1,000 government contribution by making the § 6434 election. The Treasury Secretary selects a pool of approved trustees and routes the account and seed contribution accordingly.
What the money can be invested in: Before age 18, Trump accounts can only hold eligible index funds or ETFs that (1) track the S&P 500 or another broad U.S. equity index for which futures contracts trade on a qualified exchange, (2) use no leverage, and (3) charge no more than 0.10% in annual fees and expenses. This design forces diversification into low-cost passive investing and explicitly prevents speculative investments in individual stocks, crypto, or actively managed funds. After age 18, the conversion to a regular IRA removes the investment restriction.
Contribution structure: Parents, grandparents, or anyone else can contribute up to $5,000/year to a Trump account before the child turns 18 — but those contributions are not tax-deductible (unlike a traditional IRA). They grow tax-deferred inside the account. Exempt contributions (the $1,000 government seed, employer contributions under § 128, and "qualified general contributions" from charitable organizations or government entities funding a class of beneficiaries) don't count against the $5,000 limit.
Employer contributions: Under § 128, an employer can contribute up to $2,500/year to a Trump account for any employee or the employee's dependent. The employee pays no income tax on this contribution. Employers must maintain a written plan — similar to how dependent care FSAs work — and the plan must meet basic nondiscrimination requirements so benefits aren't available only to highly compensated employees.
Bulk charitable contributions: A 501(c)(3) or government entity can make a "general funding contribution" that the Treasury distributes ratably to a class of beneficiaries — for example, all account holders under age 18 in a particular state or born in a particular year. This enables philanthropic baby-bond style programs to reach children through the Trump account infrastructure rather than building separate distribution systems.
The $1,000 Government Seed: How to Claim It
The § 6434 pilot applies to children born between January 1, 2025 and December 31, 2028. To claim the $1,000:
- Your child must be born in the qualifying period, be a U.S. citizen, and have a Social Security number
- You claim the child as a qualifying child under § 152(c) on your tax return
- You make the election (in the manner prescribed by IRS regulations) on your return for the year of the child's birth
- The IRS treats the $1,000 as a tax payment and routes it to the child's Trump account
The $1,000 contribution is not subject to federal offset for prior tax debts, child support, or other government debts — it goes to the child's account regardless. It cannot be paid before January 1, 2028 (the earliest the IRS will begin processing these payments under § 6611(a)).
After Age 18: The IRA Conversion
When the account beneficiary reaches age 18, the Trump account becomes a regular traditional IRA. The investment restrictions (index funds only, ≤0.1% expense ratio) lift. The beneficiary can:
- Leave the funds invested and growing tax-deferred
- Begin making regular IRA contributions (up to the annual IRA limit) subject to deduction rules
- Roll over to a Roth IRA (subject to income limits and the rollover becoming taxable)
- Take distributions subject to the normal 10% early withdrawal penalty before age 59½
The basis in the account (the non-deductible contributions made before age 18) is tracked so those amounts aren't taxed again on distribution.
How It Affects You
<!-- pria:personalize type="impact" -->If you have a child born in 2025, 2026, 2027, or 2028: Your child qualifies for the $1,000 government seed contribution. To claim it: (1) ensure your child has a Social Security number before you file your tax return; (2) make the § 6434 election on your federal return for the year of your child's birth (IRS will provide the specific form and instructions — watch for Form guidance in late 2026 or 2027); (3) the $1,000 is treated as a tax payment routed to the child's Trump account. The actual cash won't flow until January 1, 2028 at the earliest under the statutory timing provisions — but your child's account will be established and accruing index fund growth from the claimed amount. At a 10% annual return, the $1,000 seed alone grows to approximately $5,054 by age 17 — entirely in a low-cost S&P 500 index fund that you can't touch (protecting it from financial emergencies that might otherwise raid a 529 or taxable savings account).
If you want to contribute additional funds: You can add up to $5,000/year (inflation-adjusted after 2027) beyond the seed contribution and exempt contributions. These contributions are not tax-deductible but grow tax-deferred inside the account. The math is compelling: $5,000/year for 17 years at 10% annual return = approximately $198,000 at age 18. Even contributing just $1,000/year plus the $1,000 seed over 17 years at 10% = approximately $43,600 — meaningful retirement capital that begins compounding at birth rather than at first job. Compare to a 529: a 529 offers tax-free growth for education expenses, while a Trump account is restricted to S&P 500 index funds but becomes an unrestricted IRA at 18. If your child is likely to go to college AND you want to build retirement capital, both accounts serve different purposes and can be funded in parallel.
If you're an employer considering adding Trump accounts to your benefits: The § 128 employer contribution is easy to add and tax-efficient. Contributing $2,500/year to an employee's child's Trump account costs you $2,500 (no employer FICA, since it's excluded from the employee's wages) compared to a $2,500 salary increase that costs $2,500 + $191 in employer FICA taxes. The employee pays no income tax on it. To set this up, you need a written plan document similar to a § 129 dependent care assistance program — a simple written plan outlining eligibility and contribution amounts satisfies the requirement. Most PEOs and HR platforms haven't added Trump accounts yet as of 2026 — contact your benefits broker to ask when they'll support it; if they don't, a standalone written plan with IRS guidance compliance is still feasible.
If your child was born before 2025: The $1,000 government seed pilot covers only children born between January 1, 2025 and December 31, 2028. But parents of any child currently under 18 can open a Trump account and contribute up to $5,000/year with tax-deferred growth. As of early 2026, Treasury was still finalizing the approved trustee list — watch for IRS announcements on where to open accounts. The core value proposition for pre-2025 children: tax-deferred index fund growth from childhood, converting to a fully functional traditional IRA at age 18. Unlike a 529, there's no education-use requirement; unlike a custodial UTMA account, it has no current tax on dividends and gains. The main drawback vs. a 529: no upfront tax deduction and no state income tax deduction (versus the state income tax deduction many states offer for 529 contributions).
If your child has a disability: The ABLE rollover provision is specifically valuable for families of children with disabilities. At age 17, you can roll the entire Trump account balance into the child's ABLE account tax-free — entirely avoiding the ABLE annual contribution limit that would otherwise apply to new contributions. ABLE accounts allow tax-free growth and flexible withdrawals for disability-related expenses (housing, healthcare, transportation, education, assistive technology), whereas a Trump account-turned-IRA at 18 would impose a 10% early withdrawal penalty before 59½. For a child with a disability, the ABLE rollover at 17 means 17 years of tax-deferred S&P 500 growth followed by flexible tax-free access for disability expenses — a much more useful outcome than a locked-up IRA.
<!-- /pria:personalize -->State Variations
Trump accounts are a federal program. States do not have parallel Trump account programs, and state tax treatment of these accounts is unsettled as of 2026. Because Trump accounts are modeled on traditional IRAs:
- Most states that conform to federal IRA rules will likely follow federal treatment — the contributions aren't deductible (since they were never deductible federally), and distributions after 18 follow state IRA treatment
- California, which often decouples from federal law, has not yet issued guidance on Trump account treatment
Watch for state guidance in 2026–2027 as the accounts begin to be opened in volume.
Pending Legislation
The § 6434 pilot is limited to children born through 2028. Proposals to extend the pilot permanently and expand the $1,000 seed contribution to all children (not just those born in the pilot window) have been discussed but not enacted. Some advocates have proposed increasing the seed contribution amount or adding an income-based phase-in to provide larger seed amounts to lower-income families. Legislation to allow Trump accounts to hold a broader range of investments (beyond the S&P 500 restriction) may also emerge as the program matures.
Recent Developments
Section 530A is brand new — enacted in 2025. The IRS has not yet issued final regulations or guidance on the mechanics of the § 6434 election, the approved trustee selection process, or state tax conformity. The first accounts were expected to be created in 2026, with the first government seed contributions flowing from IRS to trustee accounts beginning no earlier than 2028 under the statutory timing provisions. Treasury issued preliminary guidance in late 2025 identifying the framework for trustee selection criteria (reliability, customer service, low cost) but had not finalized the approved trustee list as of early 2026.