Don’t Leave $1,000 on the Table: A Guide to Trump Accounts

A new tax-advantaged savings vehicle launches July 4, 2026 — here’s how to take advantage of it.

The One Big Beautiful Bill Act created a brand-new savings account for American children — formally called a “Trump Account” (IRC §530A). Accounts open officially on July 4, 2026, and the U.S. Treasury has already launched the Trump Accounts app and is sending activation emails to families who filed IRS Form 4547. If you haven’t acted yet, now is the time.

Below is what you need to know — and what we at Accavallo & Company can help you do before the launch date.

What Is a Trump Account?

A Trump Account is a custodial, tax-deferred investment account opened for a child under age 18. Think of it as a traditional IRA for minors: contributions grow tax-deferred, withdrawals after age 18 are taxed as ordinary income, and early distributions before age 59½ are generally subject to the standard 10% IRA penalty (with exceptions for education, a first home purchase, and similar IRA-qualified events).

Unlike a 529 college savings plan, Trump Accounts are not restricted to education expenses. Once your child turns 18, the account converts to a standard traditional IRA and follows all the same rules.

Key Rules at a Glance

Eligibility:

Any child who is a U.S. citizen with a Social Security number and who will be under age 18 at year-end qualifies.

Annual Contribution Limit:

The total annual contribution limit is $5,000 per child (subject to cost-of-living adjustments after 2027). Contributions can come from parents, grandparents, other family members, employers, charitable organizations, or governments. Employer contributions are capped separately at $2,500 per employee per year.

$1,000 Government Seed Contribution:

Children born between 2025 and 2028 will receive a one-time $1,000 contribution from the U.S. Treasury, deposited directly into their account beginning July 4, 2026. This seed money does not count against the $5,000 annual limit. However, it does not create tax “basis” — it will be fully taxable upon withdrawal.

Tax Treatment of Contributions:

Individual contributions (from parents, grandparents, etc.) are not tax-deductible, but they do create basis. This means when your child eventually withdraws their own out-of-pocket contributions, that portion is tax-free. Government and employer contributions are fully taxable on withdrawal.

Investment Rules:

During the growth period (before age 18), accounts are limited to low-cost index mutual funds or ETFs tracking primarily U.S. companies, with expense ratios below 0.10% and no leverage. This keeps fees minimal and keeps investments simple.

No Withdrawals Until Age 18″

Distributions are not permitted during the growth period. Beginning January 1 of the year the child turns 18, the account converts to a traditional IRA and standard IRA distribution rules apply.

How to Open an Account

To open a Trump Account, an authorized adult (parent or guardian) files IRS Form 4547 — the Trump Account Election — which can be filed alongside a Form 1040. There is no cost to open an account.

Beginning today, families who have already filed Form 4547 are receiving activation emails from [email protected] with instructions to complete setup through the Trump Accounts app (available on Apple and Google Play) or at TrumpAccounts.gov.

Scam alert: Treasury will only contact you by email at this stage — not by phone or text. Always access your account directly through TrumpAccounts.gov or the official app. Do not use phone numbers from internet search results.

What This Means for Employers and Closely Held Businesses

Trump Accounts create a compelling, low-cost employee benefit for small and closely held businesses — one of the most direct ways the program benefits the business community.

• Employer contributions of up to $2,500 per employee per year are a deductible business expense and excluded from the employee’s income.
• Employees can also make pre-tax salary deferrals through a Section 125 cafeteria plan, subject to the $2,500 aggregate limit.
• To offer the benefit, businesses must establish a written Trump Account Contribution Program, satisfy nondiscrimination testing rules (similar to dependent care assistance programs), and notify the account trustee when making employer contributions.

For owners of S-corps, partnerships, and other closely held entities, this is also worth analyzing from a personal planning standpoint for any children on payroll or as an added benefit for key employees.

5 Tips From ACO CPA to Maximize Trump Accounts

1. File Form 4547 as soon as possible. Accounts must be elected before contributions can be accepted. Early filers are already receiving activation emails. Don’t wait — the July 4 launch is imminent and the $1,000 government seed requires an active account.
2. Track basis carefully. Only individual (non-employer, non-government) contributions create tax basis. Good recordkeeping now prevents unnecessary tax at withdrawal — potentially 15 to 18 years from now.
3. Coordinate with existing education savings (529 plans). Trump Accounts and 529 plans serve different purposes. A 529 offers state tax deductions (including Connecticut’s) and tax-free withdrawals for qualified education. Trump Accounts are more flexible at distribution but taxed as income. A coordinated strategy may include both.
4. Business owners: consider adding this as an employee benefit. A written Trump Account Contribution Program is straightforward to implement, deductible, and meaningful to employees with young children. It differentiates you as an employer at minimal cost.
5. Plan for the age-18 IRA conversion. Once your child turns 18, the Trump Account becomes a traditional IRA. If your child is in a low tax bracket at that point, distributions or Roth conversions may be highly favorable. Start the planning conversation early.

How We Can Help

At Accavallo & Company, we are ready to help you evaluate Trump Accounts in the context of your overall tax and financial plan. We can:

• Assist with preparation and filing of IRS Form 4547
• Review how Trump Accounts interact with your existing 529 plans, IRAs, and estate plan
• Help closely held business owners design and document a compliant Trump Account Contribution Program
• Model the long-term tax impact of contributions and distributions for your family

Contact us today to schedule a planning conversation.