An Introduction to Trump Accounts and the Contribution Pilot Program
Created through the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, “Trump accounts” are a new type of traditional individual retirement account (IRA) specifically designed to enable families to build financial security for their children.[1] A parent or guardian can establish a Trump account for their minor children beginning after December 31, 2025, and can begin making contributions to the account after July 4, 2026. Parents or guardians can establish and contribute to accounts for their minor children. Through supporting contributions from both private and government funding mechanisms and an offering of regulated, low-fee investment options, Trump accounts aim to encourage early financial growth and maximize long-term savings.
Account Establishment and Eligibility: Minors under the age of 18 who possess a valid Social Security number (SSN) are eligible beneficiaries for a Trump account, regardless of family income.[2] To establish a Trump account, the minor’s parent or guardian must make an election by filing IRS Form 4547. This election may be made at any time before the end of the calendar year in which the minor turns 18 years old. All initial accounts will be established and maintained by a public non-profit established by the Treasury Department. However, any time before the end of the calendar year in which the beneficiary turns 18, the initial Trump account may be rolled over to a Trump account established and maintained by a financial institution of the beneficiary’s parent’s or guardian’s choosing.[3]
Contributions, Permissible Investments, and Distributions: During the period ending December 31 of the year the beneficiary turns 18, the Trump account is considered to be in “growth phase.” During the growth phase, the special rules outlined below apply. When the growth phase has ended, traditional IRA rules governing contributions, rollovers, permissible investments, and distributions apply.[4]
Contributions: During the growth phase, contributions can come from three sources: (1) a parent or guardian of the beneficiary or the beneficiary themself, (2) employers of the beneficiary or of the parent or guardian of the beneficiary, or (3) general funding contributions. Unlike traditional IRAs, no earned income is necessary for a parent or guardian of a beneficiary or the beneficiary to make contributions.[5] These contributions are made with after-tax dollars, as the contributor is not eligible to claim an income tax deduction.[6] For gift tax purposes, contributions made by a parent or guardian of the beneficiary are taxable gifts that do not qualify for the annual gift tax exclusion. Representing a second potential source of funding, employers may establish Trump account contribution programs, allowing them to fund accounts for their employees or their employees’ dependents.[7] Employer contributions are limited to $2,500 per employee annually (also adjusted for inflation after 2027) and are not included in the employee’s or the employee’s dependent’s gross income.[8]
A third potential source of funding can come from general funding contributions. General funding contributions are contributions made through the Treasury Department on behalf of a government or charitable organization to a designated class of minors.[9] The Contribution Pilot Program (CPP) is considered a general funding contribution. Under the CPP, when establishing an account for an eligible “qualifying child” as defined in I.R.C. § 152(c), a parent or guardian may elect to have the Treasury Department make a one-time $1,000 payment.[10] A “qualifying child” is eligible to receive a contribution under the CPP if they meet their date of birth falls after December 31, 2024 and before January 1, 2029 and they are a United States citizen with a valid SSN.[11] On December 2, 2025, the White House announced that Michael and Susan Dell made a $6.25 billion charitable commitment to provide additional seed funding to Trump accounts of certain minors residing in many zip codes. The White House intends for private philanthropists to create future opportunities to obtain additional general funding contributions. General funding contributions are not included in the beneficiary’s gross income.[12]
During the growth phase, non-exempt contributions are capped at $5,000 per year (adjusted for inflation after 2027).[13] Employer contributions count towards the $5,000 annual contribution limit.[14] General funding contributions and qualified rollovers between Trump accounts are considered exempt contributions that do not count towards the $5,000 annual contribution limit.[15] Aggregation rules apply if a minor is a beneficiary of multiple Trump accounts.[16] An excise tax is imposed on excess contributions, which are defined as (i) any amount contributed during the relevant calendar year exceeding the allowed limit (after subtracting timely withdrawals of excess funds), plus (ii) any excess from the previous tax year.[17]
Permissible Investments: During the growth phase, Trump accounts may only be invested in “eligible investments.”[18] An eligible investment is defined as any mutual fund or exchange-traded fund that (1) passively tracks the return of a “qualified index,” (2) avoids leveraging, and (3) has annual fees or expenses that are capped at 0.1% of the investment balance.[19] A qualified index refers exclusively to the S&P 500 index or other broad based U.S. equity indexes, and does not include industry or sector-specific indexes.[20]
Distributions: Distributions made prior to January 1 of the calendar year in which the beneficiary turns 18 years old are prohibited, unless an exception applies.[21] The two exceptions to otherwise prohibited distributions are: (1) a tax-free qualified rollover to another Trump account established for the same beneficiary,[22] and (2) a tax-free transfer to an ABLE account in the year the beneficiary turns 17.[23] If the beneficiary passes away before reaching age 18, the account’s fair-market value minus the account’s basis is considered taxable income to either the inheriting party or the beneficiary’s estate in the year of the beneficiary’s death.[24] After December 31 of the calendar year in which the beneficiary turns 18 years old, distributions are governed by traditional IRA rules.[25] For purposes of determining the taxability of distributions in both cases, contributions made by a parent or guardian of the beneficiary or the beneficiary create basis in the Trump account, whereas employer contributions and general funding contributions do not.[26]
[1] I.R.C. § 530A.
[2] I.R.C. § 530A(b)(2).
[3] Notice 2025-68.
[4] Notice 2025-68.
[5] I.R.C. § 530A(b)(1).
[6] I.R.C. § 530A(b)(1).
[7] I.R.C. § 128(a); I.R.C. § 128(c).
[8] I.R.C. § 128(b)(1); I.R.C. § 128(b)(2).
[9] I.R.C. § 530A(f)(1); I.R.C. § 530A(f)(2).
[10] I.R.C. § 6434; Notice 2025-68.
[11] I.R.C. § 6434; Notice 2025-68.
[12] Notice 2025-68.
[13] I.R.C. § 520A(c)(2)(A).
[14] I.R.C. § 530A(c)(2)(B).
[15] I.R.C. § 530A(c)(2)(B); I.R.C. § 530A(f)(1); I.R.C. § 530A(f)(2).
[16] I.R.C. § 520A(c)(2)(A).
[17] I.R.C. § 530A(h)(5); I.R.C. § 4973.
[18] I.R.C. § 530A(b)(1)(C)(iii).
[19] I.R.C. § 530A(b)(3)(A).
[20] I.R.C. § 530A(b)(3)(B).
[21] I.R.C. § 530A(d)(1).
[22] I.RC. § 53A(d)(3).
[23] I.R.C. § 530A(d)(4)(A)-(B).
[24] I.R.C. § 530A(d)(6).
[25] Notice 2025-68.
[26] Notice 2025-68.