The One Big Beautiful Bill Act (OBBBA) added a provision that allows children to have a new type of retirement account. The new account is similar to a traditional IRA for the child and is called a "Trump Account.”
The new account may be funded on or after July 4, 2026. There are specific rules that apply to the Trump Account. It is a new type of IRA that permits only certain types of investments and has its own contribution rules and limits. The Trump account may be created for a child under age 18. Those born during 2025 through 2028 may benefit from a government addition.
There are multiple special provisions that apply to the Trump Accounts.
- Contributions – Contributions made after July 4, 2026, may include a one-time Federal Government addition of $1,000. There could be other additions provided by governmental entities or qualified nonprofits. Employers and parents may also make contributions. The contributions are permitted during the growth period and there is no requirement for the child to have earned income to be eligible for contributions.
- Eligible Investments – The account investments are limited to mutual funds or exchange-traded funds that track an index of U.S. companies. For example, an approved fund would be the S&P 500 stock market index. The investment fund cannot have annual fees and expenses of more than 0.1%.
- Distributions – During the growth period, there may not be distributions to the child. However, there are provisions that allow rollovers to another Trump Account or to an Achieving a Better Life Experience (ABLE) account. Following the growth period, the account transitions to a traditional IRA.
- Reporting – The accounts will have their own reporting requirements. However, it is expected that these will be similar to the traditional IRA reporting rules.
- Coordination with IRA Requirements – Following the growth period, the accounts will follow traditional IRA rules. There are specific rules for IRA contributions, distributions, required minimum distributions and rollovers. The Trump Account is not permitted to be aggregated to other IRA accounts for specific purposes.
- Employer Contribution Limit – An employer is permitted to make contributions to the Trump Account for a child of an employee. The limit is $2,500 per year. This funding amount must meet similar fairness requirements that would also apply to a dependent care assistance program.
Editor's Note: There are generous individuals who have indicated they will contribute billions of dollars to help fund Trump Accounts for children born outside the pilot funding program. The initial account beneficiaries may receive contributions from these funds.
