New IRS Guidance on Trump Accounts is Released
The IRS has issued guidance on Trump Accounts, which are new tax advantaged accounts for children established as part of the One Big Beautiful Bill Act (OBBBA). Trump Accounts are scheduled to become available as soon as July 4, 2026. Notice 2025-68 provides answers to some questions about how these accounts will work.
Establishment
There have been many questions about how Trump Accounts can be opened. The IRS guidance gives us some answers. A new account can be established by making an election on IRS Form 4547, “Trump Account Election(s),” or (eventually) through an online application on trumpaccounts.gov. The Treasury Department will select one or more financial institutions to serve as trustee for all initial Trump Accounts. However, Trump Accounts may be moved to other financial institutions via trustee-to-trustee transfer. The entire account must be moved.
Contributions
One element of Trump Accounts that has generated significant interest is the $1,000 Federal government seed money available to children born between 2025 and 2028. To receive this contribution, a separate election must be made on Form 4547 at any time or through the website.
Notice 2025-68 also clarifies some details about how other contributions to Trump Accounts will work. During the period before the year in which a child reaches age 18, (i.e., the “growth period”), there are several types of contributions that can be made beyond the government $1,000 contribution. These include qualified general contributions, which are contributions that can be funded by government entities or charities for members of a qualified class of beneficiaries, employer contributions, and contributions from individuals, such as parents.
Combined annual contributions from individuals and employer contributions are limited to $5,000, as indexed beginning in 2028. There is a separate $2,500 annual limit, as indexed, on employer contributions. Note, however, that the $1,000 from the Federal government and any qualified general contributions do not count towards the $5,000 limit.
There are no prior-year contributions to Trump Accounts like there are for IRAs.
Distributions
No distributions will be allowed during the growth period, except for a trustee-to-trustee transfer to a rollover Trump Account, a qualified ABLE rollover contribution, a distribution of excess contributions, or a distribution upon the death of the account beneficiary.
After the growth period, distributions may be taken for any purpose and at any time. Any contributions made by parents or other individuals would be after-tax basis when distributed. However, all other contributions and earnings in the Trump Account would be fully taxable when withdrawn.
Coordination with IRAs
The guidance answers some questions about the relationship between Trump Accounts and IRAs. A child with compensation can make an IRA contribution as well as receive a Trump Account contribution. After the growth period, nearly all of the special rules for Trump Accounts cease to apply, and the accounts generally will be subject to the traditional IRA rules. The Notice confirms that Roth IRA conversions are allowed after the growth period.
Despite following the IRA rules in the year the child turns age 18, a Trump Account continues to be a “Trump Account” even after the growth period (unless it is converted to a Roth IRA). It can never receive SEP or SIMPLE IRA contributions. Similarly, a Trump Account can never be aggregated with other IRAs when allocating basis (i.e. the “pro rata rule”) related to a distribution from either the Trump Account or a person’s IRA account.
By Sarah Brenner, JD
Director of Retirement Education
Ed Slott and Company, LLC
Interested in reading more of our library of articles on topics like this and more? Click here to browse our selection of financial articles.
If you still have questions about Trump accounts, click here to schedule a complimentary 20-minute Q&A with a licensed financial advisor who can help you start on the right path.
Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007. Click the title of the group or logo below to learn what that could mean for your retirement plan.