Trump Accounts (530A Accounts) were established with the legislation passed under the One Big Beautiful Bill Act (OBBBA). They are a savings account for children under the age of 18 that provide tax-advantaged savings to foster investment. Any child under 18 can have a Trump account, and children born between January 1, 2025, and December 31, 2028 can also receive a contribution of $1,000 from the government upon establishing an account.
About Trump Accounts
A Trump Account is a way to kick-start an investment fund for a child. While only some accounts are eligible for the $1,000 pilot contribution from the government, all accounts create the benefit of an accessible savings opportunity. Each account has a total annual contribution limit of $5,000 (subject to inflation adjustments) from parents. Employers can also contribute up to $2,500 additional without their contribution being taxable to the employee. There is no deduction available for setting up or funding a Trump account, but the funds will grow tax-deferred until the beneficiary uses them.
When the child turns 18, the account must begin withdrawals or convert to an IRA. These withdrawals are taxed as ordinary income at the child’s rate when they turn 18 years old. If the child needs the funds prior to turning 18, there is a 10% penalty, although this penalty can be waived for exceptions including using the funds for higher education, starting a business, or purchasing a first home. If the account is converted to an IRA, standard IRA withdrawal rules will apply.
Trump Account Estimated Growth
Investments within the account are limited to low-cost, non-leveraged index mutual funds or ETFs tracking the S&P 500 or similar US indices, with a 0.10% expense cap. However, these investments will still grow. If you only set up an account with the $1,000 from the government, your child is estimated to have $5,800-$6,000 in their account when they turn 18. With modest contributions from parents, the account could be $50,000 – $100,000. With maximum contributions (let’s just say 18 years x $5,000 = $90,000 investment), your child could have a fund of $191,000 to over $300,000 – all depending on how the market behaves.
How to Set up a Trump Account on your 2025 Tax Return
Trump Accounts will not become available/active for funding until July 5, 2026, but you can submit a form within your 2025 tax return to get the account(s) set up. With your tax return filing, you will include Form 4547 Trump Account Election(s). The form is simple and will require information about you and the qualifying child/children. Each child must have a valid Social Security Number (SSN) to be eligible. If you have already filed and want to open an account, you can register through an online portal at www.trumpaccounts.gov.
Current clients who want to set up an account just need to let us know when they submit their documents for preparation.
Erann Thompson
As a Principal and the Director of Advisory Services at Avizo, Erann collaborates closely with business owners to identify the optimal mix of accounting cloud applications, aiming to enhance efficiency and profitability for your business.
