By: Jason Print, CFP®
Co-President & CEO
Broadly speaking, Trump accounts are long-term wealth-building account types set up for kids. Similar to UTMA or 529 accounts, they are opened by parents or guardians and managed until the children turn 18. A Trump account is a new type of tax-advantaged investment account for children created by U.S. federal law under the One Big Beautiful Bill Act. It’s meant to help kids start investing early by putting money into broad U.S. stock market index funds.
The website trumpaccounts.gov is now live and will likely be a resource for future updates, as well as a place to establish the account and get the $1,000 starter deposit from the U. S. government. Eligible for this federal contribution are only those born between January 1, 2025 and December 31, 2028. Others can open the account, but they won’t be eligible to receive the $1,000 from the government. While no required contribution is likely, it’s possible to contribute up to $5,000 per year.
According to President Trump, “This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation. And they’ll really be getting a big jump on life.”
According to the website, it’s expected that parents will be able to open an account by July 5, 2026. However, they may be able to get started earlier than that. Parents can pre-elect to open an account early by submitting IRS Form 4547 with the 2025 tax return once the form becomes available, thus reserving the child’s spot and $1,000 seed amount. This form is expected to become available in early 2026, before the tax filing deadline.
The idea is for these accounts to grow tax-deferred until the money is taken out. According to the official site, the funds can be accessed without penalty when the child turns 18 for qualified expenses such as education, a first home purchase, or starting a business. Withdrawals may be subject to restrictions and would be taxed at standard income rates. This may work similarly to an IRA account, where account holders may face income taxes on withdrawals and/or early withdrawal penalties.
Investment Options: The money is meant to be invested in a diversified portfolio of low-cost index funds to maximize long-term growth while minimizing risk. Similarly to a 529 plan or a 401(k) account, there will likely be a selection of such funds to choose from when the account is funded.
Michael Dell Foundation: These accounts are being well-received within the investment community as a way to get kids started early, especially since there is no required contribution from the family. Michael and Susan Dell have promised to give an additional $250 to children under 10 who live in certain zip codes with a median household income below $150,000. Thus, it’s possible that some newborns end up with a total seed sum of $1,250 in their investment account. The Dells have committed to donating $6.25 billion to fund these accounts.
Outside of government seeding, these will be after-tax contributions. Additional details on the taxation of the distributions from these accounts are still forthcoming, and it may depend upon what the distributions are used for (new home, college, etc.). For those eligible for the U.S. government funding and the Dell contributions, it’s free money.
For those born outside the specified timeframe or ineligible due to income limits, this account will need to be considered alongside other existing account types for minors. An UTMA account is a brokerage account opened with the social security number of the minor, with a parent or a guardian typically listed as the custodian until the child comes of age. Funds from this account can be invested in a broader range of securities compared to a Trump account. There are also tax advantages with an UTMA account.
For 2025, the tax rules work like this:
First ~$1,300 of unearned income (interest, dividends)
→ Not taxed
Next ~$1,300
→ Taxed at the child’s tax rate (usually very low)
Anything above ~$2,600
→ Taxed at the parent’s marginal tax rate
If the goal is primarily to accumulate funds for educational purposes, then a 529 plan is worth considering alongside a Trump account. The 529 will also have a limited number of investment options, and contributions are after-tax. The main advantage of these types of accounts is that any growth is tax-free as long as the funds are used for qualified higher educational expenses.
As you consider getting the next generation of your family started early, please reach out to your advisor to discuss which account makes the most sense. It may turn out to be more than one since the limits with the Trump account are lower than with either the UTMA or the 529 accounts. However, each account is likely to have its pros and cons.
