Trump Accounts: The Complete Parent's Guide (Form 4547, the $1,000 Seed, Employer Money, Investment Rules)
Every child with a Social Security number can have one, and children born 2025 through 2028 can get $1,000 from Treasury. Here is how to open the account, what it can hold, how family and employer money fits under the caps, and what the tax bill looks like when your child takes money out.
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📐 Figures verified Sep 27, 2026 against Public Law 119-21 §70204, IRS Notice 2025-68, the Form 4547 instructions, the proposed regulations of March 6, August 11 and August 20, 2026, and Treasury's launch announcements. How we check numbers →
A Trump Account is a traditional IRA for a child, opened free with IRS Form 4547. U.S.-citizen children born 2025 through 2028 can also get a one-time $1,000 from Treasury if you elect it. Family and employer money is capped at $5,000 a year and must sit in a low-cost U.S. stock index fund. Withdrawals start at 18 and are taxed under IRA rules.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| Annual contribution cap (family + employer) | $5,000 per child; indexed after 2027 | P.L. 119-21 §70204 | Sep 27, 2026 |
| Tax-free employer contribution (§128) | Up to $2,500 per employee, not per child | Proposed rule REG-101355-26 | Sep 27, 2026 |
| Treasury pilot deposit (§6434) | $1,000 once; U.S. citizens born 2025–2028 with an SSN | IRS Form 4547 instructions | Sep 27, 2026 |
| First contributions and deposits | From July 4, 2026 | Treasury, May 28, 2026 | Sep 27, 2026 |
| Last day to open an account or elect the $1,000 | December 31 of the year the child turns 17 | IRS IR-2026-33 | Sep 27, 2026 |
| Eligible investments (through age 17) | U.S. stock index fund or ETF, no leverage, fees of 0.1% a year or less | IRS IR-2026-96 | Sep 27, 2026 |
| Withdrawals | From January 1 of the year the child turns 18, under traditional IRA rules | IRS Notice 2025-68 | Sep 27, 2026 |
| Money with no basis (taxed when withdrawn) | The $1,000 seed, government or charity deposits, employer money and all earnings | IRS Notice 2025-68 (PDF) | Sep 27, 2026 |
What a Trump Account Is (and Isn't)
A Trump Account is a traditional IRA with a special rulebook for childhood. The 2025 budget law (Public Law 119-21, section 70204) created it as section 530A of the tax code. The child owns the account, and the adult who opens it runs it as the "responsible party" until the child can act alone. Any child with a Social Security number qualifies as long as the account is opened before the year the child turns 18, and unlike a custodial Roth IRA, nobody needs earned income to contribute.
The special rules last through December 31 of the year your child turns 17, a stretch the IRS calls the growth period. During it, contributions are capped, the money can sit only in approved U.S. stock index funds, and almost nothing can come out. On January 1 of the year your child turns 18, the account starts behaving like any other traditional IRA.
Three things it is not. It isn't a 529, so there are no tax-free withdrawals for school. It isn't a Roth, so earnings are taxed when they come out. And contributions aren't deductible, for you or for your child. Each child can have only one Trump Account holding money, and an existing IRA can't be converted into one.
- March 6: proposed rules set who can open an account, how Form 4547 works and the deadline of December 31 of the year the child turns 17.
- May 28: Treasury launched the Trump Accounts app and began sending activation emails.
- July 4: accounts began accepting contributions, and the first $1,000 deposits started going out.
- August 11: proposed rules for employer programs: $2,500 per employee, W-2 box 12 code TA, and a pre-tax payroll option for a dependent's account.
- August 20: proposed rules defining the eligible index funds; comments close October 20, 2026.
How to Open One: Form 4547 Step by Step
Opening the account is free and takes one form.
- Check eligibility. Your child needs a Social Security number issued before you file. For the $1,000 seed, the child must also be a U.S. citizen born from January 1, 2025 through December 31, 2028.
- Decide who files. If you're asking for the $1,000, the filer is the adult who expects to claim the child as a qualifying child that year, usually a parent. Without the $1,000, the proposed rules give the right to a legal guardian first, then a parent, an adult sibling and a grandparent. Whoever files becomes the responsible party.
- File Form 4547. Attach it to your e-filed tax return (the IRS calls this the fastest route), complete it online through your IRS Individual Online Account, or mail a paper copy. Check the $1,000 box on the same form if your child qualifies.
- Activate the account. Treasury emails the setup instructions. Its first activation emails came only from no-reply@TrumpAccounts.Treasury.gov, and setup happens in the official Trump Accounts app or, without a phone, at trumpaccount.com.
- Pick the fund and start contributing. If you don't choose one of the eligible funds, the trustee chooses for you.
Two timing rules matter. The election to open an account must be made by December 31 of the year your child turns 17, and only the first election received for a child is processed. If grandparents or an ex-spouse might also file, agree on who goes first.
Scam check. Treasury says it and its providers never ask for passwords or one-time codes by email, text or phone. If a message looks off, call the Trump Account call center at 1-866-USA-4547 instead of a number from a search result (Treasury's May 28, 2026 notice).
The $1,000 Seed and Other Free Money
The pilot program in section 6434 pays $1,000 once into the account of an eligible child: a U.S. citizen with a Social Security number, born from 2025 through 2028. It is not automatic. Someone has to check the box on Form 4547, and the window stays open until December 31 of the year the child turns 17. Treasury deposits the money once the account is confirmed open; the first deposits began July 4, 2026.
The law also protects the deposit: it can't be levied or seized for offsets such as past-due child support or federal debts (proposed pilot-program rules). Left alone at a 7% average annual return, an illustration rather than a forecast, $1,000 grows to about $3,380 by 18.
Governments and charities can also make "general" contributions for a whole group of children at once. The largest so far is Michael and Susan Dell's pledge of $250 each for children 10 and under who were born too early for the federal $1,000, starting with ZIP codes where the median income is $150,000 or less (NBC News report). General contributions don't count against the $5,000 cap, but they only reach children who have an account, which is Treasury's main argument for opening one even if you never add a dollar.
The $5,000 Cap and Employer Money
The cap is $5,000 per child per year, and it covers everyone's money combined: parents, grandparents, friends, the child's own savings and any employer contribution. Three kinds of money sit outside it: the $1,000 seed, general contributions from governments or charities, and rollovers from another Trump Account. Contributions must be cash, they stop when the growth period ends, and both the $5,000 cap and the $2,500 employer limit are indexed for inflation after 2027.
Nobody polices the total for you. An employer isn't responsible for tracking what relatives put in, so keep a family tally. Money over the cap has to come back out; returning an excess contribution is one of the few withdrawals the growth-period rules allow.
| Money going in | Counts toward $5,000? | Comes out tax-free later? |
|---|---|---|
| Parents, relatives, friends, the child | Yes | Yes, as basis (the earnings on it are taxed) |
| Employer, up to $2,500 per employee | Yes | No |
| $1,000 Treasury seed | No | No |
| Government or charity deposits (such as the Dell $250) | No | No |
| Rollover from another Trump Account | No | Keeps whatever basis it had |
Source: IRS Notice 2025-68 (contributions and basis).
Employer money
Section 128 lets an employer put up to $2,500 a year into a Trump Account for an employee or the employee's child, and it isn't taxed as income to you. The details are where people trip:
- Per employee, not per child. Two children share one $2,500, and the employer can split it between them.
- Free of income tax, not payroll tax. Social Security and Medicare taxes still apply, and the amount shows on your W-2 in box 12 with code TA.
- A pre-tax payroll option. The proposed rules of August 11, 2026 let employers offer salary-reduction contributions through a cafeteria plan, for a dependent's account but not your own.
- Owners are left out. Partners, sole proprietors and more-than-2% S corporation shareholders can run a program for their staff but can't receive the tax-free contribution themselves.
What the Money Can Be Invested In
During the growth period the account can hold only an eligible investment: a mutual fund or ETF that tracks an index of mostly U.S. company stocks, such as the S&P 500, uses no leverage and charges no more than 0.1% a year in fees and expenses. Cash and money market funds don't qualify. If you don't choose among the funds the trustee offers, the trustee puts the money in a default eligible fund. These investment rules are still proposed, and comments close October 20, 2026.
That adds up to an all-stock, all-U.S. portfolio. For a newborn with 18 years ahead, it's a reasonable mix. For a 14-year-old whose account opens late, it's riskier: there's no bond or cash option to step down into before 18, so a market drop in the last year lands in full. The limits lift after the growth period, when the account can hold anything a traditional IRA can.
You can move the account to another Trump Account trustee for the same child through a rollover, and at 17 the responsible party can roll money into the child's ABLE account if the child has one.
Withdrawals: How the Money Is Taxed From Age 18
Before January 1 of the year your child turns 18, money can leave only as a rollover to another Trump Account, a rollover to the child's ABLE account at 17, a return of excess contributions or a payout at the child's death. From that date the traditional IRA rules take over: your child can withdraw for any reason, and the IRS taxes the part that was never taxed before.
That part depends on basis. Money the family put in after tax is basis, and it comes back tax-free. Money that was never taxed carries no basis: the $1,000 seed, general contributions such as the Dell deposit, employer contributions and all of the earnings. Every withdrawal is split between the two in proportion to the whole account, so the taxable share equals 1 minus basis divided by the account value. The Trump Account is figured on its own, not pooled with any other IRA your child owns.
Withdrawals before age 59½ also owe a 10% additional tax on the taxable part unless an exception applies. For an 18- to 25-year-old, the two that matter most are qualified higher-education expenses and up to $10,000 over a lifetime toward a first home. The regular income tax applies either way.
One more wrinkle: the taxable part is unearned income. If your child is 18, or a full-time student under 24, and doesn't earn more than half of their own support, the kiddie tax can tax unearned income above a small threshold at the parents' rate. Spreading withdrawals over several years, or converting some of the account to a Roth IRA in a year your child has little income (the taxable part is taxed that year), can shrink the bill.
Worked Example: Lily's Account at 18
Lily is born in March 2026. Her parents claim the $1,000 seed and add $100 a month ($1,200 a year), her grandparents give $500 a year, and her mother's employer contributes $1,000 a year tax-free. That's $2,700 a year against the $5,000 cap, every year from 2026 through 2043, the year she turns 17. The math assumes a 7% average annual return after the fund's fee and a deposit at the start of each year.
- Balance on January 1, 2044: about $101,603, made up of $3,380 grown from the seed, $61,844 from family money and $36,379 from the employer. Total put in: $49,600.
- Basis: only the family's $30,600 counts. So 30.1% of any withdrawal is tax-free and 69.9% is taxable.
- A $12,000 tuition withdrawal at 18: $3,614 comes out tax-free and $8,386 is added to her taxable income. Because it pays for college, the 10% additional tax doesn't apply. Spend the same $12,000 on a car and she'd owe another $839 on top of the income tax.
- Leaving it alone: invested untouched until about age 60 at the same 7%, the balance would grow to roughly $1.74 million in future dollars, about $396,000 in today's money at 2.5% inflation.
The same family money in a 529 would come out tax-free for tuition, which is why the decision rules below split the jobs: free money into the Trump Account, college savings into a 529.
Decision Rules
If this, then that
- If your child was born in 2025–2028 → file Form 4547 and check the $1,000 box now. It costs nothing, and the money compounds from the day it lands.
- If your employer offers Trump Account contributions → sign up. The $2,500 is per employee, not per child, so decide how to split it if you have more than one.
- If the goal is college → put your own savings in a 529 first; qualified 529 withdrawals are tax-free and Trump Account withdrawals aren't. Use the Trump Account for the free money.
- If grandparents want to help → point them to a 529, or agree on amounts so family and employer money stays under $5,000.
- If your teen has a job → a custodial Roth IRA usually beats Trump Account contributions for those earnings, because Roth growth comes out tax-free.
- If your child is 13 or older → open the account for any free money, but don't park savings needed at 18 in an all-stock fund with no way to step down.
Mistakes to avoid
- Assuming the $1,000 is automatic. It needs the Form 4547 election.
- Letting two relatives file. Only the first election counts, and it decides who runs the account.
- Going over $5,000 when parents, grandparents and an employer all contribute. The excess has to come back out.
- Treating it like a 529. Withdrawals are taxable except for the family's after-tax contributions, even for college.
- Answering activation messages from unofficial senders, or sharing a one-time code.
- Cashing out at 18 by reflex, before looking at the taxable share, the 10% additional tax and the kiddie tax.
Related: the new baby financial checklist puts Form 4547 next to the Social Security card and the 529; our guide to the best 529 plans covers the college side; Roth vs traditional accounts explains why tax-free growth matters; and the Wire's launch report covers the July 4 opening. For the tuition target itself, see how much to save for college. More guides are in the Investing & Portfolio Strategy hub and Life Guides.