Trump Accounts can generally be described as restricted investment accounts for minors, layered with a type of individual retirement account once the minor reaches adulthood. With unique contribution rules, investment restrictions and pending regulatory guidance, families, foundations, financial institutions and businesses should start evaluating now how these accounts fit into their planning and business strategies.
Program Overview
In 2025, Congress created Trump Accounts under IRC §530A. These accounts represent a significant departure from traditional retirement savings vehicles. Any U.S. child under age 18 with a Social Security number is eligible. Children born between January 1, 2025, and December 31, 2028, may qualify for a federal pilot program that provides an initial $1,000 contribution. Accounts can be opened at a Treasury Department-selected financial institution using IRS Form 4547, and an online portal is expected to launch in mid-2026.
Contributions may begin after July 4, 2026. Anyone – family, employers or the minor – can contribute up to $5,000 annually, indexed for inflation after 2026. Charitable qualified general contributions from a foundation do not count toward the $5,000 limit. Employer contributions up to $2,500 are not included in the employee’s gross income. Contributions are allowed even if the minor has no includible compensation, which distinguishes Trump Accounts from other IRAs.
In the growth period, prior to the beneficiary attaining age 18, the Trump Accounts must be invested exclusively in low-cost index funds or exchange-traded funds (ETFs) with annual fees of 0.1 percent or less. No distributions are permitted during the growth period, ensuring nearly two decades of compounding growth. Distributions in excess of the beneficiary’s basis are subject to taxation. Distributions after the growth period are subject to an additional 10% penalty tax if taken prior to the beneficiary being age 59½, unless taken for specified financial hardships, home ownership or educational expenses.
Why This Is Important
For families, Trump Accounts offer a structured way to build long-term savings for minors, supported by federal seed funding for eligible participants. These accounts offer different tax consequences than 529 plans, and are likely to serve a different purpose in planning – potentially offering a pathway to a retirement nest egg or safety net, or even a fund for a first home or future family planning through birth or adoptions.
For employers, the program introduces a novel benefit option that could differentiate compensation packages, but it also raises compliance and administrative challenges. From an employer standpoint, Trump Accounts present several unique considerations. The ERISA status of these arrangements remains uncertain pending guidance from the Department of Labor. Unlike traditional benefit structures, most contributions would be directed to an employee’s dependent rather than the employee’s own account, which is atypical in most benefit programs. The program’s strict investment limitations – restricted to low-cost index funds and ETFs – contrast sharply with the flexibility employees expect under most retirement plans and health savings accounts. Employers may also need to coordinate contributions with cafeteria or §125 plans, though operational details are not yet clear. Interest among employers has been limited so far, given the lack of regulatory detail and competing priorities for benefits offerings, particularly for employees without dependent children.
Considerations and Action Items
For Families
Determine if Trump Accounts for minor family members are consistent with the family’s overall gifting strategy. If so, determine minor family members’ eligibility for the pilot program and prepare to open accounts when the IRS portal launches. Plan for annual contributions within the $5,000 limit, and consider how these contributions fit into overall estate and gift planning.
For Foundations
Foundations and other charities may wish to structure a program to contribute to Trump Accounts that appropriately benefits a charitable class, such as by being in a particular geographic area. Such a program would need to meet other requirements for grants to individuals, as well as the specific requirements for the new Trump Accounts, but potentially provides an opportunity to benefit children in a local community or with specific financial needs.
For Financial Institutions
Banks and approved non-bank custodians may wish to act as the trustee or custodian for rollover Trump Accounts. According to guidance issued by the Department of the Treasury and the Internal Revenue Service on December 2, 2025, financial institutions currently may not serve as the initial location for a Trump Account (unless selected by the Treasury Department). Institutions that create rollover or transfer product offerings will want to create the reporting infrastructure and select eligible index funds investments. Finally, consider whether supporting a Trump Account for those over the age of 18 is preferable to requiring a rollover to a true IRA after the growth period.
For Employers
Assess whether Trump Account contributions align with benefits strategy and workforce demographics. Evaluate forthcoming IRS and DOL guidance regarding ERISA avoidance or compliance. Plan for operational requirements to integrate contributions with cafeteria or §125 plans and nondiscrimination requirements. Consult with employment law and benefits legal counsel given the evolving and unsettled legal ramifications for employers.
For additional information about Trump Accounts and their implications for your family or business, please contact Allie Itami, Kevin Mason or your regular Lathrop GPM attorney.