Trump Accounts Explained: The Government’s New Savings Initiative

The One Big Beautiful Bill Act (OBBBA) has introduced a new category of retirement savings accounts called “Trump Accounts” for children under age 18, which could offer families a valuable way to invest in their children’s long-term financial future.

Although these accounts are not yet available and many details are still being finalized, the IRS is expected to issue additional guidance on the rules and administrative procedures in the coming months. The accounts are anticipated to launch in mid-2026. Below is an overview of what we know so far:

Key Features of Trump Accounts:

• Purpose: Trump Accounts are intended to help parents and guardians save for a child’s education and retirement, offering a long-term savings tool with flexible contribution options.
• Availability: The accounts are not yet active. The IRS is expected to release further guidance, with an official rollout likely in mid-2026.
• Eligibility: A Trump Account may be opened for any child under age 18 who has a Social Security number.
• Federal contribution: The federal government plans to make a one-time $1,000 deposit for children born between January 1, 2025, and December 31, 2028.

Contribution limits:

• Families and guardians may contribute up to $5,000 per year.
• Employers may contribute up to $2,500 per dependent under 18.
• Contributions are not tax-deductible, and none can be made before July 4, 2026.

Withdrawals and Taxes:

• Withdrawals are generally prohibited until January 1 of the year the beneficiary turns 18.
• Distributions will be taxed similarly to traditional IRA withdrawals, with potential penalties for early distributions before age 59½.

Administration and investment:

• Initially, accounts will be established with the U.S. Department of the Treasury.
• Funds are expected to be invested in low-cost index funds or ETFs through a third-party custodian.
• Later, families may transfer the account to another financial institution of their choice.

What this Means for Eligible Families:

Currently there appears to be no financial downside to opening a Trump Account, especially for those who qualify for the $1,000 government contribution. Even if no additional funds are added, the initial deposit could provide a meaningful start to a child’s future savings.

However, it’s important to note that many program details remain uncertain, and the accounts are not yet available. Be sure to stay tuned for further announcements from the IRS and Treasury Department as rules and procedures are finalized.

The Trump Account program may represent a significant new opportunity for families to invest in their children’s financial well-being. While the launch is still months away, understanding the basic structure and benefits now will help families prepare to take advantage of the program once it begins. As additional guidance becomes available, we’ll continue to provide updates to help you navigate the new system.

Reach out to an Oppenheimer Financial Professional today to discuss how these changes could impact your financial future.