Starting 2026, families will be able to establish and fund section 530A accounts (Trump accounts), which are a tax advantaged account designed specifically for children.
Parents can open Trump Accounts for eligible children, those with a valid Social Security number and are younger than age 18, by submitting IRS form 4547, using an online portal scheduled to be available later this year, or by funding the account through their tax return.
Individuals may contribute up to a total of $5,000 per child per year. Unlike other types of retirement accounts, the child does not need earned income nor do these contributions affect their eligibility to fund other retirement accounts.
Generally, no withdrawals are allowed until the year the child turns 18. Once of age, the account is subject to most of the same rules as Traditional IRAs. While the account grows tax-deferred, the taxation of the distributions will depend on the funding and basis of the account. Given the complexities with the new accounts, we recommend a thorough analysis of your funding goals for your children and a review of all options available.