What Are Trump Accounts? Section 530A Rules, Contribution Limits & Tax Implications (2026 Guide)

I write about money, not politics, but when policy creates a new wrapper for capital, I pay attention.

When I first heard about Trump accounts, my instinct was dismissive. It sounded like a not great Roth IRA with a branding problem. I assumed it was mostly optics.

After reading the actual mechanics, I changed my mind. TL;DR: if your baby is eligible for the free $1,000 from the federal government, open a Trump account. The easiest way to do so is to ask your accountant to attach form 4547 to your tax return. The financial planners at Brooklyn Fi generally think these are a positive, so if you don’t mind a little paperwork, it’s a worthy extra savings vehicle for your children.

These new child savings accounts can be opened when filing a 2025 tax return by completing Form 4547. Final regulations are still being written, so some questions remain. But here’s what we know so far — and what families should consider before electing one.

There’s actually a helpful government website, and it takes about four minutes to complete the form, although our team is recommending you just attach the form to your tax return since the IRS already has your social security number and info.

How Trump Accounts (Section 530A Accounts) Work in 2026

Trump Accounts are federally created investment accounts designed for kids. Any children born between January 1, 2025 and December 31, 2028 may be elligible for an initial $1,000 contribution from the federal government. After that, families and employers can add to it. A child under 18 with a Social Security number can have one account. An adult, usually a parent or guardian, opens and manages it until the child turns 18.

Once funded, the account can be invested. While final investment rules are pending, guidance suggests the funds will be limited to low-cost mutual funds or ETFs primarily invested in U.S. companies.

The account grows tax-deferred at the federal level, and taxes are due when funds are withdrawn.

Trump Account Contribution Limits and Government Funding

Here’s how contributions work:

  • The federal government contributes $1,000 for eligible children born between 2025 and 2028.

  • Families can contribute up to $5,000 per year.

  • Employers can contribute up to $2,500 per year.

  • Employer contributions are not taxable to the family at the federal level.

These contribution limits are lower than many other tax-advantaged accounts, but the early start is the real lever. Time plus compounding is powerful.

Benefits of Trump Accounts for Families

1. Early Compounding

Starting an investment account at birth gives compounding decades to work. Combined with tax-deferred growth, that’s meaningful. Even modest annual contributions could grow substantially over 18+ years.

2. Simple Account Setup

Opening the account alongside your tax return reduces friction. If implementation remains straightforward, participation could be high.

3. Potential IRA Rollover at 18

At age 18, beneficiaries may have the option to roll the account into an IRA. That gives young adults a potential head start on retirement savings. However, families using advanced Roth strategies, including backdoor Roth IRAs, should be cautious. An early rollover could affect future planning flexibility. If you’re already using Roth conversions or equity compensation strategies, this deserves modeling first.

Learn more about Roth IRA rules, contribution limits, and how they work.

Trump Account Gift Tax and State Tax Issues

This is where things get more complicated.

Gift Tax Implications

Although annual contributions are capped at $5,000, the family contribution will count towards the $19,000 gift tax limit, so plan your other gifting accordingly. Because these accounts rae so new, accountants are speculating there may be some gift tax complications such as filing additional forms but we expect the rules to sort themselves out by the end of 2026.

State Compliance Risk

Federal and state tax codes are separate systems, states are not required to conform to federal tax treatment. We already see this with 529 plans. Some states follow federal rules. Others do not. As of now, California does not conform to the federal tax code that created Section 530A accounts.

This means:

  • Investment income may be taxed annually at the state level.

  • Contributions, including employer or nonprofit contributions, may be treated as taxable income at the state level.

If you live in a non-conforming state, the tax benefit may be reduced.

What to Consider Before Opening a Trump Account

Before electing a Section 530A account on your tax return, ask:

  • Does my state conform to federal treatment?

  • Am I prepared to file gift tax returns?

  • Does this crowd out 529 contributions?

  • How does this interact with Roth IRA planning?

  • Do employer contributions meaningfully change the math?

  • Would a taxable brokerage account be simpler?

This is where the headline benefit can start to blur. Just because an account exists does not automatically mean it’s the best tool. If you’re unsure how a Trump Account fits into your broader tax, estate, or equity compensation plan, this is the kind of decision worth modeling before filing.

At Brooklyn Fi, we help families evaluate new tax rules alongside 529 plans, Roth strategies, executive compensation, and long-term investment planning.

The Bottom Line on Trump Accounts (Section 530A)

Trump Accounts are designed to jump-start investing for the next generation. Early funding plus tax-deferred growth can be powerful, but gift tax filings, state compliance issues, and long-term Roth planning implications all matter.

Before electing a Section 530A account on your 2025 return, it’s worth running the numbers and understanding how it fits into your broader financial plan. New tax rules are rarely as simple as they first appear.

Frequently Asked Questions About Trump Accounts

Are Trump Accounts taxable?

At the federal level, growth is tax-deferred and taxed upon withdrawal. However, some states may tax investment income annually.

Do Trump Account contributions qualify for the annual gift tax exclusion?

No. Because the beneficiary does not have present interest access to the funds, contributions may require filing a gift tax return.

Can Trump Accounts be rolled into a Roth IRA?

At age 18, beneficiaries may be able to roll funds into an IRA. However, this could affect future Roth planning strategies.

Do all states recognize Trump Accounts?

No. States are not required to conform to federal tax rules. California, for example, does not currently conform.

If you’d like help evaluating whether a Trump Account makes sense for your situation, you can schedule a discovery call with our team here.

AJ Ayers