If you have a child under 18, you can open a Trump account starting after July 4, 2026. The US government will give you a $1,000 child bonus for starters. Wealthy individuals like Michael Dell promised to give even more money to Trump accounts too. So, children in America can start growing their wealth with free money at the age of 0!  

But, $1,000 of free money from the federal goverment won’t be given away forever. In this guide to Trump accounts, let’s understand what they mean for you.

When And How To Open A Trump Account

To open Trump account, go to an online Trump account portal run by the US government. Starting after July 4, 2026, you will be able to open a Trump account through it and get $1,000 from the federal government. Many major banks and investment brokerages will administer Trump accounts.

Trump Account Eligibility

Children who have not reached 18 during the calendar year can open Trump accounts. Meaning, a child must be 17 years or younger during the entire year to open and contribute to a Trump account. A child must also have a social security number.  

How To Get $1,000 Of Free Money For Trump Accounts

Next is how to get that $1,000 free government check. The Treasury Department will contribute $1,000 to Trump accounts for children born from 2025 to 2028. But, a child must have not only a social security number, but also be a US citizen. If not, the child is ineligible for this $1,000 child bonus. Some estimates say that this $1,000 free check will cost the US government $15 billion.

As mentioned above, you can get $1,000 per eligible child by opening a Trump account via the US government site. Alternatively, a parent or a legal guardian of a child can file a special IRS tax form 4547. You will need to attach it to your tax return filed starting in 2026. There, you can check the box to receive the free $1,000 money from the government. This is less convenient than opening a Trump account yourself and getting the money deposited by the federal government.

Trump Accounts Contributions Rules

So, what are Trump accounts? They are tax-deferred accounts that are a cross between 529 college plans and IRA accounts. But, Trump accounts come with many restrictions you should be aware of. So, let’s unpack its contribution rules first.

Anyone can make contributions to a Trump account. The annual limit is $5,000 before your child turns 18. This dollar limit will increase with inflation. Contributions from individuals are after taxes like for 529 plans. In other words, your contributions won’t give you any tax deductions.

Also, your employer can contribute up to $2,500 to your child’s Trump accounts. These contributions will count towards the $5,000 annual limit though. But, contributions from charities and local governments are exempt from annual limits. That’s a big plus if that applies to you.

Charity Contributions to Trump Accounts 

Certain wealthy people pledged to give money to Trump accounts. For instance, Michael Dell would donate $6.25 billion to expand the reach of the program. It would provide $250 for each child under 10 born before 2025. In that sense, his money will go to children ineligible for the $1,000 government money. But, there is a catch. This $250 free money from Michael Dell can only go to families living in zip codes with a median income below $150,000.  

Likewise, Ray Dalio promised to give $250 to each new Trump account opened in 2026 in Connecticut. The same median income of $150K rule applies too.

Where To Invest Money in Your Trump Account

There will be restrictions on where you can invest money in Trump accounts. The only options will be low-fee funds with broad exposure to the US stock market. The government won’t allow anything risky. Even industry or sector-specific index funds are off limits.

Likely, the investment options will be something like the total stock market or the S&P 500 ETFs. Earnings like dividends and capital gains will grow tax-free until withdrawn.

Trump Accounts Withdrawal Rules

Next, when can your child get hold of that $1,000 free money? And that’s where withdrawal rules come into play. No withdrawals are allowed until a child turns 18. On January 1st of the year your child turns 18, they can make withdrawals.

But, there is a catch. After the 18th birthday, Trump accounts get converted to regular IRA accounts. And, at that point, IRA withdrawal rules apply. The main rule is that if they withdraw before turning 59 ½ years old, there will be a 10% penalty. After 59 ½, the 10% penalty does not apply.  

First, understand that Trump accounts will likely consist of a mix of after-tax and pre-tax funds. After-tax contributions from parents won’t be taxed when your kid withdraws them. But, everything else gets taxed as ordinary income at higher rates.

For instance, the $1,000 free government money will get taxed at your child’s regular income tax rate. Same thing goes for contributions from charities, local governments and employers. As for any earnings like capital gains and dividends, they will also get taxed at a regular income tax rate.  

At this point it is not clear if you can choose to withdraw after-tax or pre-tax money like what you can do with Roth IRAs. It seems like you won’t be able to pick that. Taxation will apply proportionately on your withdrawals based on my research.

Exceptions to Early Withdrawals 

But, there are exceptions to the 10% penalty as with IRAs. For instance, if your children are first-time homebuyers, they can withdraw up to $10K from Trump accounts. Penalty-free withdrawals for birth and disaster recovery have their own limits too. As far as qualified education expenses, there is no limit. So, once your children turn 18, they can use Trump accounts to fund their education with no penalties.

Should You Open A Trump Account?

The biggest benefit of Trump accounts is to start saving early on your child’s behalf. It is especially true if you as a parent are done with contributions to other custodial options like the 529 plan.

So, should you open up a Trump account for your children? It is certainly worth it for the $1,000 free government money, employers matches and charity contributions. All of this is free money that you should definitely take advantage on behalf of your child. But, beyond that, other tax-deferred options exist for children that could be superior. That depends on your situation.

Trump Accounts vs 529 Plan vs Custodial Roth IRA vs Custodial Brokerage

Before your child begins working, there is only one tax-deferred account available. And that’s the 529 plan. There is also a Coverdell Education Savings Account. But, it has strict contribution and income limits. You can also open a custodial Roth IRA account on behalf of your child regardless of their age. But, your child must work and earn income.

Finally, you can always open a regular custodial brokerage account for your child. It won’t be a tax-deferred one. But, you can make it so. If you invest in low or no dividend stocks, you can defer taxation until your child sells these assets. So, we have a custodial Roth IRA, 529 plan and regular custodial brokerage account. Let’s compare them to Trump accounts.  

1. Contributions Comparison

The first point of comparison is tax treatment of contributions. Parents’ contributions to Trump’s accounts are after taxes. You don’t get any tax deductions. If your employer contributes to Trump accounts, that will be free money. So, it is definitely worth having a Trump account just for that. And, of course, don’t forget that $1,000 free government check and any other charity contributions.

As for the 529 plan, custodial Roth IRA and standard brokerage account, all the money goes there after taxes. Same as with Trump accounts, you as a parent don’t gain any tax deductions here either.  

And for contribution limits, we have covered them for Trump accounts. Contributions to custodial Roth IRAs have an annual limit of up to your child’s earnings or a max of $7,000 a year. 529 plans don’t have federal limits. But, each state sets its own caps. For instance, Florida has a max cap of $418K to $500K of lifetime contributions per child. There is no annual limit as far as Florida is concerned.  

But, federal laws have gift tax limits. You can contribute up to $19K/person to a 529 plan with no tax reporting. Of course, you can contribute more than $19K tax free. But, you will have to file a tax form. Anything above $19K counts against your max lifetime gift exemption of ~$14M/person. The same gift tax rules apply to regular custodial brokerage accounts too.

2. Withdrawals Comparison 

As far as withdrawals go, we know from before that children can take out money for any purpose from Trump accounts as soon as they turn 59 ½ years old. They can also start taking out money right after they turn 18. But, it will come with the 10% penalty.

Taxes on Trump account withdrawals depend on whether contributions were after or before taxes. Since your contributions as a parent were after taxes, they won’t get taxed. Everything else will get taxed as ordinary income when withdrawn.

In comparison, future withdrawals from 529 plans are tax-free for education. That provides significant tax savings compared to Trump accounts.

Withdrawals from custodial Roth IRA are also tax-free, including any income earned like dividends and gains. But, your child must wait till 59 ½ to avoid a 10% penalty. Although, your child can withdraw original contributions tax-free with no penalties any time.

Finally, you have a standard custodial brokerage account. Suppose you can choose investments with little to no dividends. Then, you can grow your account tax free until the time to sell the investment comes. Earnings will likely be long-term capital gains. Long-term capital gain gets taxed at lower rates compared to ordinary income withdrawals from Trump accounts.

Trump Accounts Takeaways 

So, we see that Trump accounts are great to start the savings journey for your child. The catch is that depending on your situation, there could be better options. Suppose I know that I will send my child to college, then contributing my own money to the 529 plan is a better option. Withdrawals for education expenses are tax free. Plus, your child can get a hold of these funds tax-free before turning 60, if that’s important.

Even regular custodial brokerage accounts can be superior. Also, don’t forget other investment options. Alternatives to Trump accounts like 529 plans come with fewer restrictions. Trump accounts seem to be very restrictive as to where you can invest your money.  

Another thing that your children can do is to convert their Trump accounts to Roth IRAs after turning 18. The catch is that the conversion will almost surely trigger a taxable event. That $1,000 free government check and other pre-tax contributions will get taxed. The main benefit of this conversion is that after that, everything will grow tax-free.

Related Content: Roth IRA Beginners Guide For Tax-Free Retirement

The way I see it, the main benefit of opening a Trump account on behalf of your child is getting a free $1,000 check from the US government. However, the US government is living on budget deficits. Our children will pay for this free money through higher inflation or taxes. Also, Trump accounts make sense if your employer make contributions too. But, it is not clear if your employer will do so, given the political climate.

So, I understand the excitement around Trump accounts. However, Trump accounts should be evaluated together with other options.