“Trump Accounts” Offer New Way to Save for Child’s Future

The One Big, Beautiful Bill Act (OBBBA) just introduced the “Trump Account,” providing some parents with $1,000 seed money and a new way to invest on behalf of their children.

The latest government budget bill was signed into law on July 4, 2025, and provides an additional way to plan a child’s future, as long as they are eligible.

Who is eligible for a “Trump Account”?

Every American citizen born between January 1, 2025, and December 31, 2028, will receive $1,000 from the U.S. Treasury into their “Trump Account”, which will be considered the property of the child and held in a custodial account until they turn 18, at which point it becomes a traditional IRA.

These funds will be invested in a low-cost index fund and can be used for expenses like education, starting a business, or buying a first home in addition to retirement.

Children born before 2025 are also eligible for the account, but not the $1,000 deposit.

How much can I contribute?

Contributions to the “Trump Account” are capped at $5,000 a year, however employers are eligible to contribute up to $2,500. If they do, then that contribution will not be considered the income of either the parent or the child.

These funds will grow tax-deferred until withdrawals are made. If the withdrawals are used for a number of qualified reasons, then only a capital gains tax will be taken. If not, then withdrawals will be taxed as regular income.

Qualified reasons include education expenses, starting a small business, or buying a home.

How is a “Trump Account” different from other accounts?

While this isn’t the only custodial account you can use to save for your child’s future, there are some key differences. This will likely be the only account you could access that will include some form of seed money.

Other similar accounts, like a Coverdell Education Savings Account (CESA) or a 529 plan are also specifically for educational use, meaning that your child has less options when it comes to using the funds.

Contribution limits also vary. You can only contribute up to $2,000 per year to a Coverdell ESA. However, there is no federal limit for annual contributions to a 529 plan, but your state may have its own limits in place.

It’s also important to note that qualified withdrawals from a Coverdell ESA are tax-free, and qualified withdrawals from a 529 plan are federally tax-free with some states having different rules.

Next steps

If you’re interested in investing on behalf of your child, schedule a call with an IRA Counselor to learn more about your options.