New “Trump Accounts” for Children

At a Glance

• H.R. 1, An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14 (also known as the One Big Beautiful Bill Act), creates a new type of tax-advantaged savings vehicle called “Trump accounts.” These accounts are intended to provide long-term investment opportunities for children born after December 31, 2024. 
• Eligible funds must be unleveraged, low-cost stock mutual funds or exchange-traded funds (ETFs) that track a broad U.S. stock index. 
• Operational requirements align with traditional individual retirement accounts (IRAs) under Internal Revenue Code Section 408(a).

Account Mechanics and Timing

“Trump accounts” are custodial accounts established on behalf of eligible children (under new Section 530A of the Internal Revenue Code) that are treated in the same manner as individual retirement accounts under Section 408(a) of the Internal Revenue Code. These accounts will be opened automatically for children that are U.S. citizens born between January 1, 2025, and January 1, 2029, upon issuance of a Social Security number. The federal government will fund each such eligible account with a one-time $1,000 seed contribution.¹ Parents of minors born prior to January 1, 2025, may establish Trump accounts for their children, but such Trump accounts will not be eligible for the $1,000 seed contribution. 

The Trump account provisions apply to taxable years beginning after December 31, 2025, with the first contributions permitted beginning July 4, 2026. Annual contributions to each Trump account are capped at $5,000, indexed for inflation after 2026. Employers may make contributions to Trump accounts for the dependents of employees in amounts up to $2,500 per employee. Such amounts are not included in the employee’s gross income (but will be taxable when withdrawn by the beneficiary). The earnings of a Trump account are also subject to tax when withdrawn.

Investment Eligibility Requirements 

Trump accounts may only be invested in a low-cost, unleveraged U.S. stock index mutual fund or exchange-traded fund (ETF). To qualify for investment: 

• The fund must passively track the S&P 500 index or another U.S. equity index for which regulated futures are traded on a qualified board or exchange. 
• The fund must not employ leverage. 
• The total annual fund-level expense ratio must not exceed 0.1%. 

Although additional eligibility requirements may be added by regulation, fund sponsors and service providers may wish to begin assessing product eligibility. 

For More Information

For any questions you may have about the Trump accounts or their potential impact on a business, you may contact the authors, or a member of the firm’s investment management team or transactional tax team.

Summer associate Borey Chea contributed to this update.