There's a new way to invest for a child, and for some families it starts with $1,000 from the federal government.
They're called Trump Accounts. They came out of the One Big Beautiful Bill Act, signed into law on July 4, 2025. If you have a child or grandchild, or one on the way, this is worth understanding now. The accounts open in 2026, and the rules around the free money are specific.
Here's the plain-English version of what these accounts are, which kids qualify for the $1,000, and how to actually open one.
What is a Trump Account?
A Trump Account is a new type of tax-advantaged investment account for kids under 18. Think of it as a starter IRA for a child.
The account is owned by the child, but a parent or guardian manages it until the child turns 18. The money is invested in low-cost funds that track a broad U.S. stock index, and it grows tax-deferred. You generally cannot pull money out until the year the child turns 18. After that, it converts into a regular traditional IRA and follows those rules.
So it's a long-term account. It's built for the child's future, not for next year's expenses.
Which kids get the free $1,000?
This is the part everyone wants to know about, so let's be precise.
The $1,000 comes from a temporary federal pilot program. To qualify for it, the child must meet two conditions:
- Be a U.S. citizen
- Be born between January 1, 2025, and December 31, 2028
That's it. There are no income limits on the family. A high-earning household qualifies for the $1,000 the same as anyone else, as long as the child fits the birth window and citizenship rule.
One important catch: the $1,000 isn't automatic. Someone has to request it. You make that request on the same IRS form you use to open the account (more on that below).
What if your child was born before 2025? You can still open a Trump Account for any child under 18 with a valid Social Security number. They just won't get the federal $1,000. The account itself is open to far more kids than the seed money is.
There's also a separate, privately funded effort worth a mention. The Michael and Susan Dell Foundation has pledged money to provide a smaller contribution to certain children who miss the federal window. That's a private charity program, though, with its own rules set by the foundation, not the government. Don't count on it the way you'd count on the federal $1,000.
How do you open a Trump Account?
You open one by filing IRS Form 4547. It's called the Trump Account Election form.
You have three ways to file it:
- Online through your IRS Online Account
- Along with your federal income tax return
- On paper, mailed to the IRS
The form asks for the child's name, address, date of birth, Social Security number, and your relationship to the child. If the child qualifies for the $1,000, the same form lets you request it. One form, both jobs.
Who's allowed to file it? An "authorized individual." That's generally a parent or legal guardian. If neither is available, certain other relatives such as an adult sibling or a grandparent may be able to step in.
A few practical details that matter:
- One account per child. You can't open more than one.
- There's a deadline. You have to file the election on or before December 31 of the year the child turns 17. Wait too long and the window closes.
- Funding can't start before July 4, 2026. No contributions go in before then, including the $1,000.
- There's an activation step. After you file, the government sends information on how to activate and finish setting up the account. There's an identity verification step, and then you manage the account through the Trump Account App, available at TrumpAccounts.gov.
How much can you put in each year?
Beyond the federal $1,000, families can contribute too. The annual contribution limit is $5,000 per child for 2026 and 2027, with inflation adjustments after 2027.
That $5,000 is a combined limit. It covers contributions from parents, grandparents, other family members, and even an employer. It does not include the $1,000 seed money, charitable contributions from a qualifying organization, or certain rollovers. Those sit outside the cap.
Contributions to a Trump Account are not tax-deductible. You're putting in after-tax dollars that then grow tax-deferred.
Can employers contribute? (This is the part business owners should read.)
Yes, and this is one of the more interesting wrinkles for higher earners and business owners.
Employers can contribute up to $2,500 per year to an employee's Trump Account, or to the account of an employee's dependent, and that contribution is generally excluded from the employee's taxable income. It's done through a written employer program.
One point of confusion worth clearing up: that $2,500 employer contribution counts toward the $5,000 annual limit. It does not stack on top of it. You'll see some articles online claim otherwise. The federal guidance is clear that the employer money is part of the $5,000, not extra.
If you run a business and you're thinking about this as an employee benefit, hold off for a beat. The rules for these employer programs are still being written, and there are open questions about how they'll be administered. That's a conversation to have before you build it into your benefits package.
What about taxes when the money comes out?
Once the child turns 18, the account becomes a traditional IRA. The same tax treatment applies from there.
Withdrawals are taxed as ordinary income. And like a traditional IRA, taking money out before age 59½ can trigger an early-withdrawal penalty on top of the income tax, unless an exception applies. So the most tax-friendly use of these accounts is long-term, the way you'd treat any retirement account.
One big caveat on all of this
A lot of what's known about Trump Accounts comes from initial IRS guidance and proposed regulations issued in late 2025 and early 2026. Final regulations are expected later in 2026, and some details could change. The birth window, the $1,000 amount, and Form 4547 are set in the law itself. Some of the finer mechanics are not final yet.
Should you open one?
For a child born in the 2025 to 2028 window who's a U.S. citizen, the $1,000 is free money for the price of filling out a form. That part is easy math.
Whether you contribute beyond that, and how a Trump Account fits next to a 529 plan, a custodial account, or other savings, depends on your goals. These accounts have real limits. The money is locked up until 18, the investment choices are narrow, and withdrawals are taxed as income. They're a tool, not a complete plan.
If you'd like help thinking through where a Trump Account fits for your family, or whether it makes sense alongside what you're already doing, we're happy to talk it through. Give our office a call at 920-380-7056 or email us at hello@dreyerwealth.com.
Sources
- Internal Revenue Service, "Treasury, IRS issue proposed regulations on how to open initial Trump Accounts under the One, Big, Beautiful Bill." IRS.gov Newsroom.
- Internal Revenue Service, Notice 2025-68, "Notice of intent to issue regulations with respect to section 530A." irs.gov/pub/irs-drop/n-25-68.pdf
- Internal Revenue Service, Instructions for Form 4547 (12/2025). irs.gov/instructions/i4547
- Federal Register, "Trump Accounts," proposed rule (REG-117270-25 and REG-117002-25), published March 9, 2026.
- One Big Beautiful Bill Act, Public Law 119-21, Section 70204, adding Internal Revenue Code Sections 530A, 128, and 6434.
- U.S. Department of the Treasury, TrumpAccounts.gov.