Trump Accounts Available July 4: What You Need To Know

July 2, 2026

Katherine Malarsky, Stephen Schnelker, Tyler Macik

Summary: Beginning July 4, 2026, eligible families can begin funding Trump accounts, and qualifying children may receive a one-time $1,000 federal contribution. Learn more about eligibility, contribution and withdrawal rules, tax treatment, investment restrictions, new IRS gift tax guidance, and key state tax considerations families should understand.

The One Big Beautiful Bill, signed into law July 4, 2025, created a new savings vehicle known as a “Trump account.” Beginning in 2026, families will be able to establish these accounts for children and, in certain cases, receive a $1,000 federal seed contribution. While Trump accounts share many characteristics with traditional IRAs, they are subject to unique rules during the child’s minority years. Here is what taxpayers need to know.

Trump Account FAQs

What Is a Trump Account?

A Trump account is a custodial-style traditional IRA established for the benefit of a child under age 18 created by new Internal Revenue Code (IRC) Section 530A. The child is the legal owner of the account, while an authorized adult manages the account until the child reaches adulthood. During the account’s “growth period” (generally through Dec. 31 of the year the child turns 17), special rules apply regarding contributions, investments, and distributions. After the growth period, the account generally becomes subject to the traditional IRA rules.

Who Can Open a Trump Account?

Any child with a valid Social Security number who has not attained age 18 before the end of the year the election is made may have a Trump account established on their behalf. Only one funded Trump account may exist for a child at any time.

Authorized individuals may open an account in the following order of priority:

Legal guardian
Parent
Adult sibling
Grandparent

If multiple individuals have the same priority (for example, two parents), either may make the election.

How Is an Account Opened?

A Trump account is opened by making an election with the IRS. The election may be completed by:

Filing Form 4547, Trump Account Election(s); or
Using the online Trump accounts portal.

Form 4547 may be electronically filed at the same time an individual files a tax return. The form may also be submitted separately at any time.

The U.S. Department of Treasury recently launched the online portal and account application process. Authorized individuals must complete identity verification. Individuals who already have an IRS.gov account (via ID.me) can open a Trump account by logging into their existing IRS.gov account and completing the online election process.

When Can an Account Be Opened?

Elections to establish a Trump account may be made beginning in 2026 and generally any time before January 1 of the year the child turns 18. Contributions cannot be made before July 4, 2026, and the U.S. Department of Treasury has indicated that funded accounts will become operational beginning on that date.

What Is the Pilot Program and Who Qualifies?

Children born between Jan. 1, 2025, and Dec. 31, 2028, may qualify for a one-time $1,000 federal contribution. To receive the contribution, an authorized individual must make the election on Form 4547 or the online portal application. The contribution is expected to be deposited after the election is processed and the account is activated.

How Can Contributions Be Made?

During the growth period, contributions may come from several sources:

Parents, grandparents, relatives, or other individuals;
Employers through qualified Trump account contribution programs;
States, governmental entities, and certain charities; and
Qualified rollover contributions from another Trump account.

The annual limit for individual and employer contributions combined is $5,000 per child, indexed for inflation after 2027. Employer contributions are generally limited to $2,500 per employee annually and count toward the $5,000 limit. Government seed contributions and certain charitable contributions do not count toward the annual limit.

What Are the Investment Restrictions?

During the growth period, account assets may only be invested in low-cost mutual funds or ETFs that:

Track broad-based U.S. equity indexes;
Do not use leverage; and
Have annual fees and expenses of no more than 0.10%.

Individual stocks and actively managed investments are not permitted.

How Is the Account Taxed?

Contributions by family members and other individuals are made with after-tax dollars and create basis in the account. Those amounts are generally not taxable when withdrawn.

However, the following are taxable when distributed:

The $1,000 federal seed contribution;
Employer contributions;
Qualified charitable or governmental contributions; and
All investment earnings.

After the growth period, distributions are generally taxed under the traditional IRA rules.

When Can Withdrawals Be Made?

Withdrawals generally are prohibited during the growth period, except for limited rollover and corrective distribution provisions. Once the growth period ends, the account becomes subject to the traditional IRA distribution regime.

As a result:

Distributions may begin after age 18;
Amounts withdrawn are generally taxable to the extent they exceed basis;
The 10% early distribution penalty may apply before age 59½ unless an exception applies; and
Required minimum distribution rules eventually apply.

IRS Clarifies Gift Tax Implications of Contributions to Trump Accounts

While Congress appears to have intended contributions by parents, grandparents, and other individuals to qualify for the annual gift tax exclusion, the statutory language does not clearly provide that treatment. As a result, some commentators have suggested that contributions to a Trump account may not constitute present-interest gifts eligible for the annual exclusion.

In order to clarify some of the statutory uncertainty, the U.S. Department of Treasury and the IRS issued Rev. Proc. 2026-25 on June 29, 2026, providing a narrow gift tax reporting safe harbor for certain individual donors who contribute to Trump accounts. During the account’s “growth period,” the beneficiary generally cannot access the funds, which raised a question whether individual contributions should be treated as gifts of future interests. Because future-interest gifts do not qualify for the gift tax annual exclusion under IRC §2503(b), those contributions could otherwise require the donor to file Form 709, even if no gift tax is ultimately due.

Rev. Proc. 2026-25 addresses this concern by providing that, when all safe harbor requirements are met, qualifying Trump account contributions will be treated as completed gifts that are not future interests in property and to which the annual per-donee gift tax exclusion applies. As a result, qualifying donors are not required to file Form 709 solely to report those Trump account contributions.

The safe harbor applies only if all of the following requirements are satisfied for the calendar year:

The donor is an individual.
The donor’s only taxable gifts for the year are cash contributions, including contributions by cash, check, money order, or electronic funds transfer, to one or more Trump accounts. Each contribution must be made before the calendar year in which the account beneficiary turns 18.
The donor’s total gifts during the year to each account beneficiary, including Trump account contributions and any other gifts to that beneficiary, do not exceed the annual gift tax exclusion amount. For 2026, that amount is $19,000 per recipient.
The Trump account contributions do not generate gift tax or GST tax liability for the year after applying the donor’s remaining applicable credit amount and GST exemption.
Disregarding the Trump account contributions, the donor is not required to file, and does not otherwise file, a gift tax return for the year, including for GST tax, portability, or other purposes.

Donors should keep records sufficient to substantiate compliance with the safe harbor, including the amount and date of each Trump account contribution and any other gifts made to the same beneficiary during the year.

State Tax Implications of Trump Accounts

Although Trump accounts are intended to receive favorable federal income tax treatment as a custodial-style traditional IRA under IRC Section 530A, state income tax treatment may vary. Some states may conform to the federal rules and treat Trump accounts as tax-deferred accounts, while other states may not conform or may require state-specific adjustments. Families, employers, and account custodians should consider whether contributions, employer-provided benefits, annual investment earnings, and future distributions are treated the same for federal and state income tax purposes. State nonconformity could also create recordkeeping issues, including the need to separately track federal and state basis, previously taxed earnings, and state-specific reporting adjustments over the life of a Trump account.

For example, California generally conforms to the IRC as amended and in effect on Jan. 1, 2025 (prior to the OBBB’s enactment) and has stated that it does not automatically conform to the Trump account provisions. Accordingly, California may not recognize Trump accounts as tax-deferred retirement accounts for California income tax purposes. This means annual earnings may be taxable to California taxpayers. As a result, California taxpayers may need to track earnings taxed in real time, as well as other California-specific basis adjustments, to avoid duplicative income tax on future distributions.

By contrast, Indiana generally conforms to the IRC as amended and in effect on Jan. 1, 2026, after the OBBB’s enactment. Thus, unless Indiana specifically decouples from the Trump account provisions, Indiana should generally follow the federal treatment.

Taxpayers should be aware that the federal tax treatment of Trump accounts may only be the starting point, as state conformity and decoupling provisions could materially affect how the accounts are taxed for state income tax purposes. Taxpayers, employers, and custodians should continue monitoring state guidance and legislative developments to determine whether state-specific adjustments or recordkeeping requirements apply. State gift, transfer, or similar tax consequences, if any, should be evaluated separately on a state-by-state basis.

KSM’s tax professionals are monitoring the evolution of these accounts. For questions or more information, reach out to your KSM advisor or fill out the form below.