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The One Big Beautiful Bill Act established a new type of tax deferred savings account for children (the “Trump Account”). The IRS just released detailed guidance in Notice 2025-68 explaining how these accounts work. In simple terms, after tax contributions can be made to a Trump Account that grow tax-free (similar to a Roth IRA).
One commentator demonstrates the benefits with the following example. “If you contribute $5,000 annually for 17 years, plus the $1,000 government seed, and the account grows at 5 percent per year, it could be worth about $138,000 by the time your child turns 18. If left invested until your child reaches age 60, that balance could grow to over $1.2 million”
Who can get one?
Any child who's under age 18 and has a Social Security number
is eligible. Each child can have only one Trump Account. Children
born in 2025 through 2028 automatically receive a $1,000 nontaxable
starter grant once their account is opened. On top of this
nontaxable starter grant, on December 2, 2025, Michael and Susan
Dell pledged to fund an additional $250 for up to 25 million
eligible children – those under 10 and living in ZIP codes
where the median household income is below $150,000.
How do you open it?
A parent or legal guardian normally opens the account. Notice
2025-68 states that the IRS will release a new form (Form 4547) and
an online application system in 2026. Once available, you simply
file the form or apply online to elect a Trump Account for your
child. The IRS then works with an approved financial institution to
set up the account and sends you activation instructions.
When can you contribute?
Accounts may be opened in 2026, with contributions allowed starting
July 4, 2026. Almost anyone—parents, grandparents, friends,
employers, and community organizations—can contribute subject
to the contribution limitation of $5000 (to be indexed for
inflation). The benefit associated with an employer's Trump
Account contribution program is particularly pronounced as the
contribution will not count towards the employee's taxable
income.
There are various other requirements that are addressed in the recent IRS guidance that are not discussed here regarding the types of eligible investments, limitations on fees that may be charged to the account, trustee and reporting requirements, etc. that will presumably become part of the standard offerings of financial institutions to prospective account holders.
Bottom Line: This new IRS guidance is establishing the specific requirements that will facilitate the actual implementation of the Trump Accounts. Stay tuned.
“I'd rather regret the things I've done than regret the things I haven't done.” — Lucille Ball
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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