Trump Accounts: A Generational Investment

There’s a new tool for families looking to preserve wealth and secure their family’s future for generations. Starting on July 4, 2026, parents and grandparents can begin saving for their child’s future in tax-deferred investment accounts. Trump Accounts, established under IRC §530A, and part of the One Big Beautiful Bill Act, can be opened at birth and do not require earned income. The advantage for families is time — the earlier you start, the more dramatically compounding works in your child's favor. The difference between opening an account at age five versus age twelve could mean millions of additional dollars by their retirement.

What is a Trump Account?

A Trump Account is a new, tax-advantaged savings account designed specifically for children under 18. Unlike both traditional and Roth IRAs, it requires no earned income, making it accessible from birth. The account is subject to special rules during the child's "growth period,” from the date the account is opened through December 31 of the year the child turns 17, after which the account converts to and operates as a traditional IRA.

Here are the essentials:

• The annual contribution limit is $5,000 per year. Parents, grandparents, family, friends, and employers can contribute, though employers are capped at $2,500 per employee per year. After 2027, the $5,000 limit will be adjusted for inflation.  
• Mutual Funds and ETFs provide high growth potential at minimal cost. Funds must be invested in mutual funds or ETFs tracking a broad U.S. equity index (like the S&P 500), with no leverage and expense ratios of 0.10% or less.
• Contributions from friends and family go in after-tax, but importantly, everything the account earns compounds without any annual tax drag. This is a huge advantage over a standard custodial account. When the child withdraws from the account, the growth, the federal seed money, and any employer contributions will be taxed as ordinary income.  
• The year the child turns 18 the account transforms into a traditional IRA – with two exceptions. Funds cannot be withdrawn from the Trump Account until January 1 of the year the child turns 18. On that date, the special rules end, and standard traditional IRA rules apply – with exceptions for educational expenses and first-time home purchases.  
• There is a free federal pilot contribution of $1000 for U.S. citizen children born between January 1, 2025, and December 31, 2028. This money does not count toward the annual limit.  

Who qualifies, and how do you sign up?

Any child under age 18 with a Social Security number is qualified to open an account. A parent or legal guardian opens the account; each child may have only one. You can sign up by: Filing IRS Form 4547 with your 2025 tax return or online at trumpaccounts.gov. Contributions can begin on July 4, 2026.

U.S. citizenship is required only for the $1,000 federal pilot contribution. You must open the Trump Account and file paperwork to claim it — it is not automatic.

Though accounts will initially be managed by BNY Mellon, with Robinhood as the broker and trustee, parents and guardians may eventually rollover to their preferred broker.

The power of starting early

This is where the Trump Account gets truly compelling for families who plan ahead. When you give a child a head start, compounding does the heavy lifting. Assume a family contributes the maximum $5,000 per year to a Trump Account invested in a U.S. equity index fund earning an average of 8% annually; a reasonable long-term assumption for the U.S. stock market. We also include the $1,000 federal seed contribution for eligible children.

The takeaway is striking: a family that starts contributing at age five — giving their child just seven additional years of contributions, could see nearly $2.7 million more at retirement compared to a family that waits until age twelve. Same annual contribution, same investment, dramatically different outcome. Parents and grandparents are essentially giving their children two or more extra compounding cycles for their retirement funds.

Even the small investment of time to open a Trump Account and claim the $1,000 federal pilot contribution is worthwhile. If invested at birth, this one-time contribution could grow to approximately $149,000 in 65 years, assuming 8% annual compounding.  

How do Trump Accounts fit into your financial planning toolkit?

Unlike 529 Plans and Roth IRAs, Trump Accounts provide tax-deferred growth without earned income.

• ‍529 plans remain the go-to for education savings. They offer tax-free qualified withdrawals, state tax deductions in many states, and broader investment flexibility. If college funding is the goal, the 529 still leads.‍
• Roth IRAs are ideal for teenagers with earned income. The long-term, tax-free compounding of a Roth is hard to beat. Teens can contribute to both a Roth IRA and a Trump Account simultaneously since the limits are independent.‍
• Trump Accounts enable long-term savings to start at birth. Trump Accounts provide tax-deferred growth without earned income. With $ 1,000 in federal seed money and withdrawal exceptions for education and buying a first home, these advantages help families give their children a head start on big purchases and retirement.

Note that when funds are eventually withdrawn, or sooner for a large purchase, distributions are taxed as ordinary income, similar to a traditional IRA. This means that your personal after-tax contributions will not be taxed, but $1,000 federal seed, employer contributions, and charitable contributions, as well as investment growth will be taxed.

Our perspective: Start early, think holistically

The Trump Account is a welcome addition to your family’s wealth planning toolkit because it enables parents and grandparents to gift money to their loved ones at birth, providing a head start on the magic of compounding interest.

In addition, with $1,000 free federal seed money, it is a no-brainer for folks with a child or grandchild born between 2025-2028. As we mentioned above, if that $1,000 is invested at birth and left to compound at 8% for 65 years, it could grow to approximately $149,000.

At Balentine, we help our clients think through how to propel their wealth for generations. For tailored guidance about your personal situation, we encourage you to reach out. Clients can contact their relationship manager, and all others may reach out with the “Schedule a meeting” button.

^Disclosures:

^{The opinions expressed are those of Balentine. The opinions expressed are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed. Material presented should not be considered investment, tax, or legal advice and is provided for illustrative purposes only. The information may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. No assurance can be given that the investment objective or target return will be achieved or that an investor will receive a return of all or part of his or her initial investment. Balentine LLC (“Balentine”) is an independent investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Balentine, including our investment strategies, fees, and objectives, is included in Form ADV Part 2, which is available upon request.}