Trump Child Savings Accounts Explained: Rules, Limits & Benefits

What Are Trump Savings Accounts—and Should You Open One for Your Child?

With the signing of the One Big, Beautiful Bill Act (OBBBA), a brand-new savings tool has hit the scene: the Trump Savings Account. Designed to help parents and families invest in a child’s future, these accounts grow tax-deferred —but they also come with important rules and limitations.

If you’re a parent, grandparent, or family member looking to help a child build long-term wealth, here’s what you need to know. 

What Is a Trump Savings Account?

Think of it as an IRA-style account for kids, but with stricter rules on how and when the money can be accessed.

Key Features:

• Available for children born between 2025–2028

• Each qualifying child can receive a $1,000 seed deposit from the IRS if an election is made on their behalf

• Accounts must be opened in the child’s name, with their Social Security number

• Contributions are after-tax and limited to $5,000/year, adjusted for inflation after 2028

• Funds cannot be withdrawn until the child turns 18 

Who Can Contribute?

Contributions can be made by:

• Parents, grandparents, or other family members

• Employers (up to $2,500 annually—excluded from the employee's income)

• Nonprofits or governments through special programs

🎁 Bonus Tip: Contributions from governments or nonprofits don’t count toward the $5,000 annual limit and are tax-free to the beneficiary. 

How Can the Funds Be Used?

Once the child turns 18, the funds become accessible and are taxed like a traditional IRA. However, there are exceptions for penalty-free withdrawals, including:

• Qualified education expenses

• First-time home purchase

• Starting a business

• Certain medical or hardship needs

Note: Earnings are taxable upon withdrawal, and there’s no Roth-style tax-free growth.

Strategic Planning Opportunities

These accounts can be a smart way to:

• Start multi-generational wealth building early

• Supplement or pair with a 529 plan for more flexible post-high school use

• Allow employers to support workers’ families in a tax-efficient way

• Provide a "family gifting" vehicle that isn’t subject to annual exclusion gift limits if structured properly

What to Watch Out For

🔒 Accounts are locked until age 18
❌ Withdrawals before age 18 are not allowed
⚠️ Contributions are not deductible
📋 There may be setup and reporting requirements once the IRS releases further guidance

And keep in mind: California does not currently conform to these new federal accounts, so state-level treatment may vary.

Still Waiting on the “How”: Implementation Details Coming Soon

While the Trump Savings Account is now law under the OBBBA, many of the details around implementation are still unclear.

Here’s what we know so far:

• The IRS has been tasked with developing rules and procedures for how these accounts will be opened and managed

• We expect that parents or guardians will elect to open the account when filing their 2025 tax return (in early 2026)

• Contributions may be made by multiple parties, but we’re still awaiting specifics on things like account custodians, approved institutions, and reporting

⚠️ The bottom line? The framework is in place, but we’re still waiting on the "how" to catch up with the "what"

More guidance is expected in the coming months. By the time you file your 2025 tax return, the IRS will likely have published the exact process to make the $1,000 federal election and set up the account. 

Final Thoughts: Worth Considering, But Plan Carefully

Trump Savings Accounts aren’t a replacement for 529 plans or custodial Roth IRAs, but they can be a powerful supplemental strategy for families who want to invest in a child’s future beyond just college. Keep an eye open to see how the details behind these new wealth building vehicles unfold in the coming months.

Find more highlights from the OBBBA at Major Tax Changes from the OBBBA: What You Need to Know for 2025