Who this applies to
Parents of children under 18, especially babies born 2025 through 2028, and employers looking for a new tax-free benefit.
Key questions
- Is your child eligible for the $1,000 pilot deposit?
- Should family gifts go to a Trump Account, a 529 plan, or both?
- Would a Section 128 employer contribution plan help you attract or keep staff?
Review with the OICPA team
- Claim the account and submit Form 4547 for the $1,000 deposit
- Coordinate Trump Account and 529 contributions for each child
- Set up a written Section 128 plan before making employer contributions
Trump Accounts are a new kind of tax-advantaged savings account for children, created by the One Big Beautiful Bill Act. Contributions opened on July 4, 2026, and children born from 2025 through 2028 can receive a one-time $1,000 deposit from the federal government. Here is how the accounts work, how they compare with a 529 plan or a custodial Roth IRA, and what business owners can do with them.
The basics
- Who can have one. Any child under 18 with a valid Social Security number. Treasury opened an account automatically for every eligible child on October 1, 2026, and a parent or guardian claims it in the official Trump Accounts app.
- $1,000 pilot deposit. U.S. citizen children born after December 31, 2024 and before January 1, 2029 can receive a one-time $1,000 contribution from Treasury. You request it by making the election on Form 4547.
- Annual limit. Family and other private contributions are capped at $5,000 per child per year, indexed for inflation after 2027. The $1,000 pilot deposit, and certain contributions from governments and charities, do not count toward the cap.
- Investments. Until the year the child turns 18, the money must be invested in low-cost funds that track a broad U.S. stock index.
- No deduction going in. Parents and relatives do not get a tax deduction for what they put in. Growth is tax-deferred.
How to claim the account and the $1,000
First claim the account in the Trump Accounts app; no form is needed for that. The $1,000 pilot deposit is not automatic, though: you elect it on Form 4547, which you can submit through the app, the Trump Accounts website, your IRS Individual Online Account, or with an e-filed return, at any time of year. It cannot be attached to an amended return. Once the account is claimed, anyone, including grandparents, can contribute up to the annual limit. Our step-by-step guide walks through each screen and decision.
Employer contributions: A new benefit for your team
Under new Section 128, an employer can contribute up to $2,500 a year to the Trump Account of an employee or an employee's dependent, and the contribution is excluded from the employee's income. Employer money counts toward the child's $5,000 annual limit. The contributions must be made under a written plan that meets nondiscrimination rules, much like a dependent care assistance program.
For a business owner, it is a low-cost benefit that employees with young children value. Contributions are free of income tax for the employee but still subject to Social Security and Medicare tax. Owners are a different matter: sole proprietors, partners, and more-than-2% S-Corp shareholders (and, for an S-Corp, their family members on payroll) cannot receive Section 128 contributions from their own business. Our employer setup guide covers who qualifies, the cost, and the plan document, and our payroll team sets up the payroll coding.
Trump Account, 529 plan, or custodial Roth IRA?
- 529 plan. Best for education. Withdrawals for qualified education costs are tax-free, and many states give a deduction for contributions.
- Custodial Roth IRA. Best when the child has earned income, for example from working in a family business. Growth and qualified withdrawals are tax-free.
- Trump Account. Best for long-term saving that does not depend on the child having a job or going to college. The $1,000 pilot deposit is free money, so claim it even if you fund a 529 as well.
Once the child turns 18, the account generally follows traditional IRA rules. Withdrawals of earnings are taxable, and early withdrawals can carry a 10% penalty unless an exception applies. That makes the Trump Account a retirement-style account, not a college fund.
What to do this year
- Claim your child's account in the Trump Accounts app, and for a baby born 2025 through 2028, submit Form 4547 so the $1,000 deposit is not missed.
- Decide whether family gifts should go to a 529, a Trump Account, or both.
- If you have employees, consider adding a Section 128 contribution to your benefits for 2027.
Our Impuestos para Individuos y Familias team includes the election when we prepare your return.
Frequently asked questions
Can I open a Trump Account for a child born before 2025?
Yes. Any child under 18 with a Social Security number can have an account. Only the $1,000 pilot deposit is limited to children born from 2025 through 2028.
Do grandparents get a tax deduction for contributing?
No. Contributions from individuals are not deductible. They do count as gifts, but $5,000 is well under the $19,000 annual gift tax exclusion for 2026.
What happens if I forget to make the election on my return?
Nothing is lost. Form 4547 can be submitted at any time through the Trump Accounts app, the website, or your IRS Individual Online Account. It just cannot be attached to an amended return.
Can the money be used for college?
The account is designed for long-term saving. Before 18, withdrawals are generally not allowed. After 18, IRA-style rules apply, including the exception that waives the 10% penalty for qualified higher education expenses.