Trump Accounts for Children: The $1,000 Deposit, $5,000 Limit, and 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 Social Security number. A parent or guardian opens the account on the child's behalf.
• $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 open one and claim the $1,000

The usual route is Form 4547, the Trump Account election. You attach it to your original Form 1040. It cannot be filed with an amended return or an extension request, so if you want the pilot deposit for a 2025 or 2026 baby, make sure it goes in with the return you actually file. Treasury publishes account information and updates at trumpaccounts.gov. Once the account exists, anyone, including grandparents, can contribute up to the annual limit.

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, that means two things. First, it is a low-cost, tax-free benefit that employees with young children will value. Second, if you employ your own children's parent, which is often you or your spouse, the plan may let the business fund your own child's account with pre-tax dollars, as long as the plan meets the limits on how much can go to owners. Our payroll and HR compliance team can set up the plan document and 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

• If you had a baby in 2025 or will have one in 2026, make the Form 4547 election with your return 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 individual and family tax team includes the election when we prepare your return, and our wealth and legacy planning team can fit the account into a broader plan for your children.

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?

Form 4547 cannot be attached to an amended return. Check trumpaccounts.gov for any other way to make the election, and talk to your CPA promptly so the deposit is not lost.

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.