Everything a parent needs to know

Any U.S. child under 18 with a valid Social Security number is eligible for a Trump Account, and an account can be opened any time before the year they turn 18. Priority for who's allowed to open the account generally follows this order: legal guardian, parent, adult sibling, or grandparent. There's a separate pathway for foster youth through state child welfare agencies.

To open an account, a parent or guardian files IRS Form 4547 (Trump Account Election) — directly through the IRS, as part of a tax return, or through the official Trump Accounts app and website (TrumpAccounts.gov). For newborns, there's a more direct path: starting July 3, 2026, parents can enroll a baby right at the hospital through the existing birth-registration process, without a separate form. There's no cost to open an account, and only one funded account is allowed per child.

• Individual/family limit: $5,000 per year, combined across all contributors, indexed for inflation starting in 2027 (for comparison, a regular IRA's 2026 limit is $7,500).
• Employer contributions: up to $2,500/year per employee — not per child — tax-free, and counts toward the $5,000 cap. An employee with several kids splits that single $2,500 among their accounts. BNY Mellon and BlackRock have both pledged to match the federal $1,000 for employees' newborns.
• Nonprofit/charitable/government contributions: no dollar limit, but must be distributed equally across an eligible group. Doesn't count toward the $5,000 cap. Michael Dell and Ray Dalio have both made large pledges here.
• No earned-income requirement — unlike a standard IRA or a Roth IRA for kids.

Separately, children born January 1, 2025 – December 31, 2028, who are U.S. citizens qualify for a one-time $1,000 federal deposit. This doesn't count against the $5,000 cap, isn't automatic (a guardian must actively elect it via Form 4547), and can only be claimed by whoever claims the child as a dependent. As of late July 2026, roughly 7 million children had accounts, but only about 1.4–1.5 million were confirmed eligible for the $1,000. Some families have reported delays actually seeing the deposit land.

While the child is under 18 (the “growth period”), the money isn't invested freely. By law:

• It must go into mutual funds or ETFs tracking a broad U.S. stock market index (S&P 500 or total-market style funds)
• No individual stocks, no actively managed funds, no bonds, and no leverage are allowed
• Fund expense ratios are capped at 0.10% — low compared to many retail investment products
• Once the child turns 18 and the account becomes a standard IRA, these restrictions lift and normal IRA investment rules apply

Before 18: withdrawals are essentially locked. The only exceptions are the death of the child, a return of an excess contribution, or a special provision letting a 17-year-old roll the account into an ABLE account. There's no hardship or emergency exception.

At 18: the account can convert into a standard traditional IRA. From there:

• Withdrawals are generally taxed as ordinary income
• A 10% early-withdrawal penalty applies before age 59½, unless an exception applies (first-time home purchase up to $10,000, qualified education expenses, disability, and others)
• Required minimum distributions begin at age 73 under current law
• The now-adult owner can do a Roth conversion — often a smart move, since 18–23-year-olds are typically in their lowest lifetime tax bracket
• Once converted, the money isn't restricted to one purpose — retirement, a home, education, or anything else

• A parent's own after-tax contributions come back out tax-free (this is the account's “basis”).
• The $1,000 federal deposit, employer contributions, and charitable contributions are not tax-free basis. They — along with all investment earnings — are taxed as ordinary income whenever withdrawn.
• This means a Trump Account is not a Roth-style account, despite sometimes being described that way. A true Roth IRA lets after-tax contributions grow and come out completely tax-free. A Trump Account only gives that treatment to a parent's own contributions — everything else is tax-deferred, not tax-free, until separately converted to a Roth IRA at 18.

529 plan — best if education costs are the top priority. Qualified education withdrawals are entirely free of federal income tax, and contribution limits are far higher — often $235,000–$620,000+ lifetime depending on the state, with the ability to superfund up to five years of gifting at once. The trade-off: non-education withdrawals face tax and penalty on earnings, and balances can affect financial aid.

UTMA/UGMA (custodial account) — best for flexible, non-education spending. No contribution ceiling and broad investment choice, but investment income is taxed annually under “kiddie tax” rules, the child gets full legal control at 18–25 (depending on the state), and it's generally weighted more heavily on the FAFSA.

Roth IRA for kids — best once a child has a job. Requires actual earned income, but contributions can be withdrawn anytime tax- and penalty-free. A Trump Account needs no earned income at all — useful for infants — but has a lower contribution limit and no early-access flexibility.

Independent firms broadly frame these as complementary: a Trump Account as a free baseline for every eligible kid, a 529 for education-specific savings, a UTMA/UGMA for pre-18 flexibility, and a Roth IRA once a teen starts earning.

A few honest criticisms worth knowing:

• No liquidity, period — no way to access the money for a real emergency before age 18, even with a penalty.
• The tax story is more complicated than “free money.” Economist Dean Baker (CEPR) argues that because only a parent's own contributions come back out tax-free, the account is less favorable than it first sounds.
• No ability to reduce investment risk as the child nears 18 — unlike a target-date fund that gets more conservative over time.
• Participation is opt-in, which some researchers argue skews benefit toward more financially engaged families.
• Some early rollout friction, with families reporting delays before the $1,000 lands.

Our take: claiming the free $1,000 makes sense for essentially every eligible family — it costs nothing, and even taxed later, decades of compounding on free money is a good deal. Beyond that: prioritize a 529 if education is the main goal, consider a UTMA/UGMA for pre-18 flexibility, look at a Roth IRA once your child has earned income, and talk to a tax professional about a Roth conversion right around age 18.