Trump Accounts are a new savings option designed to help families build long-term wealth for children. Learn how contributions work, investment rules, distribution options, and key planning considerations.
Transcript:
Hi, I’m Mike Walther, Founder and President of Oak Wealth Advisors, with a summary of the new Trump Accounts.
These are new savings accounts for children. Contributions can be made to fund the accounts until the child reaches age 18. After that, the account essentially functions like a retirement account. Once the account owner reaches age 59½, withdrawals can generally be taken without penalties. For now, however, the focus should be on funding the accounts and building long-term value.
There is a $5,000 annual contribution limit. If the government provides the initial $1,000 contribution, that leaves up to $4,000 in additional contributions that can be made each year. Depending on where you live, you may also be eligible for a one-time $250 contribution from the Dell Foundation. Contributions can begin on July 4, 2026.
In summary, there is a $5,000 annual contribution limit until age 18. After that point, the account becomes similar to an IRA for the individual.
There are two distinct periods to keep in mind. The first is the growth period, which lasts until age 18. During this time, contributions can be made, but distributions are not allowed. Regardless of the reason, under current law there is no way to withdraw funds before age 18.
There are also investment restrictions. All Trump Accounts must be invested in a low-cost U.S. stock index fund with expenses below 10 basis points, or one-tenth of one percent. This provides a growth-oriented investment vehicle focused on U.S. equities. The child will be the sole beneficiary of the account.
After age 18, distributions are permitted, but they may be subject to taxes and penalties. Because of this, individuals should consult with a financial advisor before taking distributions. Another option available after age 18 is converting the Trump Account to a Roth IRA. Once converted, the Roth IRA can continue to grow tax-free, and qualified future withdrawals would also be tax-free. Since the account belongs to the individual after age 18, they will be responsible for making these decisions during the post-growth period.
You may be wondering how to open one of these accounts. The current guidance is that you will either use Federal Form 4547 or visit TrumpAccounts.gov to complete the required paperwork and establish the account.
Initially, accounts will be held at BNY Robinhood, the designated custodian for these accounts. This centralized structure is intended to simplify the government’s funding process. At a future date, which has not yet been determined, account owners may be able to transfer their accounts to another custodian. We do not yet know which custodians will be available, but we expect additional guidance in the future.
It is also important to understand that while the account is owned by the child, anyone may contribute to it, subject to the $5,000 annual contribution limit.
When making contributions, be aware that because distributions are not allowed before age 18, contributions may not be considered completed gifts for gift tax purposes. As a result, a gift tax return may be required in some situations. These contributions may not qualify for the annual gift tax exclusion amount, which is $19,000 per recipient in 2026. If you are planning to contribute to a Trump Account, consult your accountant or tax advisor to determine whether any gift tax filing requirements apply to your situation.
At Oak Wealth Advisors, we have also identified potential planning strategies that may help address some of these gift tax concerns. If you would like to discuss these possibilities, please contact us.
Finally, during the growth period, it is important to understand how the account is invested. While there may be some investment choices available, the investments must be held in a mutual fund or exchange-traded fund with expenses below 10 basis points.
One additional consideration is state taxation. A few states, including Wisconsin and California, have indicated they may tax the annual earnings generated within Trump Accounts. Most states are expected to treat these accounts similarly to IRAs, allowing growth to occur tax-free while funds remain in the account. If you live in Wisconsin, California, or are unsure about your state’s treatment, reach out to Oak Wealth Advisors or your financial advisor to determine whether state taxes may apply.
If you have any questions, please contact your advisor at Oak Wealth Advisors. You can also follow us on social media and listen to our podcasts, including The Special Needs Voice on Spotify, where we feature leaders from the disability community and share valuable insights for individuals and families.
Please remember that everything discussed here is a summary of a brand-new program. The rules and guidance may continue to evolve. Before implementing any strategy, consult your financial advisor and tax professional for personalized advice. Do not assume that current information will remain unchanged, and always seek professional guidance regarding your taxes and financial planning.
We wish you all the best.
