A new program included in the 2025 One Big Beautiful Bill has created “Trump Accounts” (officially called MAGA Accounts: Money Accounts for Growth and Advancement). These accounts aim to help children save for education, homeownership, and entrepreneurship — but the rules are detailed, and not everyone will qualify. Here’s what families need to know.
What Are Trump Accounts?
- $1,000 government deposit: Every child born between Jan 1, 2025 and Dec 31, 2028 will automatically receive $1,000 in a new account.
- Private contributions: Parents, relatives, and others can contribute up to $5,000 annually per child.
- Investment rules: Accounts must be invested in a government-approved index fund.
- Qualified uses: Withdrawals are allowed for education, first-time home purchases, or entrepreneurial expenses.
- Tax treatment: Investments grow tax-deferred. Qualified withdrawals get favorable tax treatment, while non-qualified uses may be taxed.
Who Qualifies?
- Children born between 2025 and 2028 are eligible for the government seed deposit.
- Contributions are open to parents, guardians, grandparents, or other relatives.
- Accounts will be overseen by the U.S. Treasury and managed by participating banks or financial institutions.
Pros
- Head start for newborns: Eligible children born from 2025 through 2028 can receive a one-time $1,000 government contribution; parents must elect it when opening the account.
- Compounding power: Starting at birth means decades of potential growth.
- Different flexibility than 529 plans: Withdrawals generally aren’t allowed before the year the child turns 18. After that, the account follows traditional IRA rules, including penalty exceptions for qualified education expenses and a first home purchase.
- Encourages early saving habits: Families can contribute steadily over 18 years.
Cons & Unknowns
- Limited window: Only children born between 2025 and 2028 qualify for the $1,000 seed money.
- Rules still being finalized: The IRS has issued initial guidance, and additional regulations are expected.
- Unequal benefit: Higher-income families who can contribute $5,000 annually will see far larger benefits.
- Separate rules: Trump Accounts and 529 plans are separate accounts with different rules, and families may need to weigh which to prioritize.
- Legislative risk: A future Congress could amend or repeal the program.
Timeline
- July 4, 2025 — Law passed as part of the One Big Beautiful Bill.
- December 2025 — IRS issued initial guidance (Notice 2025-68).
- July 4, 2026 — Contributions to Trump Accounts began.
Frequently Asked Questions
Are contributions tax-deductible?
No. Contributions are made with after-tax dollars, but growth is tax-deferred.
Does the $1,000 count toward the $5,000 limit?
No. It’s in addition to the private contribution allowance.
What if money isn’t used by adulthood?
There is no deadline to use the money. Starting in the year the child turns 18, the account generally follows traditional IRA rules, so withdrawals are taxed as income and may face a 10% additional tax before age 59½ unless an exception applies (such as qualified higher education expenses or a first home purchase).
Can I also have a 529 plan?
Yes. Trump Accounts do not replace 529 plans, and a child can have both. They are separate accounts with different rules: 529 plans are designed for education savings, while Trump Accounts generally follow traditional IRA rules starting in the year the child turns 18. IRS guidance does not provide for rollovers between a 529 plan and a Trump Account.
What Families Should Do Now
- Review the IRS guidance and account options at trumpaccounts.gov before opening or contributing.
- Think of these as a supplement, not a replacement — retirement and emergency savings should still come first.
- Plan contributions realistically — while $5,000 annually maximizes benefits, even small regular contributions can grow meaningfully over time.
Should You Consider a Trump Account?
Trump Accounts offer a new way to save for children’s futures, combining a government seed deposit with flexible qualified uses. But with rules still being finalized, it’s important to understand both the benefits and the limitations before making them a central piece of your family’s financial strategy.
About the Financial Planning Author
Alexander Langan, J.D., serves as the Chief Investment Officer at Langan Financial Group. In this role, he manages investment portfolios, acts as a fiduciary for group retirement plans, and consults with clients regarding their financial goals, risk tolerance, and asset allocation.
With a focus on ERISA Law, Alex graduated cum laude from Widener Commonwealth Law School. He then clerked for the Supreme Court of Pennsylvania and worked in the Legal Office of the Pennsylvania Office of the Budget, where he assisted in directing and advising policy determinations on state and federal tax, administrative law, and contractual issues.
Alex is also passionate about giving back to the community, and has participated in The Foundation of Enhancing Communities’ Emerging Philanthropist Program, volunteers at his church, and serves as a board member of Samara: The Center of Individual & Family Growth. Outside of work and volunteering, Alex enjoys his time with his wife Sarah, and their three children, Rory, Patrick, and Ava.
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