New Child IRA Option Introduced Under the One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, allows parents, guardians, and other authorized individuals to establish “Trump Accounts”, a new type of individual retirement account for children. Trump Accounts are for children who have not turned age 18 before the end of the calendar year in which the election is made and have a valid Social Security number.

The account features a pilot program in which the Government will contribute $1,000 to children born between Jan. 1, 2025, and Dec. 31, 2028, and who are U.S. citizens with a valid Social Security number.

Trump Accounts are a type of Individual Retirement Account (IRA) launching on July 4, 2026. Taxpayers can conveniently open a Trump Account for their child by making an election when filing their 2025 annual income tax return using the newly created IRS Form 4547. Once this election is completed, a financial institution will receive the funds and activate the child’s account. Contributions are scheduled to start on July 4, 2026. There are no income limits for creating an account. For children born between Jan. 1, 2025, and Dec. 31, 2028, the U.S. Treasury will contribute $1,000 to their Trump accounts.

For children born before January 1, 2025, there are other funding sources as well. Children aged 10 or younger may qualify for contributions from other private funding if the eligibility requirements are met. Taxpayers/employers can then decide to contribute further to the account (max $5,000/year until the child reaches 18).

Billionaires Michael and Susan Dell have donated $6.25 billion dollars into the program for children ages 10 and younger (who live in ZIP codes with a median family income of $150,000 or less) to receive $250 in Trump Accounts. Additionally, hedge fund founder Ray Dalio and his wife, Barbara, have pledged $75 million dollars to fund $250 in Trump Accounts for children under 10 in Connecticut. Also, investor Brad Gerstner pledged to donate $250 for every child under 5 in Indiana. These contributions do not affect the $5,000 contribution limit or add basis to Trump Accounts.

According to the Trump Account official website, account valuations are estimated below:

There are some limitations on eligible investments for Trump Accounts. During the account’s growth period, funds may only be invested in mutual funds or exchange traded funds that are primarily U.S. companies, such as the S&P 500. There are also other criteria, including that the funds should not use leverage, charge annual fees, or incur expenses exceeding 0.1% of the investment balance. Distributions from Trump Accounts may not be made until the end of the growth period, which starts January 1^st of the year in which the beneficiary turns 18 years of age. If funds are distributed before this, they are subject to a 10% additional tax, like early distributions from a traditional IRA.

Many may be wondering whether to open a 529 plan or a Trump Account to save for a child’s future. Although both are great choices for savings goals, there are several key differences, including but not limited to the following:

If you have any questions regarding 529 plans or Trump Accounts, please contact your Anchin Relationship Partner.