IRS, Treasury Explain How to Open ‘Trump Accounts’

The Department of the Treasury and the Internal Revenue Service issued Notice 2025-68 on Tuesday, laying out how newly created “Trump Accounts” will work, establishing the first detailed framework for the tax-advantaged savings vehicles.

Created in the One Big Beautiful Bill Act signed into law on July 4, Trump accounts are a new kind of individual account designed for minors. The accounts are opened for children younger than age 18 and are treated as traditional IRAs under Section 408 of the Internal Revenue Code, but with special “growth period” rules lasting until the year the child turns 18.

During the up-to-18-year period, the account can only invest in certain low-cost, index-tracking investments, and account holders cannot make withdrawals except in limited cases such as rollovers or the death of the beneficiary.

Unlike other IRAs, contributions can be made even if the child has no earned income. The initial federal pilot program provides a $1,000 deposit for eligible U.S. citizens born on or after January 1, 2025, through December 31, 2028, whose parents elect to open an account through the IRS’s forthcoming portal at www.trumpaccounts.gov.

The first contributions are expected to begin after July 4, 2026, when the accounts go live.

On Tuesday, billionaires Michael and Susan Dell pledged $6.25 billion to support the “Trump Accounts” initiative aimed at providing an estimated $250 each to 25 million children. Michael Dell previously stated that his company would match the $1,000 in government funding for each child of its employees. The company match is anticipated to be deductible as a corporate wage expense and will be nontaxable to the employees.

Contributions to the accounts are limited to an aggregate of $5,000 per year. The annual contribution limits are indexed to inflation and will adjust starting after 2027, according to the IRS notice.

How Accounts Can Be Opened

According to the announcement, the IRS plans to create a Trump Account for each eligible child once an election is made using IRS Form 4547 or an online application. Parents, guardians, adult siblings or grandparents—in that order of priority—may make the election, and only one account can be opened per child. Once processed, the IRS will begin sending activation details in May 2026.

Each account will be overseen by an approved financial institution chosen by Treasury to serve as trustee. The account’s “responsible party,” typically the parent or guardian who opened it, can select among the approved investment options—the S&P 500 or another index of primarily American equities—and manage rollovers.

Funding Sources and Limits

During the growth period, contributions can come from five sources:

1. The $1,000 federal pilot payment;
2. “Qualified general contributions” funded by states, nonprofits or tribal governments for defined groups of children;
3. Employer contributions of up to $2,500 per year under new Section 128 of the Internal Revenue Code, “Trump Account contribution programs”;
4. Rollovers from a previous Trump account; and
5. Voluntary contributions by parents or others, up to $5,000 per year, indexed for inflation after 2027.

Funds must be invested only in low-cost U.S. index mutual funds or exchange-traded funds that charge no more than 10 basis points in annual fees, use no leverage and track a broad-based U.S. equity index such as the S&P 500.

No distributions are permitted while the child is younger than 18, except for rollovers or death. After that, the account converts to a regular IRA, with usual tax rules applying to withdrawals and early-distribution penalties. Trustees must maintain strict procedures to prevent early withdrawals or ineligible investments.

Trustees will have separate reporting obligations under new Section 530A(i), including identifying the source of contributions and providing annual reports to both the IRS and the account beneficiary. Once the child turns 18, normal IRA reporting rules resume.

The IRS will take public comments on the notice before issuing formal regulations. However, rules governing the initial account elections and the pilot program contributions may be finalized sooner, allowing parents to begin applying in 2026.

The IRS is posting a draft version of Form 4547, Trump Account Election(s) to its draft tax forms for review.