The new Trump Accounts are out! Launched on July 4 – babies born 2025 through 2028 are eligible for $1,000 from the Treasury – invested in an S&P 500 index fund. Any child under 18 can open one — the birth window only determines who gets the free $1,000.
Six million children are already signed up!
It’s crazy to think that a grandchild qualifies for a retirement account even before she qualifies for solid food. Though, the compounding effects are easy to swallow.
The questions everyone’s asking:
Is it really free money? Yes! The initial $1,000 is. So if a child qualifies — take it!
Can the family add more? Yes — up to $5,000 a year, combined. That’s one shared limit for everyone: parents, grandparents, and generous aunts. Some employers will chip in up to $2,500 for an employee’s child, though that counts toward the same cap.
Can she touch it? Not until 18. Then it becomes a regular retirement account — meaning if she taps it before age 60, the IRS will tax it and take a 10% penalty. This account rewards patience.
Does it pay for college? It can, but it’s not ideal. College skips the penalty but not the tax. A 529 is still the best college account. This is the everything after account.
The clever part? At 18, these accounts can be converted to a Roth. The sweet spot is to convert in low income earning years (maybe 18–25 years old?) The tax bill will be small — and it grows tax-free for the next forty years — one of the best ‘coming of age’ conversations to have.
California? Hasn’t decided whether to play along (of course) and state income taxes may apply. Stay tuned.
And the IRS form number for the account … wait for it … Form 4547!
Grandchildren? Call me before you open anything. The details matter, and they’re worth getting right.
Plan well,
Barbara
July 12, 2026
Sources:
- TrumpAccounts.gov — U.S. Treasury. https://www.trumpaccounts.gov
- IRS Guidance on Trump Accounts. https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
- “Trump Accounts create a ‘legal backdoor’ for Roth IRA wealth,” CNBC, June 3, 2026. https://www.cnbc.com/2026/06/03/trump-accounts-roth-ira.htm
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