If you have a child under 18 — or one on the way — there's a new federal savings program that deserves your immediate attention. Section 530A of the One Big Beautiful Bill Act of 2025 created what are commonly called "Trump accounts," and if your family qualifies, the government will seed your child's account with $1,000 just for signing up. But the real opportunity runs much deeper than a free thousand dollars, and most families won't capture it without the right guidance.
This is exactly the kind of provision we help clients navigate. Here's what you need to know and how we can help you make the most of it.
A Trump account is a tax-advantaged savings vehicle created specifically for children. For children born between 2025 and 2028 who are U.S. citizens with a valid Social Security number, the federal government contributes an initial $1,000 deposit to get the account started. From there, your family and even your employer can contribute up to $5,000 per year.
During your child's minor years, the account is invested in low-cost, broad U.S. equity index funds. That's a straightforward, time-tested approach — and over 18 years of compounding, it can generate significant growth. When your child turns 18, the investment restrictions lift and the account automatically converts to a traditional IRA in their name.
Growth in the account is tax-deferred throughout childhood, which means more of your money is working for your child over time. How distributions are taxed later depends on where each contributed dollar originally came from — and that distinction matters enormously, which we'll explain below.
The federal seed deposit doesn't arrive automatically. You need to file Form 4547 to register the account and claim it. For children born between 2025 and 2028, this is one of the simplest financial wins available — but it requires action.
We can help you file Form 4547 and get the account established correctly from the start. Getting the setup right from day one also lays the groundwork for all the planning that follows.
For clients who own a small business, the Trump account rules include a provision that makes this a compelling planning opportunity on both sides of your financial life.
Employers are permitted to contribute up to $2,500 per year toward a Trump account for an employee's qualifying child. If you own the business and your child is the qualifying beneficiary, that means your company can fund $2,500 toward your child's account each year. That contribution is deductible to your business and excluded from your income — a genuine tax benefit, not a deferral.
Pair that employer contribution with a personal after-tax contribution of $2,500 and the account is fully funded at $5,000 per year from the start. You're building generational wealth while also reducing your tax burden today. That's the kind of multi-layered planning that requires some coordination to get right — and delivers real results when it's done properly.
Here's where things get complicated — and where having professional support can save your family a significant amount of money.
When your child eventually takes distributions from the account, the tax treatment depends on the original source of each dollar contributed. Your personal after-tax contributions come back to your child tax-free. The earnings on those dollars are taxed as ordinary income. The employer contributions and the government's seed deposit are fully taxable on distribution.
If those sources aren't carefully tracked over 18 years, the IRS defaults to treating the entire account as pre-tax. That means your child could end up paying taxes on money your family already paid taxes on — simply because the records weren't maintained.
This is not a hypothetical risk. It's a predictable outcome for families who set up an account and walk away. We offer an annual contribution tracking service that keeps a clean record of every dollar's source, year by year. It's the kind of quiet, ongoing work that protects a large sum of money — and you won't regret having it done when the distributions begin.
If you're already contributing to a 529 college savings plan, you're doing the right thing — and a Trump account doesn't replace it. These two vehicles serve different purposes and are most powerful when used together.
A 529 is still the best tool for education savings. Qualified withdrawals are entirely tax-free, and many states offer deductions or credits on contributions. For funding tuition, it's the right choice.
A Trump account is a long-horizon wealth vehicle — think retirement, not college. The 18-year compounding window, combined with the right strategy at the point of conversion, can turn modest annual contributions into a substantial tax-advantaged nest egg.
The sequence we walk clients through: establish and fund the 529 for education, then layer in annual Trump account contributions on top. If you own a business, we optimize the employer contribution alongside that. Together, these create a comprehensive plan for your child's future that covers both education and long-term financial security.
This is the decision that determines whether a Trump account becomes truly transformational or simply adequate — and most families won't know it's coming until it's already relevant.
When your child turns 18 and the account converts to a traditional IRA, the default path is to leave it there and draw it down in retirement. But that approach is costly. Most of the account's growth — plus the employer and government contributions — will eventually be taxed at ordinary income rates, with required minimum distributions added on top.
The far better outcome is a Roth conversion shortly after the account converts. Between the ages of 18 and 25, most young adults are in the lowest marginal tax brackets of their entire lives. A Roth conversion creates a tax bill in the year it's executed, but at a rate that's likely far below what those same dollars would face in retirement. Every dollar in the account then grows tax-free — permanently — with no required minimum distributions ever.
The math is worth sitting with. A $200,000 account at 18, converted to a Roth IRA with a tax cost of roughly $40,000, leaves $160,000 in a tax-free account. Over the following 42 years at historical market returns, that balance could grow to approximately $9–10 million. Every dollar of it tax-free.
One important nuance: if your child is still your dependent and enrolled in school at 18, the IRS may impose your marginal tax rate — not your child's — on the conversion income under the Kiddie Tax rules. The timing of the conversion matters, and getting it wrong can significantly increase the cost. This is a planning decision that requires careful analysis of your family's specific situation. We'll be watching that window with you and advise on the right moment to act.
Trump accounts are not complicated to open, but they are complicated to optimize. The decisions made at each stage — setup, annual contributions, employer coordination, record-keeping, and the eventual Roth conversion — compound over 18 years. Getting them right from the beginning is far easier than correcting them later.
Here's what we offer for clients with children who qualify:
Account Setup. We file Form 4547, establish the account correctly, and confirm your child has captured the federal seed deposit.
Employer Contribution Strategy. If you own a business, we analyze whether and how to structure contributions through your entity to maximize the tax benefit on both sides.
Annual Contribution Tracking. We maintain a clean record of the source of every contribution, year over year, so your child's distributions are taxed correctly — not over-taxed by default.
529 Coordination. We integrate your Trump account contributions into your existing education savings strategy so the two plans work together, not at cross purposes.
Roth Conversion Planning. As your child approaches 18, we analyze the optimal timing and structure for the Roth conversion, accounting for dependency status, income, and family circumstances.
If you have a child who qualifies — or one due soon — the best time to start is now. The government contribution window for births between 2025 and 2028 won't last, and every year without a structured contribution plan is a year of compounding you can't recover.
Reach out to our office to schedule a conversation. We'll review your family's situation and walk you through exactly what makes sense for your child.
This article is for general informational purposes only and does not constitute tax, legal, or financial advice. Individual circumstances vary. Please contact our office to discuss your specific situation.