New child investment accounts, what parents and grandparents need to know

Introduction

Recent tax legislation has introduced a new type of investment account designed specifically for children under the age of 18. The goal of this program is to help children build financial resources that will be available as they enter adulthood.

Although these accounts are not open yet, early IRS guidance released in December makes it important for parents and grandparents to understand how the program is expected to work and why early preparation matters.

At TaxPro Consult and Bookkeeping Services, we help families in Charlotte, NC, and across the U.S. stay informed about new planning opportunities that can benefit the next generation.

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Account overview, how the program is expected to work

Beginning after July 4, 2026, eligible children may have a Trump Account opened on their behalf. While final regulations are still being developed, current guidance outlines several key features.

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Annual contributions

Up to $5,000 per year may be contributed for each child under age 18. Starting in 2027, this contribution limit is expected to be indexed for inflation.

Contributions can come from parents, grandparents, or other eligible family members, subject to program rules.

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No early withdrawals

Funds must remain in the account until January 1 of the year the child turns 18.

Withdrawals before that time are generally not allowed, with very limited exceptions such as the death of the beneficiary. This rule is designed to encourage long term investing rather than short term spending.

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Investment restrictions

Funds in the account must be invested according to strict guidelines.

The account cannot hold basic savings or checking deposits. Instead, eligible investments are expected to include mutual funds or ETFs that track indexes made up primarily of U.S. companies.

This structure is intended to promote growth over time.

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One account per child

Each child is limited to one Trump Account.

The IRS has established an order of priority for who may open the account:

1. Legal guardians
2. Parents
3. Adult siblings
4. Grandparents

This ensures that one centralized account is maintained for each child.

What happens when the child turns 18

Once the child reaches age 18, the Trump Account ceases to exist.

At that point, the balance must be rolled over or distributed. Distributions are expected to be treated similarly to those from a traditional IRA, which means taxes may apply depending on how funds are handled.

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Why this account matters, key benefits and incentives

This program was created to help young Americans enter adulthood with financial support already in place. Several incentives make this account especially notable.

Federal seed money for newborns

Children born between January 1, 2025 and December 31, 2028 may qualify for a $1,000 federal government contribution through a pilot program.

This money is invested and allowed to grow over time, giving children a financial head start.

Employer contributions

Employers may contribute up to $2,500 per year to an employee’s Trump Account for a child.

These contributions are not included in taxable wages, which could make this a valuable new fringe benefit for working parents.

Private gift funding

Up to 25 million children age 10 and under may receive a $250 contribution funded by Michael and Susan Dell.

Eligibility is based on living in a ZIP code with a median household income below $150,000. Separate applications will be required.

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Example, how this could work in real life

Imagine a child born in 2026.

Once the program launches, the parents open a Trump Account. The account receives:

• A $1,000 federal seed contribution
• Annual family contributions of $2,000
• Possible employer contributions from a parent

Over 18 years, with consistent investing and market growth, this child could enter adulthood with a meaningful financial foundation that can support education, housing, or long term planning.

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What families should do now

Even though accounts are not yet available, families can take important steps now.

Stay informed

Visit www.trumpaccounts.gov and sign up for email updates to receive official IRS announcements and timelines.

Be ready to open the account

The IRS has indicated that accounts may be opened using IRS Form 4547 or through the official website once applications are available. Early enrollment is expected to be important.

Prepare for bonus applications

Government and private bonus contributions will require separate applications. These funds may be limited, so timing will matter.

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Key takeaways for parents and grandparents

If you are considering this opportunity for your children or grandchildren:

• Stay informed as rules are finalized
• Open the account as soon as it becomes available
• Apply promptly for any additional funding opportunities

Early planning could make a meaningful financial difference for the next generation.

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DISCLAIMER, TaxPro Consult and Bookkeeping Services

This article is for general education only. It does not constitute tax, legal, or accounting advice. Regulations change, and individual situations differ. You should consult a qualified tax professional who can review your specific circumstances. TaxPro Consult and Bookkeeping Services is not acting as your tax preparer or tax advisor in this content.

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Need help planning for your child’s financial future?

If you live in Charlotte, NC, or anywhere in the U.S., our team at TaxPro Consult and Bookkeeping Services can help you understand how this new program fits into your broader tax and financial plan.

Email us or schedule a consultation for personalized guidance.