Trump Accounts open July 4 with $1,000 for eligible children

Families will be able to start depositing money into Trump Accounts on July 4, and eligible children can begin receiving the government’s one-time $1,000 seed deposit once a parent or guardian makes the election. Treasury will roll out account activation to millions of families ahead of the launch. On March 31, IRS data showed more than four million children had already been signed up and more than one million were covered by the pilot contribution.

The account is a new type of individual retirement account for children under 18. The child owns it, with a parent, guardian or other authorized adult serving as custodian until age 18; the child also needs a valid Social Security number, and contributions cannot be made before July 4, 2026. Regular family deposits can run up to $5,000 a year, employer contributions can reach $2,500 a year without counting toward the worker’s taxable income, and the money can only buy low-cost mutual funds or ETFs tied to broad U.S. equity indexes such as the S&P 500. After the child turns 18, the account generally functions like a traditional IRA.

The $1,000 federal contribution applies only to U.S. citizen children born from Jan. 1, 2025 through Dec. 31, 2028, and only if an election is made for that child. Families can start the process by signing in to an IRS account with ID.me and filing Form 4547; IRS guidance puts the process at five to 10 minutes. Activation emails will go out in phases, and the account is fully in the child’s name.

A 529 plan is a state-operated education account, and its earnings are tax-free federally, and generally at the state level, when withdrawals pay qualified education costs; contributions, however, are not deductible. UTMA and UGMA custodial accounts are more flexible because a custodian can manage funds, securities and other assets for a minor, but the transfer is irrevocable and investment income can be taxed under kiddie-tax rules.