A Trump Account (aka 530A Account, or 530 IRA) is a new type of retirement investment account for children. They offer tax-deferred growth, but you don’t get a tax break upon contribution. Funds generally cannot be withdrawn until the child reaches age 18, whereupon it converts into a traditional IRA with penalties on most withdrawals until age 59.5. Unlike other IRAs, no earned income is required. Beyond parental contributions, there are various ways to receive contributions from the government and outside donors (including employers and nonprofits). The combined annual contribution limit for individuals and employers is $5,000 per child in 2026 (government and outside donors don’t count towards the limit).
Sources for this post are here, here, here, here, and here. My personal takeaway is that they are two main scenarios where you should open an account.
Scenario #1: If you are eligible for free money, you should take action and open an account.
- Enrollment is not automatic. However, once you open an account, even with $0, outside contributions can arrive directly into your account. There are no annual account fees, so I see no reason not to take the money and let it grow over time until it becomes part of your child’s IRA balance. Your money will be invested in an S&P 500 index ETF (ticker SPYM) and you will need to use an app with BNY and Robinhood software handling the backend.
- Download the official app. You need to file IRA Form 4547. Practically, you can do everything on the app found at the official site TrumpAccounts.gov. You could also wait until when you file your taxes or through the IRS website.
- $1,000 Federal-level contribution for young kids and newborns. U.S. citizens born between January 1, 2025, and December 31, 2028, qualify for a one-time federal contribution of $1,000. The money arrives automatically after you open an account.
- $250 Dell Foundation contribution (~75% of rest of kids under age 10). U.S. citizens born between 2016 and 2024 who live in ZIP codes where the median income is $150,000 or less qualify for $250 from the Dell Foundation. This ends up including ~75% of all kids in that age range. Limited to the first 25 million kids who open an account. Here is an eligibility tool. The money arrives automatically after you open an account.
- Employer Contributions and/or Matching (Up to $2,500/year). Check with your employer, and look out for new commitments, especially if its a big corporation.
- State-level Contributions. This list is also growing.
- Things appear to be changing constantly, including Visa stating they want to enable the ability to redirect your credit card rewards to Trump Accounts.
Scenario #2: If you are already financially set for your own retirement and your children’s educational goals.
- In general, I take the philosophy that you should worry about your own retirement needs first. If you aren’t very confident you can fund your own retirement, why are you worrying about your kids? This by itself removes the majority of US families.
- After that, 529 accounts are most likely a better way to save money towards your child’s education. There are tax breaks on contributions in many states, there are more investment options, and the money can be withdrawn tax-free for eligible educational expenses. Even if you over-contribute, you can also now convert up to $35,000 in excess to Roth IRAs.
- For those financially set enough that they still want to help fund their kids’ retirement beyond that, then this works like a non-deductible IRA contribution to your kids’ retirement. You have to put in after-tax money, it grows tax-deferred, but when it turns into a Traditional IRA at age 18, your kids will owe tax on all capital gains upon withdrawal (taxed as ordinary income).
- Given that your kids will probably be an a relatively low tax bracket at age 18, this may be a good time to convert from Traditional IRA to a Roth IRA, assuming that is still allowed in the future. Boom, your kid could turn 21 with a six-figure Roth IRA.
- I figure the folks that are rich enough for this will often be the same folks that were previously funding their kids’ Roth IRA by trying to count their chores or other household tasks as “earning income”. This account isn’t as good as a Roth IRA, but it’s a lot easier to fund.
I was surprised to find out that roughly 75% of children aged 10 and under qualify for the “low-income restricted” Dell $250 contribution, and indeed my zip code was eligible and the $250 has already arrived in my child’s account.
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Just to invest in anything with his name on it makes my skin crawl. I’m doing fine without anything optional from him.
Amen. And luckily I live in an ineligible ZIP code for the free money so it made my decision easier.
Agreed. Absolutely grosses me out.
I submitted the forms to open accounts for my kids via the IRS website on July 10. The status is still labeled as Processing. According to the app, it should take 1-3 business days to open the accounts when the forms are submitted electronically. I have contacted support multiple times about this, and they just give me the run-around every time. My kids have been listed on my tax returns as dependents for years, so the IRS should already know about them. No one will give me an answer about what is taking so long to open these accounts. The sad thing is my kids should have been eligible for the $250 Dell contribution, but will probably miss out since the government refuses to open the accounts for my kids and will not help me when I contact them about this situation.
I opened the account for my youngest on the app and it was pretty quick. I think I got approved the next day. Maybe you can try that since it is in limbo on the website. I still need to open one for my oldest
I tried submitting the forms through the app this time. The next day I received a response that the accounts couldn’t be opened. Now I see two forms for each kid in my IRS account. The ones from July 10 still showing as processing and the ones from yesterday as unable to process. I contacted support yet again, and they told me this is an issue affecting many people and they will reach out with further guidance in the future. At least I got something of an answer this time even though they couldn’t provide any details or a timeline for getting this resolved.
If it wasn’t for the possibility of getting the $250 Dell contribution for my kids, I definitely would be giving up and not wasting any more time on these accounts.
One potential benefit you didn’t mention is the ability for friends and family to contribute to the accounts. Friends and relatives (especially those without children) often don’t give gifts for bdays, Christmas, honor roll, etc. Either they don’t know what to give, or weren’t invited/informed. Trump accounts allow parents to invite a contribution to the child’s account on these occasions (in lieu, or in addition to a gift), and in this way broaden the contributor base.
Additionally, I can imagine this expanding to service workers so that you’d see an option at checkout to “Contribute a dollar to your cashier’s grandchild” etc. and the business would manage the contribution to the Trump account. Cashiers, waiters, etc could provide the details for their own children, grandchildren, etc to receive the contributions.
Great, not only bugging customers for (excessive) tipping, now also shaming them to pay for their kids…what terrible country we have become.
We live in an amazing country. Objectively richer and free to pursue our interests than the Kings of yesterday, and most other contemporary societies. Reject the propaganda pushed by people who hate humanity 🙁
Friends and family can already contribute to 529 accounts very easily. At least in my social circles, it has not been a popular option at all.
I can understand if you don’t like the name on the account, but names come and go. You can simply refer to them as 530A accounts based on the IRS tax code they reference, just like 529 accounts.
@Andy – I would try signing up directly through the app. Also, only 7 million accounts have been opened in total as of last count I saw in September, so you are still okay.
Ah, I didn’t realize that it was possible to contribute to a 529 so easily. Parents should definitely be taking more advantage of that feature.
My daughter turns 18 next year. I’ve been thinking about contributing the $5k for her at the end of this year and then converting it to a Roth as soon as possible. At least it would give her a head start on a retirement account before she starts working and if she is able to allow it to compound until around age 60 it could become worth around $40k adjusted for inflation and tax free.
Not clear from your comment, but the $5k you’re interested in putting into a Roth may be better spent in putting directly into a Roth if she has $5k+ of taxable income. May want to avoid taxes on conversion amount if you can. Also college/ other financial considerations may change what you should do.
Thanks. 529 is well-funded and she does not have taxable income. My understanding is only the gains would be taxable upon conversion, and those should be minimal given the short timeframe between funding and converting.
Do you have to do anything for the $250 Dell $ to trigger? Or just open the account (for eligible kids/zip).
Mine were opened in under a day. Just wondering if I need to do anything else for the $250.
In case anyone sees this: about a week after I opened the accounts, the Dell Foundation $ appeared in each account and I got an email notification. So it just happens automatically.