The One, Big, Beautiful Bill Act (which the IRS calls the Working Families Tax Cuts) created a new tax-advantaged savings account for children: the Trump account. Contributions can begin on July 4, 2026, so 2026 is the first year clients will ask about them.
The basics
- Who: an account for a child under age 18 with a valid Social Security number.
- How to open: a parent or guardian elects to open the account on Form 4547, either with their tax return or separately.
- Annual limit: up to $5,000 a year from family and other contributors during the growth period (indexed for inflation after 2027).
- Employers: an employer can contribute up to $2,500 per employee a year tax-free; this counts toward the $5,000 limit and applies across all of that employee’s children.
- $1,000 pilot contribution: the federal government deposits $1,000 for eligible U.S.-citizen children born in 2025 through 2028 when the pilot program is elected on Form 4547. It does not count toward the $5,000 limit.
- Distributions: generally not allowed before the year the child turns 18; after that the account follows rules similar to a traditional IRA.
What to do now
- Identify clients with children born in 2025 or later and make sure the pilot election is made.
- Ask employer clients whether they want to offer a Trump account contribution program.
- Track contributions against the $5,000 limit when more than one person contributes.
Sources: IRS, Instructions for Form 4547; IRS, Treasury, IRS issue guidance on Trump Accounts. Rules may change as regulations are finalized.