An Overview of §530A Trump Accounts
Tax professionals will need to educate taxpayers in the upcoming filing season
§70204 of the One Big Beautiful Bill Act (OB3 Act) established a tax-deferred savings account for children, referred to as a Trump account, in new §530A. The IRS issued preliminary guidance in Notice 2025-68, and forthcoming proposed regulations will generally conform to the notice. The information in this article is from both sources.
For the 2025 tax season, it will be essential to inform clients with children about Trump accounts so that they can decide whether to open one. Tom’s Tax Toolbox has a Trump Account Client Overview for professionals to provide to their clients.
Trump Account Overview
A Trump account is established for the exclusive benefit of an eligible individual by an authorized individual. An eligible individual is a person for whom an election is made to establish a Trump account, who has not attained age 18 by the end of the calendar year in which the election is made, and who has been issued a Social Security Number on or before the date of the election.
If only the account opening election is made, the authorized individual for opening the initial Trump account must be a legal guardian, parent, adult sibling, or grandparent of the eligible individual, in that order of priority. This election is made on Form 4547, Trump Account Election(s), or at trumpaccounts.gov. Form 4547 can be filed with the authorized individual’s 2025 Form 1040.
A Trump account is a type of §408 traditional IRA account that has special rules during the growth period, which is the period that ends before January 1 of the calendar year in which the account beneficiary attains age 18. For example, if a child turns 18 on January 5, 2027, the growth period ends on December 31, 2026.
The following five special rules apply during the growth period:
The Trump account has limited, but sound, investment options. They can be invested in a mutual fund or exchange-traded fund (ETF) that tracks an index of primarily U.S. companies with annual fees of no more than 0.1%.
There is a different contribution limit from other IRAs. Trump accounts are subject to a $5,000 account contribution limit, which is inflation-adjusted starting in 2027. Beneficiaries may also contribute to a traditional or Roth IRA, and those contribution limits are not affected by Trump account contributions.
There is no deduction for individual contributions to a Trump account.
Distributions are generally not permitted except for qualified rollover contributions, qualified ABLE rollover contributions, distributions of excess contributions, and distributions upon the death of the account beneficiary.
Trustees have similar but different reporting requirements compared to IRAs.
Under a pilot program, the Treasury will contribute $1,000 for U.S. citizens born after December 31, 2024, and before January 1, 2029, if the authorized individual elects to receive the payment. For the pilot program election, as well as the account opening election (only if made at the same time as the pilot program election), the authorized individual is the one who anticipates that the eligible individual will be their §152(c) qualifying child for the tax year in which the election is made. This election is made on Form 4547, Trump Account Election(s), or at trumpaccounts.gov. Form 4547 can be filed with the authorized individual’s 2025 Form 1040.
Trump Account Contributions
No contributions to Trump accounts are permitted before July 4, 2026. There are five types of Trump account contributions during the growth period:
A pilot program contribution of $1,000 for an eligible child.
They are excluded from income and do not create basis in the account.
It is not subject to an annual contribution limit.
Qualified general contributions, which are contributions by states (or political subdivisions thereof), the United States, the District of Columbia, Indian tribal governments, or §501(c)(3) tax-exempt organizations for members of a qualified class of account beneficiaries. The Treasury Department will serve as the intermediary, depositing the offered funds into individual Trump accounts.
They are excluded from income and do not create basis in the account.
They are not subject to an annual contribution limit.
Employer contributions excluded from income under new §128.
They are excluded from income and do not create basis in the account.
They are subject to the $5,000 account contribution limit.
They are limited to $2,500 per employee and must be a part of an established Trump account contribution program.
Qualified rollover contributions from another Trump account.
They are excluded from income and have a transferred basis from the prior account.
They are not subject to an annual contribution limit.
Qualified rollover contributions are not permitted after the growth period.
Contributions from other sources, including account beneficiary, parents, or any other person.
They are excluded from income and create basis in the account.
They are subject to the $5,000 account contribution limit.
After the Growth Period
A Trump account remains a Trump account after the growth period, even though it is then subject to the general §408 IRA rules. An account initially established as a Trump account can never receive contributions under a SEP arrangement or SIMPLE IRA plan. A Trump account can never be aggregated with other IRAs when allocating basis related to a distribution from either the Trump account or another IRA (i.e., this is a modification of the regular IRA pro-rata rule).
Notice 2025-68 states that all other general IRA rules apply after the growth period, including those related to contributions, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting. A Roth conversion strategy can be initiated in the year the beneficiary turns 18; however, a multi-year approach may be necessary to minimize kiddie tax exposure.
§128 Employer Contribution Plans
An employer can establish a §128(c) Trump account contribution plan for employees or their dependents. A §128(c) plan is a tax-free fringe benefit that is a deductible business expense to the employer. The maximum employee exclusion amount is $2,500, and that is inflation-adjusted after 2027.
A §128(c) plan is subject to most of the same rules as dependent care assistance programs under §129(d); however, §129(d)(4) does not apply, which prohibits more than 25% of the benefits going to individuals who are shareholders or owners (or their spouses or dependents) each of whom own more than 5% of the business. However, §129(d)(8) does apply, and the average benefits provided to employees who are not highly compensated employees (HCEs) under all plans of the employer must be at least 55% of the average benefits provided to HCEs under all plans of the employer.
Notice 2025-68 does not provide material guidance on the operation of a §128 Trump account contribution plan; forthcoming regulations will address this matter.
Political Controversy
It would be inappropriate to let one’s political views cloud one’s obligation to inform clients about the potential benefits of a Trump account. It is also important to tell clients that they should consider a Trump account for an eligible child, regardless of their own political views. It is not uncommon to name new programs after politicians. Roth IRAs are named after Senator William Roth (R-DE), Pell Grants are named after Senator Claiborne Pell (D-RI), and Coverdell Education Savings Accounts are named after Senator Paul Coverdell (R-GA).