What Are “Trump” Accounts?

On July 4, 2025, the One Big Beautiful Bill was signed into law (also known as OB3, or H.R. 1).  As part of that law, Internal Revenue Code Section 530A was added, which created “Trump” accounts (or 530A accounts). Sec 530A accounts are investment accounts that can be set up for children under age 18, for which the growth/earnings is tax deferred.  From the time the account is created and the first contribution is made, until December 31st of the year in which the child turns 18 is referred to as the “growth period.”  During the growth period, these accounts have specific rules regarding eligibility, contributions, and investments.

Who Can Open and Contribute to a 530A Account?

These accounts can be opened by the child’s parent, guardian, adult sibling, or grandparent, but really anyone can contribute to the child’s account – including employers!  The child must be under the age of 18 and have a valid Social Security number.  Contributions are limited to $5,000 per year, so it will be critical to keep track of who is contributing and how much so that there are no issues with excess contributions.

How Does the Federal Pilot Program Work?

The Federal government has a Pilot Program, during which it will contribute $1,000 in “seed money” to the accounts for children born in 2025-2028, IF they have been set up and have elected to receive it.  To open a Trump account (and elect to receive the seed money, if eligible) you just need to file IRS Form 4547 with your 2025 income tax return, or you can file it separately.  You will also be able to do so on www.trumpaccounts.gov.

Can Employers Contribute to 530A Accounts?

Employers can contribute up to $2,500 per year (adjusted for inflation) directly to an (under age 18) employee’s 530A account or to an employee’s dependent’s 530A account.  These contributions count towards the $5,000 per year maximum, so again – it is imperative to keep track of who is contributing and how much each year.  The Government seed money, however, or other government-funded contributions are explicitly excluded from the $5,000 cap.

What Investment Rules Apply to Trump Accounts?

The Trump accounts’ investments are generally limited to mutual funds or Exchange-Traded Funds (ETFs) that track broad-based U.S. equity indexes.  Annual management fees cannot exceed 0.10% and leveraging is prohibited.

What Happens When the Child Turns 17 or 18?

When the child turns 17, they have a one-time opportunity to roll the account in an ABLE account, if the need is there.  If this one-year window is missed, the opportunity to roll to an ABLE account is gone.  Otherwise, when the child turns 18, the account transitions to rules for traditional IRAs, another reason why tracking contributions (and therefore basis) is important!  Beneficiary designations should be evaluated and Roth conversions should be contemplated while the young adult may be in lower income tax brackets.

How Can Trump Accounts Fit Into a Long-Term Savings Plan?

Trump accounts are focused on long-term growth and can be used alongside 529 plans, Uniform Transfers to Minors Act accounts (UTMAs), and then ultimately follow traditional IRA rules.

What Gift Tax Issue Should Contributors Be Aware Of?

Since Trump accounts are tax-deferred, and distributions are not permitted until the beneficiary turns 18, contributions to them are technically considered “gifts of future interests”, requiring the filing of a gift tax return for each contribution.  However, on June 29, 2026, the IRS released Rev Proc 2026-25, establishing a “safe harbor” to treat qualified contributions to Trump accounts as “completed gifts”, to which the annual gift tax exclusion may apply ($19,000 for 2026), thereby eliminating the requirement to file a gift tax return. As long as the contribution to the Trump Account meets the “safe harbor” requirements, no gift tax return filing is required.   Following are the safe harbor requirements:

1. Taxpayer is an individual;
2. The only taxable gifts made by the individual during the calendar year are cash to one or more Trump accounts, each made before the calendar year in which the account beneficiary attains age 18;
3. The taxpayer’s total gifts during the calendar year to each individual who is an account beneficiary, including contributions to that account beneficiary’s Trump account, do not exceed the annual exclusion amount ($19,000 for 2026);
4. Such contributions to Trump accounts made during the calendar year do not generate for that calendar year either a gift or GST tax liability, after application of the taxpayer’s remaining applicable credit amount against the gift tax, or remaining GST exemption;
5. Disregarding the year’s Trump Account contributions, no gift tax return is otherwise required to be filed or is filed, whether for GST tax, portability, or other purposes.If the above 5 “safe harbor” requirements are not met, you will need to file a gift tax return to report the Trump Account contributions on it.

How Can Walz Group Help?

At Walz Group, our team stays closely informed on new tax legislation, IRS guidance, and planning opportunities that may impact individuals, families, business owners, and employers. As new rules continue to develop around Section 530A accounts, our professionals are committed to helping clients understand the details, evaluate planning considerations, and make informed decisions based on their broader tax picture.

With decades of experience serving individuals and businesses throughout Central Pennsylvania, Walz Group brings the technical knowledge, attention to detail, and proactive guidance needed to navigate changes in tax law with confidence. If you have questions about 530A accounts, employer contributions, gift tax considerations, or how this new provision may fit into your family’s financial planning, our team is here to help.