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Trump Accounts

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Key Highlights

  • The account is opened for a child with a Social Security number before age 18.
  • For children born between 2025 and 2028, the federal government may deposit $1,000 into the account if a parent elects to participate.
  • Family members, employers, charities, and governments may also contribute.
  • Most contributions are limited to $5,000 per year (except certain government or rollover contributions).
  • Money in the account must be invested in low-cost index funds tracking major U.S. stock indexes.
  • The funds cannot generally be withdrawn until January 1st of the year the child turns 18.
  • After age 18, the account works mostly like a traditional IRA, meaning withdrawals may be taxed and early withdrawals could have penalties.

Account Summary

The federal government created a new type of savings account called a “Trump Account.” It is designed to help children build savings for the future.

Trump accounts are tax-advantaged custodial accounts (IRC §530A) that transitions to Traditional IRA rules at age 18. The money grows over time and generally cannot be withdrawn until the child becomes an adult.

The goal is to allow children to start building long-term savings early in life.

trumpaccounts.gov

Important Information

This information is provided for general informational purposes only and is based on currently available guidance regarding a new federal child savings account program. Program rules, eligibility requirements, and implementation details are subject to change as additional regulations and guidance are issued by the U.S. Department of the Treasury and the Internal Revenue Service.

First Hope Bank does not provide tax, legal, or accounting advice. Customers should consult a qualified tax or financial professional regarding their individual circumstances before making financial decisions related to this program.

Trump Accounts must be opened through the IRS using Form 4547 or the official program enrollment link. They are not opened directly through First Hope Bank. Availability of related banking services may depend on final regulatory guidance and program implementation.

FAQ

What is a Trump Account?

A Trump Account is a new type of savings and investment account created by federal law to help children build long-term savings starting at birth or early childhood. It functions similarly to a traditional retirement account.

Who can have a Trump Account?

A Trump Account can be opened for:
– A child under age 18
– Who has a Social Security number
– For whom a parent or authorized adult elects to open the account.

Does the government contribute money?

Yes. For eligible children born between January 1, 2025 and December 31, 2028, the federal government may contribute $1,000 to the account if an election is made.

When can contributions begin?

Contributions to Trump Accounts cannot begin until July 4, 2026.

Who can contribute to a Trump Account?

Several types of contributions are allowed, including:
– Parents or family members
– The account owner (the child)
– Employers (up to certain limits)
– Government entities
– Charitable organizations
Most private contributions are limited to $5,000 per year (adjusted for inflation in the future).

Do children need income to receive contributions?

No. Unlike traditional IRAs, children do not need earned income to receive contributions during the growth period.

How can the money be invested?

During childhood, the money must be invested in low-cost index funds or ETFs that track major U.S. stock indexes (like the S&P 500).
This rule is designed to keep investments simple and low-cost.

Can money be withdrawn before age 18?

Generally no. Funds must remain in the account until the child turns 18, except in limited situations such as:
– Transfers to another Trump Account
– Certain disability account transfers
– Death of the beneficiary
– Correction of excess contributions.

What happens when the child turns 18?

After the child turns 18:
– The account mostly follows traditional IRA rules.
– Withdrawals may be taxed.
– Early withdrawals may have penalties unless an exception applies.

Can employers contribute?

Yes. Employers can contribute up to $2,500 per year to the Trump Account of an employee or their dependent without it counting as taxable income to the employee.

Can a child have other retirement accounts?

Yes. A child may still have other IRAs if they have earned income, in addition to a Trump Account.

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