Contributed by: Michael Brocavich, CFP®, MBA
With the passage of “The One Big Beautiful Bill” in 2025, one of the more talked-about provisions is the introduction of Trump Accounts— a new type of savings and investment account designed specifically for children.
As we continue reviewing the details and thinking through how these may fit into our clients’ overall financial plans, we wanted to provide an overview of what you need to know. Like our previous updates, this highlights the provisions we believe are most relevant and will continue to evolve as additional IRS guidance is released.
What is a Trump Account?
A Trump Account is a tax-advantaged investment account for children under age 18. Think of it as a hybrid between a traditional IRA and a custodial account designed to give kids a long-term financial head start. The account is owned by the child, with a parent or guardian acting as custodian until age 18.
The Headline Feature: $1,000 Government Contribution
Children born between January 1, 2025, and December 31, 2028, are eligible for a one-time $1,000 contribution from the U.S. Treasury. Families must elect into the program to receive this benefit. This seed money is designed to give every eligible child a starting point for long-term investing.
Contribution Rules
Families and others can contribute up to $5,000 per year. Employers may contribute up to $2,500 annually, and these contributions are not taxable to the employee. Contributions are made with after-tax dollars.
How the Money is Invested
Funds must be invested in low-cost, diversified U.S. stock index funds or ETFs. Fees are capped, and the structure is designed to prioritize long-term growth and simplicity.
Accessing the Funds
Funds are generally not accessible before age 18. After that point, the account transitions to a structure similar to a traditional IRA, reinforcing the long-term nature of the strategy.
Tax Treatment
Contributions are made with after-tax dollars and grow tax-deferred. Withdrawals are generally taxable, which places these accounts somewhere between traditional retirement accounts and taxable brokerage accounts.
Who Should Consider a Trump Account?
These accounts may make sense for families looking to start investing early for children or take advantage of the initial government contribution. However, they are not a replacement for other tools such as 529 plans, custodial accounts, or Roth IRAs.
Key Planning Considerations
As we evaluate how these fit into broader plans, we are watching how they interact with financial aid rules, future tax treatment, coordination with existing strategies, and overall funding priorities.
Final Thoughts
Trump Accounts introduce a new way to build wealth for the next generation. The concept is simple: start early, invest consistently, and allow compounding to do the heavy lifting. As always, the right strategy will depend on your individual situation and overall financial goals. Please talk with our Financial Planners to see if a Trump account is the right savings vehicle for your family.
Michael Brocavich, CFP®, MBA is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He has an extensive background in both personal and corporate finance.
Every investor's situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
You should discuss any tax or legal matters with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Michael Brocavich, CFP® and not necessarily those of Raymond James.