Passed under the One Big Beautiful Bill Act (OBBBA), the federal government has launched a new type of minor-focused savings vehicle officially designated as Trump Accounts (or 530A accounts). Designed to help the next generation build long-term wealth, the program includes a signature kickstart specifically targeting newborns.
Here is what parents need to know about the numbers, rules, and enrollment process.
1. The $1,000 Federal Seed Money
The headline feature of the program is a one-time, $1,000 pilot program contribution directly from the U.S. Treasury. To qualify for this free seed money, a child must meet three strict criteria:
- Born between January 1, 2025, and December 31, 2028.
- Be a U.S. citizen.
- Possess a valid Social Security number.
(Note: While any child under 18 can open a Trump Account to accumulate tax-deferred growth, only newborns within this specific four-year window receive the $1,000 federal deposit.)
2. Annual Contribution Limits and Rules
Once the account is established, families and outside entities can continue to build the nest egg:
- $5,000 Annual Cap: The maximum combined amount that can be added to the account each year from all individual sources.
- Pre-Tax Employer Matching: Employers can contribute up to $2,500 per year toward an employee’s child’s account. These employer contributions are excluded from the parent’s taxable income but do count toward the overall $5,000 annual cap.
- No Earned Income Required: Unlike a standard custodial IRA, the child does not need documented wage income for contributions to be made.
3. Investment Restrictions and Strict Lockdown
To ensure steady, long-term growth, the government has placed strict guardrails on how the money is handled:
- The Investment Menu: Funds cannot be used to day-trade individual stocks. By law, they must be invested in low-cost, diversified index mutual funds or ETFs that track major American stock indexes, such as the S&P 500.
- The Age 18 Lockdown: Money is completely locked down. Zero withdrawals are permitted for any reason until the beneficiary turns 18.
- The IRA Transition: Once the child reaches age 18, the account automatically converts and is treated under standard Traditional IRA tax rules. The original $1,000 seed and any pre-tax employer growth will be taxed as ordinary income upon retirement withdrawal, while standard after-tax individual contributions are not double-taxed.
4. How to Claim the Funds
The enrollment window is officially open, and more than 4 million children have already been registered. Parents can claim their newborn’s $1,000 by taking two steps:
- File IRS Form 4547: This one-page election form can be submitted directly alongside your annual federal tax return.
- Use the Online Portal: If you missed it during tax season, parents can log in via ID.me at trumpaccounts.gov to submit the election form and track the status of the federal deposit.