Trump Accounts: What Parents & Business Owners Need to Know

Unlock the key rules, benefits, and strategies behind the new Trump Accounts and learn how families can use them to build long-term, tax-free wealth for their children.

One of the most talked-about provisions in the One Big Beautiful Bill Act (OBBBA) is the creation of “Trump Accounts,” a new tax-advantaged investment account designed specifically for U.S. children under 18.

Think of it as a hybrid between a 529 plan, a Roth-style growth account, and a government-backed wealth-building initiative. If you work with a professional like a CPA Pasadena TX advisor, this becomes a major new planning tool for families preparing ahead of 2026.

For high-income earners and business owners, this is one of the most impactful new individual tax planning tools arriving in 2026.

Below is a clear breakdown of the rules, opportunities, and what this means for families.

Who Qualifies? (3 Simple Rules)

A child is eligible if they:

1️⃣ Are under age 18 at the end of the tax year
2️⃣ Are a U.S. citizen
3️⃣ Have a valid Social Security Number

If these three are true, the child can have a Trump Account.

How the Account Must Be Set Up

To qualify for tax benefits:

• The account must be formally designated as a “Trump Account” when opened.

• It must follow IRS reporting and compliance rules.

• No contributions can be made once the child turns 18.

All funds inside the account must be invested in a qualified mutual fund, which comes with strict rules.

What Counts as a Qualified Mutual Fund?

The fund must:

✔️ Track the S&P 500 or another broad U.S. equity index
✔️ May include regulated futures contracts
✔️ Cannot be sector-specific
✔️ Must have ultra-low expenses (≤ 0.1% annually)

Translation:

This is a low-fee, broad-market, long-term compounding account, not a trading vehicle.

This is also where working closely with an Accountant Houston or financial advisor helps ensure the fund you choose actually qualifies.

Contribution Rules

⭐ Annual Contribution Limit

• $5,000 per child, starting in 2026

• Indexed for inflation starting 2028

⭐ Who Can Contribute?

• Parents

• Relatives

• Employers

• Charities

• Government agencies

Employer contributions (up to $2,500) are not taxable to the employee if made under a compliant plan.

Charitable and government contributions do not count toward the $5,000 annual limit.

⭐ Timing

• Contributions cannot begin until July 4, 2026

• Must stop once the child turns 18

Withdrawals + Rollovers

No withdrawals before age 18 except for:

• Rollovers to another child’s Trump Account

• Rollovers to an ABLE account

• Correction of excess contributions

If a child dies before 18, the account becomes taxable to the estate.

The Federal $1,000 Seed Deposit

A federal pilot program will automatically deposit $1,000 into a Trump Account for every U.S. citizen born between 1/1/2025 and 12/31/2028.

• This does not count toward the annual contribution limit.

• If parents don’t open the account, the IRS will automatically create one, unless the family opts out.

Families often lean on a Small business CPA Houston or tax advisor to coordinate this with their broader planning, especially when they already use 529s, UTMAs, or Roth strategies.

Growth Projections (From the Council of Economic Advisers)

Assuming historical S&P 500 returns:

If parents contribute the full $5,000/year:

• $303,800 by age 18

• $1,091,900 by age 28

If parents contribute $2,500/year:

• $154,800 by age 18

• $555,000 by age 28

If no contributions beyond the initial $1,000 seed:

• $5,800 by age 18

• $18,100 by age 28

This is generational wealth on autopilot.

Why This Matters for Business Owners

Trump Accounts create a unique planning opportunity:

• Tax-free employer contributions for employees’ children

• A new benefit that can help attract and retain talent

• A long-term wealth-building tool for business-owner families

• A low-cost, low-effort way to create future financial stability for kids

For high-income families already maximizing 529s, UTMAs, and Roth strategies, this becomes one more powerful bucket for tax-advantaged compounding.