A new type of tax advantaged account for eligible children was created by the legislation signed into law in 2025 commonly referred to as the One Big Beautiful Bill Act (OBBBA). Section 530A accounts, also known as Trump accounts, can be established for children under age 18 who have a Social Security Number (SSN). Contributions to properly established accounts can begin on July 4, 2026.

Essentially a New Type of IRA

A 530A account can be established for the exclusive benefit of an eligible child, who’s the account owner. While the account is essentially a type of IRA, it’s subject to special rules that don’t apply to other IRAs. Most of these rules are in effect only during the period that ends before January 1 of the calendar year in which the child reaches age 18, which is referred to as the growth period.

During the growth period:

  • The account funds can be invested only in eligible investments, generally mutual funds or exchange traded funds (ETFs) that track an index of primarily U.S. companies, such as the Standard and Poor’s 500, and meet other criteria.
  • The account has a lower contribution limit than IRAs, generally $5,000 per year, adjusted for inflation after 2027.
  • The account generally can’t make distributions, including hardship distributions.
  • Individuals can’t claim a tax deduction for their contributions.

After the child turns 18, traditional IRA rules kick in, including those regarding contributions, distributions, the 10% early withdrawal penalty, required minimum distributions (RMDs), taxation and Roth IRA conversions.

Establishing an Account

Unlike regular IRAs, 530A accounts must be created initially by the U.S. Treasury Secretary. To have an account established for your child, you must make an election, and the child must not have reached age 18 before the close of the calendar year when the election is made. The child also must have an SSN before the election is made.

The election can be made on Form 4547, Trump Account Election(s), or through an online form at trumpaccounts.gov. An account can be established at the same time you elect to receive a pilot program contribution or any time before January 1 of the year the child turns 18. Only one account can be opened per child.

After the election is made, the Treasury Department will send you the necessary information to activate the account.

Getting the Government Contribution

A one time $1,000 government provided contribution is available for children born after December 31, 2024, and before January 1, 2029, who are U.S. citizens with SSNs. The pilot program election can be made on Form 4547 or through the online form.

The Treasury Department will contribute to accounts eligible for the pilot program as soon as practicable after the election is made. Note that no contributions will be made before July 4, 2026.

Making Contributions

530A accounts can receive several types of contributions during the growth period besides contributions from parents, other loved ones or the children themselves. For example, an account can accept a qualified general contribution funded by states and political subdivisions, the federal government, Indian tribal governments, or certain nonprofits. These contributions, which will funnel through the Treasury Department, can be made only to qualified classes, such as those residing in certain areas and born in specific years.

Employers can contribute up to $2,500 per year, adjusted for inflation after 2027, to the accounts of employees or their dependents, with contributions generally excluded from the employee’s taxable income. The limit applies on a per employee basis. 530A accounts can also accept qualified rollover contributions.

Pilot program contributions, qualified general contributions and qualified rollover contributions don’t count toward the annual contribution limit. However, employer contributions do count toward the limit. Notably, contributions must be made within the calendar year to count toward that year’s limit. The contribution deadline doesn’t extend to April 15 of the next year as it does for traditional and Roth IRAs.

Comparing to Education Savings Plans

530A accounts might not be the best option if your goal is to build savings for your child’s education. Both Section 529 plans and Coverdell Education Savings Accounts (ESAs) also allow tax deferred growth, but withdrawals for qualified education expenses are tax free. On the other hand, 530A account distributions are taxed as ordinary income to the extent that they aren’t attributable to after tax contributions.

There are other 529 plan advantages: Contributions may qualify for state tax deductions. And they aren’t subject to an annual limit, provided they don’t exceed the amount needed to cover the beneficiary’s qualified expenses. Note that gift tax rules might apply, depending on the contribution amount.

Moreover, up to $35,000 of funds left in a 529 plan account for at least 15 years can be rolled over into the beneficiary’s Roth IRA without incurring the normal 10% penalty for nonqualified withdrawals or resulting in taxable income. Roth IRAs don’t have RMDs, and withdrawals are tax free. Certain restrictions on 529 plan rollovers apply, but this rollover option could be a significant advantage over 530A accounts, which eventually become traditional IRAs and would generate tax liability if converted to Roth IRAs.

Investment options for 529 plans are limited to those permitted by the plan administrator, typically mutual funds and ETFs. But they may offer greater choice than 530A accounts. ESAs allow a wider range of investments, typically everything your broker offers. However, the maximum contribution to an ESA is limited to $2,000 per beneficiary per year, lower than the 530A limit. And ESA contributors are subject to income based contribution limits, which don’t apply to 530A account contributors.

Considering the Benefits

If you have a child who’s eligible for the $1,000 government provided contribution, you’ll probably want to set up a 530A account so your child can benefit from that amount and potentially many years of tax deferred compounding growth on it. Whether it makes sense to contribute yourself or to set up a 530A plan for a child ineligible for that pilot program depends on a variety of factors. These include whether other types of tax advantaged plans might better achieve your goals and how much overall you can afford to set aside for your child’s future.

If you have questions about 530A accounts or want more information about other tax advantaged savings options to benefit your children or grandchildren, contact us.