What Is a Trump Account? The Complete 2026 Guide to Section 530A

A Trump Account is a new type of tax-advantaged investment account for American children, created by the One Big Beautiful Bill Act signed July 4, 2025. Children born between January 1, 2025 and December 31, 2028 receive a free $1,000 deposit from the U.S. Treasury when an account is opened. Contributions from parents, grandparents, and others can begin July 4, 2026. The money grows invested in low-cost U.S. index funds until the child turns 18, when the account converts to a traditional IRA.

The Official Name and the Acronym

The accounts are officially named Trump Accounts under Internal Revenue Code Section 530A, which was created by the One Big Beautiful Bill Act (OBBBA), Pub. L. 119-21, signed into law on July 4, 2025.

The statute also uses the term “Money Account for Growth and Advancement,” which produces the acronym MAGA. Some financial institutions and advisors refer to them as 530A accounts to use a more neutral identifier. All three names, Trump Account, MAGA Account, and 530A account, refer to the same product.

The concept was originally proposed by Senator Ted Cruz (R-TX) as a way to give all American children an early stake in the stock market and long-term wealth-building. The accounts are managed by the SEC’s investor education office at Investor.gov and administered through BNY Mellon, which was designated as the financial agent by the U.S. Treasury in April 2026. BNY Mellon is partnering with Robinhood to develop a dedicated Trump Accounts app and provide customer service.

Who Is Eligible

Any U.S. citizen child under the age of 18 with a valid Social Security number is eligible to have a Trump Account opened on their behalf. There are no income restrictions for the parents or guardians. A parent, legal guardian, adult sibling, or grandparent can open the account.

The account is held in the child’s name. The adult opener serves as the custodian until the child turns 18, at which point the child gains full and unrestricted control of the account.

Children do not need to have been born after 2024 to have an account opened. Any U.S. citizen under 18 is eligible. However, only children born between January 1, 2025 and December 31, 2028 qualify for the $1,000 federal seed contribution.

The $1,000 Federal Seed Money

For eligible children born between 2025 and 2028, the U.S. Treasury deposits $1,000 into the child’s Trump Account. This money is free, requires no out-of-pocket contribution from the parent, and is immediately invested in the account’s eligible index funds.

To claim the $1,000, parents file IRS Form 4547 when filing their federal income taxes. The form can be submitted with the 2025 tax return or in subsequent years. Filing the form is the election that triggers the Treasury deposit. The official government website for the program is trumpaccounts.gov.

The $1,000 seed is not tax-deductible and is not considered a contribution by an individual, meaning it does not count against the $5,000 annual contribution limit. It is classified as a government contribution under the pilot program established by the OBBBA.

Contribution Rules

The annual contribution limit is $5,000 per child, combined from all sources including parents, grandparents, other relatives, friends, and employers. This limit is set for 2026 and will be adjusted for inflation beginning in 2027. The limit is lower than the standard traditional IRA contribution limit of $7,500 in 2026.

Important tax distinction: individual contributions are not tax-deductible. This is different from traditional IRA contributions, which may be deductible depending on income and whether you have a workplace retirement plan. With a Trump Account, you contribute after-tax dollars, similar to a Roth IRA contribution in that respect.

However, the growth inside the account is tax-deferred, meaning you pay no taxes on investment gains each year while the money compounds, similar to a traditional IRA. Taxes are due when distributions are eventually taken.

Individual contributions create “basis” in the account. When distributions are eventually taken, the after-tax contributions (basis) can be withdrawn tax-free. Only the investment growth is subject to ordinary income tax when withdrawn.

Employer contributions work differently: employers can contribute up to $2,500 per year to the Trump Account of an employee or their dependent, and those contributions are tax-free to the employee. Employer contributions count toward the $5,000 annual cap.

What the Money Can Be Invested In

During the “growth period,” which lasts until December 31 of the year before the child turns 18, investments are strictly limited to:

• Mutual funds or ETFs that track the S&P 500 or another broad U.S. equity index
• The index must be “primarily” composed of U.S. companies, defined as at least 90% of the weighted value in U.S. companies
• The fund’s annual expense ratio must be at or below 0.10% (10 basis points)
• No leverage is permitted
• Sector-specific index funds are excluded (no tech-only, energy-only, etc.)
• Inverse funds are excluded

This means no individual stocks, no bonds, no international funds, no crypto, no sector ETFs, and no actively managed funds. The restriction to broad U.S. equity index funds with ultra-low expense ratios is by design: it forces long-term, diversified, low-cost investing throughout the child’s growth years.

Once the child turns 18 and the account converts to a traditional IRA, the investment restrictions no longer apply. The account holder can invest in any IRA-eligible asset.

Most major S&P 500 index funds qualify. Vanguard’s VOO (expense ratio 0.03%), iShares’ IVV (0.03%), and Fidelity’s ZERO Large Cap Index Fund (0.00%) all meet the criteria. Many total market index funds also qualify, as broad U.S. total market funds typically have at least 90% weight in U.S. companies.

What Happens at Age 18

On December 31 of the year before the beneficiary turns 18, the growth period ends. The account converts to a standard traditional IRA, and the child gains full, unrestricted control of the funds. At that point:

• The child can keep the money invested and treat it as a head start on retirement savings
• The child can convert the account to a Roth IRA, paying income taxes now in exchange for tax-free growth and withdrawals later (this is generally advantageous if the 18-year-old is in a low tax bracket)
• The child can withdraw funds, subject to standard traditional IRA rules: ordinary income tax on pre-tax growth, and a 10% early withdrawal penalty if under age 59½, unless an exception applies

Exceptions to the 10% early withdrawal penalty after age 18 follow standard IRA rules and include: first home purchase (up to $10,000 lifetime), qualified higher education expenses, birth or adoption costs (up to $5,000), disability, and certain medical expenses. Qualified distributions for these purposes are still subject to ordinary income tax on the pre-tax growth portion.

Required Minimum Distributions (RMDs) begin at age 75 if the account has been kept as a traditional IRA.

One critical point for parents: once the child turns 18, the account is entirely theirs. There is no mechanism for parents to restrict how the money is used. If the 18-year-old wants to withdraw and spend the funds on something other than education or a home, they can do so, subject to tax and penalty. The accounts are designed to build long-term wealth but do not guarantee that outcome.

Withdrawal Rules Before Age 18

Withdrawals during the growth period are essentially prohibited. The three narrow exceptions are: rollover to another Trump Account, return of excess contributions, and death of the beneficiary. There are no exceptions for financial hardship, medical emergencies, or early education expenses during the growth period.

Any unauthorized early distribution triggers ordinary income taxes plus a 10% early withdrawal penalty, consistent with early withdrawal penalties on traditional IRAs.

How to Open a Trump Account

Accounts officially open for contributions on July 4, 2026. To set up an account and claim the $1,000 seed for an eligible child born between 2025 and 2028:

1. File IRS Form 4547 when submitting your federal income tax return. This form elects the $1,000 federal contribution.
2. The Treasury will deposit $1,000 into the account through BNY Mellon.
3. After July 4, 2026, you can open a Trump Account directly through the official government site at trumpaccounts.gov or through authorized custodians including the Robinhood-powered BNY Mellon app.
4. Children already under 18 who were not born in the 2025-2028 window can have an account opened but do not receive the $1,000 seed.

How a Trump Account Compares to Other Child Savings Options

Trump Accounts are not the only way to save for a child. The comparison with the most common alternatives matters for anyone deciding where to put money.

529 College Savings Plan: Contributions are invested in a broader range of options including equity funds, bond funds, and age-based portfolios. Qualified distributions for education are completely tax-free, including both contributions and growth. Distributions for non-education purposes incur income tax plus a 10% penalty on the growth portion. 529 plans are specifically designed for education and offer clearer tax advantages for that purpose. Trump Accounts do not offer tax-free distributions; even qualified distributions are subject to ordinary income tax on the growth.

UGMA/UTMA Custodial Accounts: Contributions are after-tax, growth is taxable annually (not tax-deferred), and the funds are unrestricted in use once the child reaches the age of majority. No contribution limits. Investment options are unrestricted. Trump Accounts are more tax-efficient on growth due to the deferral, but UGMA/UTMA accounts offer more flexibility in investment choices and use of funds.

Roth IRA for the Child: If the child has earned income, they can contribute to a Roth IRA (contribution limit equal to earned income up to $7,500). Roth IRA contributions grow tax-free and qualified distributions in retirement are tax-free. This is generally more favorable than a Trump Account for tax purposes, but requires the child to have earned income (babysitting, lawn mowing, part-time jobs, etc.). Trump Accounts have no earned income requirement.

Is a Trump Account Worth Opening?

For parents of children born between 2025 and 2028, opening an account to claim the $1,000 federal deposit is effectively free money that requires only filing a form. A $1,000 initial investment in a broad U.S. equity index fund left untouched for 18 years at historical average U.S. stock market returns of roughly 7% per year (after inflation) grows to approximately $3,400 by the time the child turns 18. With additional annual contributions of $2,000 over 18 years, the projected balance exceeds $75,000. The compound growth over 18 years is the primary argument for opening one.

The limitations worth weighing: contributions are not tax-deductible, distributions are taxed as ordinary income (unlike Roth), the investment menu is restricted to U.S. index funds, and the child gets full control at 18 with no restrictions on use. For families who specifically want to save for college, a 529 plan offers cleaner tax advantages on education distributions. For families who want unrestricted investment flexibility, a UGMA/UTMA account provides it.

The strongest case for a Trump Account is as a supplement to existing savings, not a replacement. Claim the free $1,000 seed for eligible children, make additional contributions if the budget allows, and let the index fund position compound over 18 years as a head start on whatever financial goals the child will have as an adult.