What Is a Trump Account?

A Trump Account is a new, custodial, IRA-style investment account for children under 18, created under the One Big Beautiful Bill Act (OBBBA) of 2025. Contributions can begin July 2026. Each eligible child born between January 1, 2025 and December 31, 2028 receives a one-time $1,000 federal "seed" contribution, and parents, grandparents, employers, and others can contribute up to a combined $5,000 per year on top of that.

The Key Numbers

The $1,000 seed and any qualified contributions from charities or government entities don't count against the $5,000 annual limit — only individual and employer contributions do.

How to Use This Calculator

Select whether the child is eligible for the $1,000 federal seed (born 2025–2028 with a Social Security number). Enter their current age, your planned annual contribution (up to the $5,000 cap), and an expected return rate — 7% is a commonly used long-term assumption for diversified stock index funds, matching the rate used in several major financial institutions' own projections. Set "project to age" to 18 for the standard outcome, or higher to see long-term compounding if the account is left untouched.

Tax Treatment

Unlike a traditional deductible IRA, contributions to a Trump Account are made with after-tax money — there's no upfront tax deduction. The account grows tax-deferred (no tax on investment gains while invested), and withdrawals are generally taxed as ordinary income, similar to a traditional IRA. Withdrawals before age 59½ for non-qualified reasons can trigger a 10% early withdrawal penalty in addition to regular income tax on the earnings portion.

Trump Account vs. 529 Plan

• Use of funds: 529 plans require education spending for tax-free withdrawals; Trump Accounts have no such restriction — funds can be used for anything once the child reaches 18 (subject to standard IRA tax treatment)
• Tax-free vs. tax-deferred: qualified 529 withdrawals for education are completely tax-free; Trump Account withdrawals are taxed as ordinary income (like a traditional IRA)
• Flexibility: Trump Accounts offer more flexibility on use of funds, while 529s offer a stronger tax break specifically for education costs

Worked Example

A newborn receiving the $1,000 seed, with $5,000 contributed annually until age 18 at a 7% average annual return, could see the account grow to roughly $185,000–$195,000 by age 18 — consistent with projections published by major financial institutions using similar assumptions. Left untouched and invested until age 60 at the same return rate, that balance could grow to well over $1 million, illustrating the power of starting tax-deferred compounding from birth.

Where This Fits Your Bigger Picture

Compare this against education-specific saving with a 529 plan, or check your broader retirement picture with our compound interest calculator and Roth IRA calculator.

Frequently Asked Questions