Bohdan Domino

MSA, MST | Assurance In-Charge

On July 4, 2025, President Trump signed the “One Big Beautiful Bill” Act into law, introducing one of the most talked-about provisions:  Trump Accounts. This new type of tax deferred account aims to help children in the U.S. build long-term wealth from birth into adulthood.

What Is a Trump Account?

A Trump Account is a federally created tax-deferred investment account designed to give children a financial head start through both government contributions and private investments.

Key Benefits:

• Automatic enrollment for eligible children
• The Department of the Treasury will open the account and deposit a one-time $1,000 federal contribution for every child born between January 1, 2025, through December 31, 2028.
• Tax-deferred growth similar to retirement accounts

Who Is Eligible for a Trump Account?

• Child must be a U.S. citizen with a Social Security number
• Parents can open accounts for children born outside the 2025–2028 window, but these accounts will not receive the $1,000 federal contribution

Contribution Rules

• Annual contribution limit: $5,000 per child until age 18
• Contributions can come from parents, relatives, employers, non-profits, government bodies and taxable entities
• Employers’ contributions: Up to $2,500 per year for employees’ dependents and will not be considered a taxable fringe benefit
• Contributions do not affect eligibility for traditional or Roth IRA contributions, providing the IRA requirements are met

Investment Requirements

• Funds must be invested in low-cost stock mutual funds or ETFs that track a U.S. stock index

Withdrawal Rules

Qualified withdrawals (Allowed starting at age 18)

• Education expenses
• First-time home purchase (up to $10,000)
• Starting a business

Taxation & Penalties

• 10% penalty on unqualified withdrawals before age 59½
• Taxes will be accessed on tax-free contributions based on the portion of basis
• After age 59½, the account functions like a Traditional IRA with standard withdrawal rules

What Should You Do Now?

Many details will be clarified through future regulations, including IRS interpretations. Even though year-end tax planning usually begins in Q4, now is the ideal time to talk to your tax advisor and evaluate whether a Trump Account makes sense for your family.

At Cray Kaiser, we’re here to help you navigate the One Big Beautiful Bill Act and plan not just for this year, but for the years ahead. Contact us to discuss how these new rules could impact your tax and financial future.