Since the passage of the Big Beautiful Bill (OBBBA), we have received a lot of questions about Trump Accounts. What are they, and how can someone open one? These questions have increased over the last few months with announcements by both the Dell family and, most recently, by Ray Dalio, that they would make major contributions to these accounts on behalf of eligible children. The Dells have pledged an astounding $6.25 billion ($250 for up to 25 million eligible children), and Dalio pledged $75 million for children in Connecticut, his home state. Several employers have also signed on to make matching contributions to their employees’ contributions, including BlackRock, Schwab, BNY Mellon, Dell, and our own firm.
So, what is a Trump Account and how does it work? Essentially, it is an Individual Retirement Account (IRA) for children under 18 who have a valid Social Security number, without them needing to have earned income to contribute. The government will make a one-time contribution of $1,000 to the account for children born between Jan. 1, 2025, and Dec. 31, 2028. Children’s parents, grandparents, etc., can make their own contributions to the accounts in 2026 up to a combined limit of $5,000 per year, which will index for inflation starting in 2028. Employer matches can be made up to $2,500 per year, but those matching contributions do count towards the $5,000 total limit, unlike government contributions. The good news is that matches are not treated as taxable income to the employee. Contributions to Trump Accounts also do not affect regular IRA contribution limits, meaning that in addition to the $5,000 you can contribute to the Trump Account, you can also contribute up to $7,500 to another IRA. Trump account contributions are not tax-deductible, as they might be for other traditional IRAs.
Logistics of the accounts include no withdrawals before age 18, other than rollovers. Once the child turns 18, the account converts to a traditional IRA. Distributions are allowed, but they follow the same IRA rules, unless they meet the strict criteria of exceptions (e.g., higher education, first home purchase, or disability). Then, withdrawals prior to age 59 ½ are subject to a 10% penalty along with ordinary income tax. After age 59 ½, distributions are taxable but no longer subject to penalties.
Accounts can be opened starting sometime in the middle of 2026 via an online portal at https://trumpaccounts.gov/. Contributions can begin on July 4, 2026. There will be a list of funds and exchange-traded funds (ETFs) that the accounts are permitted to hold, but will mostly be made up of low-cost index-type funds.
Starting early with investing can be seen as beneficial. The magic of compound interest is the reason it is so important to start as soon as possible, and Trump Accounts make starting early even more attractive.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS, visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
