Key Takeaways
- Children born 2025 through 2028 get a one-time $1,000 Treasury deposit once the account is activated.
- Family and friends can add up to $5,000 a year combined; employers up to $2,500 of that.
- Money must sit in a low-cost U.S. stock index fund until the year your child turns 18.
- At 18 it follows traditional IRA rules, so earnings are taxed as ordinary income when withdrawn.
Treasury has been depositing the $1,000 Trump Account seed money since July 4, 2026, and more than 7 million children have been signed up so far. If your child was born from 2025 through 2028 and is a U.S. citizen with a Social Security number, that $1,000 is free money you should claim.
The part most coverage skips is what happens later. At 18 the account becomes a traditional IRA, and most of what comes out is taxed as ordinary income. That changes how much of your own money belongs here.
Which Children Get Free Money, and How Much
Any child under 18 with a Social Security number can have a Trump Account. Only some get a deposit they didn’t pay for.
| Your child | What goes in automatically |
|---|---|
| Born Jan 1, 2025 to Dec 31, 2028, U.S. citizen | $1,000 from Treasury (one time) |
| Age 10 or under, born before 2025, living in a ZIP code with median income of $150,000 or less | $250 pledged by Michael and Susan Dell |
| Any other child under 18 | No seed money, but the account can still be opened |
The Dell gift is a private pledge of $6.25 billion, not a federal benefit, so its timing depends on the Dells and Treasury rather than the tax code. A child born in December 2024 falls in the Dell group, not the $1,000 group, which is the birth-date edge I get the most questions about.
Getting the Account Opened and Activated
There are three ways in, and all of them lead to the same Treasury-run account:
- Form 4547: File IRS Form 4547 with your tax return, or on its own, to elect the account and the $1,000.
- Online or in the app: Sign up at TrumpAccounts.gov or in the Trump Accounts app, which Treasury built with BNY and Robinhood.
- At birth: Since July 2026, parents applying for a newborn’s Social Security number at the hospital can opt in on the same form.
Signing up isn’t the last step. Treasury sends an activation email from no-reply@TrumpAccounts.Treasury.gov, and the $1,000 isn’t invested until you activate. If you filed Form 4547 last spring and never saw that email, check spam, then call the program line at 1-866-872-4547.
Treasury Secretary Scott Bessent said in September that the government plans to enroll eligible children automatically. Details haven’t been published yet, and activation will still be on you.
Who Can Put Money In, and How Much
Contributions opened July 4, 2026. The limits work like this:
| Source | Annual limit | Counts toward the $5,000? |
|---|---|---|
| Parents, grandparents, friends (combined) | $5,000 | Yes |
| Your employer | $2,500 per employee, tax-free to you | Yes |
| Treasury’s $1,000 and the Dell $250 | One time | No |
| Charities and state or local governments | Set by the program | No |
The $5,000 is per child, not per giver. Two grandparents each sending $3,000 would put the account over, so decide who gives what before December.
Here’s what the full amount can grow to. Rosa and Kevin’s son was born in March 2026. They put in $200 a month, and Kevin’s employer adds $2,500 a year, so $4,900 goes in annually on top of the $1,000.
At a 7% average return, that reaches about $170,000 by his 18th birthday. About $43,000 of it is Rosa and Kevin’s own after-tax money, and the rest is the seed, employer money and growth. That split matters later.
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What the Money Is Invested In
Until the year your child turns 18, the account can only hold mutual funds or ETFs that track a broad U.S. stock index, such as the S&P 500. Fees are capped at 0.10% a year, and leverage isn’t allowed.
In the Treasury app, new money goes into a default qualifying index fund automatically. There are no individual stocks, bonds or crypto. For an 18-year horizon, all-stock is a reasonable default, but it means a bad market year shortly before 18 hits the balance hard.
Rules for moving the account to another brokerage are still being written. Until then, the Treasury-run account is the only home for it.
The Tax Catch: At 18 It Becomes a Traditional IRA
No withdrawals are allowed before January 1 of the year your child turns 18. From then on, the account is treated as a traditional IRA, and your child controls it.
When money comes out, it’s taxed in layers:
- Your after-tax contributions come back tax-free, since you already paid tax on them.
- Earnings, the $1,000 seed, Dell money and employer contributions are taxed as ordinary income.
- A 10% penalty applies before age 59½, unless an IRA exception fits: college costs, up to $10,000 toward a first home, or up to $5,000 for a birth or adoption.
Older coverage of this program, including an earlier version of this page, said qualified withdrawals would get capital-gains rates. That was in the House bill but not the final law.
For Rosa and Kevin’s son, roughly $127,000 of that $170,000 would be taxable as income when withdrawn. A Roth conversion in a low-income year, such as his first year out of school, may be one way to soften that. The IRS has said more guidance is coming.
Should You Add Your Own Money?
Take the free $1,000 and any employer contribution. For dollars from your own pocket, compare the options:
| Trump Account | 529 plan | Custodial Roth IRA | |
|---|---|---|---|
| Needs child’s earned income | No | No | Yes |
| Tax on growth for main use | Ordinary income | None for education | None after 59½ and 5 years |
| State tax deduction | No | In many states | No |
| Best for | Free money, employer dollars | College | Teens with a paycheck |
If college is the goal, my 529 plan rules for 2026 usually win. Once your teen earns money from a job, a custodial Roth under the 2026 Roth IRA limits beats both on taxes.
Where the Trump Account wins is flexibility with no earned-income requirement. It also suits grandparents who want to give without picking a 529 plan.
Mistakes I’m Seeing in the First Three Months
- Signing up but never activating. The $1,000 sits uninvested until you do.
- Answering scam messages. Real emails come only from no-reply@TrumpAccounts.Treasury.gov. Nobody from the program will call asking for bank details.
- Going over the $5,000 cap across relatives. It’s one limit for everyone combined, employer money included.
- Calling it a college fund. It can pay for college, but a 529 does that job with better tax treatment.
- Forgetting the kiddie tax link. The account itself isn’t taxed each year, but it doesn’t change the kiddie tax rules on your child’s other investments.
What Still Needs to Be Settled in 2027
Three things I’m watching. First, the $5,000 and $2,500 limits are indexed for inflation starting in 2027, and the IRS usually publishes new figures in October or November.
Second, Treasury still has to finish the rules for automatic enrollment and for rolling accounts to other brokerages. Third, more than 50 companies have pledged employer contributions, so check your 2027 open enrollment materials.
If you’re still planning for a baby, my post on whether you can afford to start a family covers the first-year budget. For older kids, how to teach kids to invest shows how to use the account as a lesson.
