Trump Accounts: A Strategic Overview for Investors and Families

New Trump Account

The IRS and Treasury Department recently released Notice 2025-68, detailing the upcoming regulations for Trump Accounts, a new tax-advantaged savings vehicle created by the One, Big, Beautiful Bill Act (OBBBA). Designed as specialized Traditional IRAs for individuals under the age of 18, these accounts feature unique contribution rules, investment mandates, and government incentives intended to build long-term wealth for the next generation.

Below is a summary of the key features and actionable steps for investors and guardians to take advantage of this new opportunity.

Key Features of Trump Accounts

• Eligibility & Structure: A Trump Account is established for an "eligible individual" who has not yet attained age 18. It operates under special "growth period" rules until the beneficiary turns 18, after which it essentially reverts to standard Traditional IRA rules.

  
  

• The "Growth Period" Restrictions: Until the beneficiary reaches adulthood, funds must be invested solely in "eligible investments"—generally defined as low-fee (under 0.1%) mutual funds or ETFs that track a broad index of primarily U.S. companies (e.g., S&P 500) and use no leverage⁵. Distributions are generally prohibited during this period.

  
  

• Contribution Sources & Limits:

  • Pilot Program: The government will contribute $1,000 to accounts for eligible children born on or after January 1, 2025, and December 31, 2028.

  • Standard Contributions: Parents and others can contribute up to $5,000 annually (post-tax; no deduction allowed).

  • Employer Contributions: Under Section 128, employers can contribute up to $2,500 annually tax-free to the employee (excluded from gross income).

    
    

• Tax Treatment: Contributions during the growth period are not tax-deductible. However, the account grows tax-deferred. Upon withdrawal after the growth period, the basis (original contributions) is tax-free, while earnings are taxed as ordinary income.

  
  

Actionable Suggestions for Investors

For parents, guardians, and strategic investors, the introduction of Trump Accounts offers specific planning opportunities starting July 4, 2026.

1.  Enroll for "Pilot Program" Seed Money

If you have a child born in 2025 or later, you must affirmatively elect to participate in the Pilot Program. This grants a one-time $1,000 government contribution that is immune to offsets.

• Action: Watch for IRS Form 4547 or the launch of trumpaccounts.gov in mid-2026 to file your election immediately.

2. Utilize Employer-Sponsored Benefits

Unlike personal contributions, employer contributions up to $2,500 are excludible from gross income. This is effectively "free money" with a tax advantage that personal contributions do not offer.

• Action: Employees should inquire if their workplace plans to offer a Section 128 Trump Account contribution program as part of their benefits package.

3. Utilize the "Growth Period" for Low-Cost Compounding

While the investment options are restricted to U.S.-based index funds, the fee cap (0.1%) ensures low-cost compounding.

• Action: Treat this account as a "set and forget" vehicle. Contribute the maximum $5,000 annual limit early in the year to maximize time in the market, even though you do not get an immediate tax deduction.

4. Plan for the "Age 18" Transition

Once the child turns 18, the strict investment and distribution rules expire, and the account functions like a traditional IRA.

• Action: Be aware that while the account becomes flexible, it retains its unique "Trump Account" designation, meaning it can never be commingled with other IRAs for basis allocation purposes. Keep accurate records of all non-deductible contributions to ensure future withdrawals are taxed correctly.

Source: Notice 2025-68 https://www.irs.gov/pub/irs-drop/n-25-68.pdf

Disclaimer: Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors and Synergy Wealth Management are separate entities. 

Neither Stratos nor Synergy Wealth Management provides legal or tax advice. Please consult legal or tax professionals for specific information regarding your individual situation.