A New Savings Option for Children

As of July 4, 2026, families can begin funding “Trump Accounts,” a new tax-deferred investment account for children created under last year’s OBBBA tax law. Children born between 2025 and 2028 are eligible for a one-time $1,000 federal deposit, though a parent or guardian must elect to receive it. The accounts grow tax-deferred and convert to a traditional IRA the year the child turns 18.

Key Details

•    $5,000 annual contribution limit — anyone can contribute; employers may contribute up to $2,500 of that total tax-free. The limit is indexed for inflation beginning in 2028
•    $1,000 federal deposit for children born 2025–2028 — doesn’t count against the annual limit, but requires opting in via IRS Form 4547 or trumpaccounts.gov. The child must be a U.S. citizen with a Social Security number
•    No earned income required, unlike a traditional or Roth IRA — and contributions don’t count against the child’s IRA or 401(k) limits, so a teen with a summer job could fund a Roth IRA and still receive Trump Account contributions
•    Investments limited to low-cost U.S. equity index funds until age 18
•    No withdrawals until the year the child turns 18, when the account converts to a traditional IRA and standard IRA rules take over — after-tax contributions come out tax-free, while earnings are taxed at the child’s ordinary income rate, and early withdrawal rules still apply: most withdrawals before age 59½ face a 10% penalty

For a deeper look at how these accounts work, Charles Schwab has published a helpful overview: What to Know About Trump Accounts.

This material is provided by CLF Asset Management for informational and educational purposes only and does not constitute investment, tax, or legal advice, or a recommendation to buy, sell, or hold any security. Account features, contribution limits, and eligibility rules described herein are based on current law and third-party sources believed to be reliable but not guaranteed, and remain subject to change and further IRS guidance. Investing involves risk, including possible loss of principal. Past performance is not indicative of future results. Please consult your advisor and a qualified tax professional regarding your individual circumstances.