Four million children are already signed up for Trump Accounts, the new tax-advantaged investment accounts created under the One Big Beautiful Bill Act. With contributions set to begin July 4, 2026, this program gives every American child under 18 a shot at building real wealth before they even graduate high school.

The IRS announced on March 31 (IR-2026-42) that one million children have already claimed the $1,000 government seed contribution available to kids born between 2025 and 2028. But here’s what many people miss: the accounts aren’t limited to newborns. Any child who hasn’t turned 18 by the end of the calendar year can open a Trump Account and start receiving contributions from family, friends, employers, and even nonprofits.

How the Accounts Work

Trump Accounts function as a new type of custodial IRA, locked until January 1 of the year the child turns 18. During that growth period, contributions go into low-cost index funds tracking the S&P 500 or other broad U.S. equity indexes, with expense ratios capped at 0.10%. No individual stocks, no crypto, no bonds. The design keeps costs minimal and growth consistent over 18 years of compounding.

The contribution limits are generous. Parents, grandparents, aunts, uncles, friends, or anyone else can put up to $5,000 per year into a child’s account. Employers can chip in up to $2,500 per year per child (counting toward that $5,000 cap), and those employer contributions aren’t taxable income for the employee. Government entities and charities have no annual limit. Starting in 2028, the $5,000 cap adjusts for inflation.

Children born between January 1, 2025 and December 31, 2028 are eligible for a one-time $1,000 pilot contribution from the U.S. Treasury. Parents claim this by filing Form 4547 (a one-page form) with their 2025 tax return, or by enrolling online at form.trumpaccounts.gov.

How Taxes Work on These Accounts

Not all the money in the account gets the same tax treatment, and this is where families need to pay attention. The simple version: money you personally put in won’t be taxed again when your child takes it out. But the government’s $1,000 seed money, employer contributions, and all the investment growth will be taxed as regular income when withdrawn.

Why? Because when you (a parent, grandparent, or friend) contribute, you’re using money you already paid taxes on. The IRS won’t tax it twice. But the $1,000 from the government and any employer matches were never taxed, so they get taxed on the way out. And every dollar the investments earn over the years gets taxed on withdrawal too, since no one ever paid taxes on those gains.

A quick example makes this clearer. Say a family puts in $4,000 over the years, the employer adds some, the government kicked in $1,000, and the investments grow the total to $40,000. When the child withdraws, only the $4,000 the family put in comes out tax-free. The other $36,000 is taxable income.

What Happens at Age 18

The account stays locked until January 1 of the year the child turns 18. After that, it becomes a retirement account (an IRA) that the young adult controls. They can withdraw money without penalty for college or vocational training, buying a first home (up to $10,000), birth or adoption expenses (up to $5,000), or major medical costs. For anything else, withdrawals before age 59-1/2 come with a 10% early withdrawal penalty on top of the income tax.

One smart move: if your child starts working but has a low income in their late teens or early twenties, they can convert the account to a Roth IRA. That means paying a smaller tax bill now in exchange for completely tax-free growth and withdrawals for the rest of their life. A tax advisor can help determine if and when this makes sense.

Where the Idea Came From

The concept started at a kitchen table. Brad Gerstner, CEO of hedge fund Altimeter Capital, had opened custodial investment accounts for his two sons at birth. When his son Lincoln asked, “Why do we get these and what about the other kids?”, Gerstner decided to turn the idea into policy. He and his sons founded the Invest America Foundation to build the coalition and research needed to make it happen.

The concept of child investment accounts had been floating around Washington for years under the name “Baby Bonds,” but those earlier proposals limited investments to low-yield government bonds. The Trump administration reworked the idea, requiring investments in broad market index funds and bringing in private sector partners to supercharge the program.

Billions in Private Commitments

The private sector response has been remarkable. Michael and Susan Dell committed $6.25 billion to seed accounts with $250 each for 25 million children age 10 and under living in ZIP codes where the median household income is below $150,000. Ray Dalio and his wife Barbara pledged $75 million for 300,000 children under 10 in Connecticut, also targeting lower-income ZIP codes. Gerstner himself pledged $250 per account for every Indiana child under 5.

On the corporate side, more than 25 major companies have committed to matching the $1,000 government contribution for employees’ children. The list includes Broadcom, Intel, Nvidia, JPMorgan Chase, BlackRock, Comcast, Chipotle, Uber, Charles Schwab, Robinhood, SoFi, BNY Mellon, Coinbase, Charter Communications, Continental Resources, and Steak ‘n Shake, among others.

What Families Should Do Now

If you have a child born in 2025 or later, file Form 4547 with your 2025 tax return to claim the $1,000 pilot contribution. You can also enroll online at trumpaccounts.gov. If your children are older (up to age 17), you can still open a Trump Account and begin contributing when the program launches on July 4, 2026.

Check with your employer about matching contributions. Many companies are still announcing their plans, and the list of participating employers is growing every month.

The math on compounding makes this worth attention. Even modest annual contributions of $2,000 to $3,000 into an S&P 500 index fund could grow to a substantial nest egg by the time a child turns 18, giving them options for college, a first home, or starting a business.

BCA advisors can help families understand the tax implications of Trump Account contributions and plan the best strategy for maximizing the benefit across multiple children. For employers considering matching programs, BCA can help structure compliant contribution plans that work within the $2,500 annual limit.

Sources: IRS IR-2026-42 | IRS/Treasury Trump Accounts Guidance | IRS Trump Accounts | Center for Retirement Research