The One Big Beautiful Bill Act (OBBBA) created a new tax-advantaged savings account for children: Trump Accounts (formally, Money Accounts for Growth and Advancement, or MAGA accounts). This provision has received less attention than others in the law, but parents, grandparents, and business owners should take notice. Here is what you need to know.
What Are Trump Accounts?
Every U.S. citizen born between January 1, 2025, and December 31, 2028, receives a one-time $1,000 federal seed contribution into a Trump Account, a tax-deferred savings account. The accounts invest in low-cost U.S. stock index funds and grow tax-deferred until the child reaches age 18, at which point the account converts to a traditional IRA.
Who Is Eligible?
Every child born in the U.S. between 2025 and 2028 with a Social Security number is eligible for the $1,000 federal contribution. Parents must also have Social Security numbers. Children born outside this window can still have Trump Accounts opened on their behalf, but they will not receive the federal seed money. There are no income limits or wealth restrictions for eligibility or contributions.
Contribution Rules
The annual contribution limit is $5,000 per account. Family members and others can contribute to the same account, as long as the combined total does not exceed $5,000 per year. Employers can contribute up to $2,500 per year to an employee’s Trump Account or an employee’s dependent’s account. These employer contributions count toward the $5,000 annual limit but are not taxable income to the employee. No earned income is required for initial contributions.
What Can the Money Be Used For?
Funds cannot be withdrawn before January 1 of the calendar year the child turns 18. After that, because the account converts to a traditional IRA, withdrawals can cover higher education expenses (tuition, books, fees), a first home purchase (up to $10,000), or starting a small business. Funds can also remain invested for long-term retirement savings. Non-qualified withdrawals are subject to ordinary income tax and a potential 10% early withdrawal penalty under standard IRA rules.
How to Set One Up
Complete IRS Form 4547 and include it with your electronically filed 2025 federal tax return by April 15, 2026. Major tax preparation software packages will include Form 4547 in their 2025 tax year releases. After filing, the IRS will process your request and send account activation and identity verification information beginning in May 2026. Accounts go live on July 4, 2026.
If you miss the tax return deadline, an online registration portal at trumpaccounts.gov is expected to launch in mid-2026 as an alternative. The $1,000 federal contribution remains available for eligible children even if registration occurs after April 15.
Why This Matters for Business Owners
Beyond the personal benefit for your family, Trump Accounts present an opportunity for employers. The ability to contribute up to $2,500 annually to employees’ accounts as a tax-free benefit could become a valuable recruiting and retention tool, particularly for small businesses competing for talent. For employers, Trump Account contributions could become a recruiting advantage worth highlighting. Discuss implementation with your benefits provider to see if it fits your compensation strategy.
Disclaimer: This article is for informational purposes only and is not legal, tax, or financial advice. BCA is not a licensed professional services firm. We help clients assess their situations and work with licensed attorneys, tax advisors, and other qualified professionals on your behalf. Read our full Disclaimer and Terms of Use. Have questions? Contact BCA and let us put the right team together for you.
Sources and Further Reading
- IRS Guidance on Trump Accounts: irs.gov
- Trump Accounts Official Portal: trumpaccounts.gov
- Fidelity – What Are Trump Accounts: fidelity.com
- Charles Schwab – What to Know: schwab.com
- William Blair – What Families Need to Know in 2026: williamblair.com