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Once tax season comes to an end, most families shift their focus away from planning. This year, that may be a mistake.
A new federally backed savings account for children, known as a Trump Account, is set to launch this summer, offering a $1,000 government-funded starting balance and tax-deferred growth. For families already thinking about 529 plans and long-term wealth transfer, the question isn’t whether to pay attention — it’s how to use this new tool effectively.
For families with children and grandchildren under age 18, the first step to participate can be taken now by filling out IRS Form 4547 on the official Trump Accounts site. While simple in execution, this decision has the potential to become a meaningful building block within a broader, long-term financial plan.
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How Trump Accounts work
Created under the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, Trump Accounts introduce a new way to build wealth for minors. Structurally similar to a traditional IRA, the accounts offer tax-deferred growth, meaning contributions are made with after-tax dollars, but investment gains compound without annual taxation.
From a planning perspective, this creates another avenue to extend tax-efficient growth across generations.
What makes the program particularly compelling is the built-in starting point. Eligible children — those born between January 1, 2025, and December 21, 2028, who are U.S. citizens with valid Social Security numbers — receive a $1,000 federal seed contribution.
While modest on its own, when viewed through the lens of long-term planning, that initial investment represents something more powerful: Time in the market.
The importance of starting early cannot be overstated. When capital is invested early and allowed to compound, even relatively small contributions can grow meaningfully.
For example, a family contributing $5,000 annually through age 18, alongside the $1,000 federal seed and a 6% return, could accumulate roughly $190,000 by adulthood — and more than $2 million by retirement if left untouched. While hypothetical, the scenario underscores how early contributions, not just large ones, drive long-term outcomes.
Trump Accounts are intentionally structured to reinforce that discipline. Investments are limited to low-cost U.S. equity index funds or ETFs, with expense ratios that do not exceed 0.10%.
Contributions are capped at $5,000 annually (indexed for inflation), and assets are locked until age 18. Together, these features create a framework designed for consistency and long-term growth without the burden of short-term decision-making.
Eligibility is broad, which allows for coordinated family planning. Parents or legal guardians typically open the account, but grandparents and others can contribute. This creates an opportunity to align gifting strategies across generations and to begin introducing younger family members to long-term investing in a tangible way.
Trump Accounts and 529 plans
For many families, the question is how Trump Accounts fit alongside existing strategies, particularly 529 plans. In our view, this is not an either-or decision. Each serves a distinct purpose.
For many families, 529 plans remain an effective tool for education-specific savings, offering tax-free growth when used for qualified expenses. Trump Accounts, by contrast, are not limited to education. They provide flexibility beyond college, allowing assets to continue compounding into adulthood.
This means they can be used to support broader financial independence, while also instilling a lifelong habit of regular, incremental investment over time.
Used together, these tools can help families take a more comprehensive approach — funding education needs while also building long-term wealth. The addition of the $1,000 federal contribution further strengthens the case for early participation, particularly when integrated into an overall plan.
How to get started
Getting started is straightforward. While it was possible to include IRS Form 4547 with your 2025 tax return, it is now available on the Trump Accounts website, allowing you to complete the process online if you missed the opportunity.
Ultimately, Trump Accounts are not just a new savings vehicle – they are a new planning consideration. For families focused on generational wealth, they offer a structured way to start earlier, invest consistently and align financial decisions with long-term intent.
For families focused on building wealth for future generations, the real advantage of Trump Accounts isn’t just tax deferral — it’s time.
Starting earlier, even with modest amounts, can meaningfully change long-term outcomes. This is a rare opportunity to get a head start on putting that principle into practice.
