A parent cradling a newborn baby, illustrating a savings account opened for a child's future

The Savvy Investor's Guide

Trump Accounts have launched: the $1,000 newborn deposit and how they work (2026)

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James Heppe-Smith

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By James Heppe-Smith · July 2026 · 8 min read

What’s changed: Updated 7 October 2026: Treasury says every eligible child under 18 now has an account, and a parent claims it in the official app. Earlier, 24 August: proposed rules on what an account can hold. Full update history.

A new federal savings account for children, created by the One Big Beautiful Bill Act (OBBBA) of July 2025 and known as a Trump Account, opened for deposits on 4 July 2026. Eligible children born between 2025 and 2028 receive a $1,000 deposit from the federal government; families can add up to $5,000 a year on top, invested in low-cost US stock index funds; and the money is held until the child turns 18. This guide explains who qualifies, how the money is invested, how to open an account, and a new IRS rule that lets grandparents and other relatives contribute without extra gift-tax paperwork.

Since 1 October 2026 the account no longer has to be opened. Treasury says automatic enrollment is complete, so every eligible child under 18 with a valid Social Security number already has one. A parent or guardian still has to claim it, and the $1,000 is paid only after that.

The short version

  • $1,000 government seed deposit for a child who is a US citizen, has a Social Security number, and was born between 1 January 2025 and 31 December 2028.
  • Families can contribute up to $5,000 per child per year (parents, relatives, and employers), on top of the government deposit. An employer’s contribution counts inside that $5,000, not on top of it, and up to $2,500 of it is excluded from the employee’s income.
  • The money is invested in low-cost US equity index funds, with fund fees capped at 0.10% a year.
  • The account grows tax-deferred and is built for the long term: it converts into a traditional IRA when the child reaches adulthood, at which point normal IRA rules apply (which allow some penalty-free early withdrawals, for example toward a first home or higher education).
  • Since 1 October 2026 the account already exists. Treasury enrolled every eligible child under 18 with a valid Social Security number automatically. A parent or guardian claims it in the official Trump Accounts app, and the $1,000 is paid only once it has been claimed.
  • A new IRS safe harbor (Revenue Procedure 2026-25, 29 June 2026) means most family contributions do not trigger gift-tax reporting, provided they stay within the annual gift-tax exclusion ($19,000 per person for 2026).

What a Trump Account is

A Trump Account is a tax-advantaged, long-term investment account opened in a child’s name (the law creates them as new “530A” accounts). It was created by OBBBA in 2025 and opened for funding on 4 July 2026, timed to the 250th anniversary of the Declaration of Independence. In the days after launch the Treasury reported that more than 6 million accounts had been opened for children under 18, with about 1.4 million newborns eligible for the $1,000 pilot deposit (up from the 4 million accounts and 1 million pilot-eligible the IRS had reported on 31 March 2026). On 1 October 2026 Treasury said automatic enrollment meant “over 60 million more eligible children now have an account ready to be claimed”. In structure it is closer to a retirement account than to an instant-access savings pot: contributions are made with after-tax money, the balance is invested in low-cost US stock index funds and grows tax-deferred, and the account is designed to convert into a traditional IRA when the child reaches adulthood.

The headline feature is the government’s $1,000 deposit for eligible newborns and young children. The account is now set up automatically for every eligible child. The deposit is not paid automatically: the account has to be claimed first. The rest of the account works like a simple, low-cost investment plan that family members, and in some cases employers, can pay into within an annual limit.

Who qualifies for the $1,000 deposit

To receive the $1,000 federal deposit, a child must:

  • Be a US citizen at birth;
  • Have a Social Security number; and
  • Be born between 1 January 2025 and 31 December 2028.

The 2025 to 2028 birth window is the eligibility band for the automatic $1,000 deposit. A smaller $250 seed is available for some children born between 2016 and 2024 who live in a ZIP code with median income of $150,000 or less (which covers most of the country). Children outside these bands can still have a Trump Account, funded by their families, but the government seed is tied to those birth ranges. If you have a child who qualifies for the $1,000, it is worth claiming even if you do not plan to add anything yourself, because it is money the account starts with at no cost to you.

How the money is contributed and invested

On top of the government deposit, the account can receive up to $5,000 per child per year, up to the year before the child turns 18. That $5,000 is a combined annual limit across everyone who pays in: parents, grandparents, other relatives, and in some cases the child’s parent’s employer. Contributions are made with after-tax dollars (there is no upfront federal income tax deduction for paying in).

Two kinds of money sit outside that limit, and it is worth knowing which. The government’s $1,000 pilot deposit does not count towards the $5,000, and neither do qualified general contributions routed through the Treasury by governments and non-profits. Everything else does, including money from friends and family and anything an employer pays in. The proposed regulations published on 11 August 2026 are explicit on the last of those: “Section 128 contributions count towards the $5,000 annual contribution limit.”

The money is invested in low-cost US stock index funds and grows tax-deferred, with the fund’s fee capped at 0.10% a year. Two separate decisions sit behind that sentence, and coverage of the program often runs them together. The fee cap comes from the law; the proposed regulations published on 20 August 2026 set out how it is measured. The choice of fund is Treasury’s own operating decision, announced separately on 1 July 2026. The proposed regulations name no fund at all. They set criteria and leave each account provider to pick and publish its own default.

At launch, every contribution goes into the State Street SPDR Portfolio S&P 500 ETF (ticker SPYM), which tracks the S&P 500 and charges 0.02% a year. Treasury has named four alternatives that will become available once fund selection is up and running: the iShares Core S&P 500 ETF (IVV), the Vanguard Total Stock Market ETF (VTI), the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) and the iShares Core S&P Total US Stock Market ETF (ITOT). The fee cap matters more than it looks. Over 18 years, the gap between a 0.02% fund and a 0.60% fund on the same contributions can eat a meaningful share of the final balance. Building the cap into the product closes off one of the quieter ways small accounts lose value to charges.

Because the balance is invested in the stock market, it can fall as well as rise, particularly over shorter periods. The long holding period (up to 18 years) is what makes an all-equity index approach reasonable here, but a family adding money should understand that the value is not guaranteed and will move with the market.

What a Trump Account is allowed to hold

Until August 2026 the 0.10% fee cap was a stated feature of the program rather than a written test. The proposed regulations published on 20 August put it on paper and add the rest of the criteria. A qualifying fund has to be a mutual fund or an exchange traded fund registered under the Investment Company Act of 1940, and it has to track what the rules call a qualified index. What counts as a qualified index is where the real constraints sit, and it rules some fund types out while explicitly allowing others:

  • Mostly US companies, with a number attached. The index has to be made up of equity in primarily United States companies. The draft rules treat an index as safely meeting that when US companies are at least 90% of it by weight. The S&P 500 qualifies by name in the statute.
  • No sector or industry funds. An index is disqualified if inclusion depends on the industry a company is in, and that extends to indices covering a group of related industries.
  • No ESG funds. These are excluded separately and explicitly, including any index marketed as having an environmental, social or governance focus.
  • Broad market and size-based indices are fine. Choosing companies by market capitalization does not disqualify an index, so total-market and small-cap trackers are allowed alongside the S&P 500.
  • Equities only, and no leverage. An index containing bonds or derivatives does not qualify, and neither does any fund designed to return a multiple of an index. The index methodology also has to be published.

What the 0.10% fee cap covers, and what it leaves out

The cap is narrower than it first appears. On the fund side it is drawn widely: it captures everything the fund charges investors directly, whatever the charge is called and whenever it is levied, sales loads and one-off charges on buying or selling included. Where a fund’s published expenses are already reduced by a fee waiver, the reduced figure is the one tested, so a waiver can bring a fund inside the limit for as long as it lasts.

What the cap does not touch is the fee charged by the institution holding the account. Custody and administration charges sit outside the 0.10% limit entirely, and at present they are not capped at anything. Treasury has asked for comment on whether they should be. For a family comparing this account against a 529 or a custodial account, that is the number to ask about.

Two consequences follow. If a fund stops qualifying, there is a 30-day window to move the money; miss it and the account stops being a Trump Account and is treated as though the whole balance had been paid out at its market value on that date. And the investment restrictions are not permanent: they run to 31 December of the year the child turns 17, after which the ordinary rules for a traditional IRA apply and the fund menu no longer binds.

All of this is still a proposal. The rules are written to apply to tax years starting on or after 1 January 2026, and providers and families may rely on them before they are finalized, as long as they follow them in full and consistently. Treasury and the IRS have said they intend to publish final rules within 18 months of the law being enacted. Comments close on 20 October 2026, and a public hearing will be held only if somebody asks for one in writing.

The gift-tax safe harbor: what it means for grandparents and relatives

Why this matters. Large gifts can, in principle, require the giver to file a federal gift-tax return (Form 709). A new IRS safe harbor removes that worry for ordinary Trump Account contributions, so a relative can pay in without extra paperwork, as long as their total gifts to that child stay within the annual exclusion.

On 29 June 2026, the Treasury and IRS issued Revenue Procedure 2026-25 (announcement IR-2026-80), creating a gift-tax reporting safe harbor for contributions to Trump Accounts. In plain terms: where the requirements are met, contributions made by an individual donor to a child’s Trump Account in a year will not be subject to gift-tax reporting for that year. The safe harbor is aimed squarely at the practical question a grandparent or other relative will ask, which is whether paying into the account creates a tax filing for them.

The safe harbor is built around staying within the annual gift-tax exclusion, which for 2026 is $19,000 per person, per recipient. A contribution comfortably inside that limit, made by an individual and meeting the other conditions in the Revenue Procedure, does not require a gift-tax return. Because the Trump Account’s own annual contribution cap ($5,000 per child) is well below the $19,000 exclusion, most family contributions will fall inside the safe harbor without any special planning. The full conditions are set out in Revenue Procedure 2026-25; anyone giving at or near the annual exclusion, or combining a Trump Account gift with other gifts to the same child, should read them or check with a tax professional.

How to open or claim an account

Since 1 October 2026 the account is already there. Treasury announced that day that automatic enrollment was complete: “every eligible child under the age of eighteen with a valid Social Security number now has a Trump Account.” What remains for a family is to claim it. In Treasury’s words: “To claim your child’s Trump Account, download the official Trump Accounts app, available for iOS and Android.” In the app a parent or guardian verifies their identity and their relationship to the child, reviews the child’s information and accepts the account terms.

Everything else waits on the claim. Until a parent or guardian has claimed the account it cannot be managed, and family, friends or an employer cannot pay in. The seed money waits too: “Eligible children must also have their Trump Account claimed to receive the one-time $1,000 seed contribution from Treasury.”

The release names the app and no other way of claiming, and it does not say whether the earlier routes are still open. They are listed below as they stood before 1 October. The rules behind automatic enrollment are in temporary regulations that took effect on 30 September 2026, and a proposed rule published the same day is open for comment until 30 November 2026.

  • Through your tax return. You can claim or open the account using Form 4547 filed with a 2025 federal tax return.
  • Online. Accounts can be opened and managed directly at TrumpAccounts.gov, the official government site for the program.
  • Through the app. A companion app, built with Robinhood, lets families set up and manage the account and its contributions. Robinhood and the Bank of New York (BNY) were selected by the Treasury to hold and administer Trump Accounts in the program’s initial phase.
  • At the hospital, for newborns. The Social Security Administration will let parents enroll a newborn in a Trump Account at the same time they apply for the baby’s Social Security number, through its Enumeration at Birth program; hospital forms and future parent mailings are being updated to include the option.
  • Employer and corporate contributions. A number of large employers and companies have pledged to contribute to or match Trump Account deposits for employees’ children, and since 11 August 2026 there are proposed rules covering how it works: up to $2,500 a year is excluded from your income under Code section 128, it counts inside the $5,000 limit, and the $2,500 is per employee rather than per child. If you are employed, it is worth asking whether your employer offers this, and whether it can be funded by salary reduction through a cafeteria plan. The public hearing on those proposed rules, on 15 October 2026, is now by telephone only.

How a Trump Account compares with a 529 or a custodial account

Trump Accounts are not the only tax-advantaged way to save for a child, and they are not a replacement for the existing options. Families already using a 529 plan or a custodial account (UGMA or UTMA) will want to understand where the new account fits.

  • Versus a 529 plan. A 529 is built for education and offers tax-free growth when used for qualifying education costs, with much higher contribution room than the Trump Account’s $5,000. A Trump Account is a long-term, IRA-style vehicle (it converts to a traditional IRA in adulthood) with a lower annual limit. The two can be used together: our guides to the 529 to Roth IRA rollover and the 529 to Roth 15-year rule cover how 529 money can be repurposed if it is not needed for school.
  • Versus a custodial (UGMA/UTMA) account. A custodial account has no contribution cap and no restriction on use, but it becomes the child’s outright property at the age of majority and has less favorable tax treatment on investment income. The Trump Account trades that flexibility for a government seed deposit, a fee cap, and the gift-tax safe harbor.
  • The $1,000 is the clear win. Whatever else a family does, the government’s $1,000 deposit for an eligible child is free money the account starts with. That alone is a reason to claim the account for a qualifying child.

Trump Accounts were created by the same 2025 law that changed the SALT cap and 529 rules; our OBBBA 2026 guide covers those other provisions for the current tax year.

Common questions

  • Does my child automatically get the $1,000? The account is automatic now; the $1,000 is not. Since 1 October 2026 every eligible child under 18 with a valid Social Security number has an account, but Treasury says it must be claimed, in the official Trump Accounts app, before the one-time $1,000 is paid. The $1,000 itself is for qualifying children: US citizens with a Social Security number, born 2025 to 2028.
  • How much can I add each year? Up to $5,000 per child per year in total across all contributors, on top of the government deposit.
  • Will I owe gift tax for paying in? Under the June 2026 IRS safe harbor, an individual’s contributions do not trigger gift-tax reporting as long as their total gifts to that child stay within the annual exclusion ($19,000 for 2026) and the other conditions are met. Because the account’s own $5,000 cap is well below $19,000, most family contributions are covered.
  • When can the money be used, and for what? The account is built for the long term. It grows tax-deferred and converts into a traditional IRA when the child reaches adulthood, after which normal IRA rules apply: the money is intended mainly for retirement, though IRA rules do allow some penalty-free early withdrawals, for example up to a set limit toward a first home or for qualified higher education. Confirm the current rules and the tax treatment on withdrawal against IRS guidance before withdrawing.
  • Is the money guaranteed? No. It is invested in stock index funds, so the value moves with the market and can fall as well as rise. The long time horizon is what supports an equity approach, but there is no guaranteed return.
  • Should I use this instead of a 529? They do different jobs and can be used together. A 529 has far higher limits and tax-free education growth; a Trump Account adds the $1,000 seed and broader permitted uses at a lower annual cap. The right mix depends on your goals and budget.

Sources

This article is for general information only and is not personalised tax or financial advice. Trump Account rules, contribution limits, and the details of the gift-tax safe harbor depend on your circumstances and on IRS guidance that may be updated; consult a qualified US tax professional (CPA or EA) before relying on them for your own situation. Investments held in these accounts can fall as well as rise in value. Figures reflect the program as launched on 4 July 2026 under OBBBA, and the claiming route as Treasury described it on 1 October 2026.

Update history: 7 October back to 22 July 2026

Update, 7 October 2026: every eligible child now has an account, and it has to be claimed. On 1 October Treasury announced that automatic enrollment for Trump Accounts was complete. Every eligible child under 18 with a valid Social Security number now has an account. A parent or guardian claims it in the official Trump Accounts app, and the $1,000 seed is paid only after the claim. Temporary regulations covering automatic enrollment took effect on 30 September, with comments on the matching proposed rule due by 30 November. The 15 October hearing on employer contributions is now by telephone only. The guide above has been updated to say so. The notes below have moved here from the top of the article and are unchanged. Source: US Treasury, 1 October 2026.

Update, 24 August 2026: the investment rules are now written down. Treasury and the IRS published a second set of proposed regulations on 20 August (IR-2026-96, Federal Register document 2026-17123), covering what a Trump Account is allowed to hold. These are proposals rather than final rules, and comments close on 20 October 2026. Four points matter to a family:

  • The 0.10% fee cap is now in the draft rules, not just a description of the program. A fund fails the test if its fees and expenses come to more than “0.1 percent of the net value of its assets”.
  • Sales loads count towards that cap. The account provider’s own fees do not. Custody and administration charges sit outside the 0.10% limit altogether, and Treasury is separately asking whether they should be capped at all.
  • Sector funds and ESG funds are excluded. The money has to track a broad index of mostly US companies, treated as safely qualifying when US companies are at least 90% of it by weight. Leveraged funds are out; total-market and small-cap indices are allowed.
  • You can choose. The provider sets a default fund, but a parent acting for the child can pick a different eligible fund; the default applies only when nobody does.

Update, 17 August 2026: the employer route now has rules. Treasury and the IRS published proposed regulations on 11 August (IR-2026-90) covering employer contributions under new Code section 128. These are proposals rather than final rules: comments close on 25 September 2026 and a public hearing is set for 15 October. Four points matter to a family:

  • An employer can pay up to $2,500 a year, indexed for inflation, into the Trump Account of an employee or an employee’s dependent, and that money is excluded from the employee’s income.
  • It is not extra headroom. Section 128 contributions count towards the same $5,000 annual limit. The government’s $1,000 pilot deposit still sits outside it.
  • The $2,500 is per employee, not per child and not per job. It applies however many employers you have and however many dependents. Anything above it is not excluded from your income.
  • An employer’s scheme must not favour highly compensated employees, and it can be funded by salary reduction through a section 125 cafeteria plan, with elections changeable at least monthly.

Update, July 22, 2026. Take-up has scaled fast. The IRS reported on July 21 that more than 4 million children have been signed up for Trump Accounts, with over 1 million claiming the $1,000 pilot program contribution. Reported totals vary with the counting method used by different agencies, so treat any single figure as a scale indicator rather than a precise census. The account mechanics, contribution limits and eligibility rules described in this guide are unchanged.

Fact-checked: 24 August 2026 · Last reviewed: 17 August 2026

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