How Trump Accounts Work

As we celebrate the 250th anniversary of America's founding this Fourth of July, the Vista Finance team wanted to make sure you're aware of a new savings vehicle that may be relevant for your family: Trump Accounts.

Created under the One Big Beautiful Bill Act, this program comes available for initial deposits on July 4, 2026. If you have children or grandchildren born between January 1, 2025 and December 31, 2028, they may be eligible for meaningful benefits worth discussing.

Here is a summary of how the accounts work:

The Basics

• U.S. citizen children born in this window receive a one-time $1,000 deposit from the federal government, automatically invested on their behalf.
• Structurally, a Trump Account is a traditional IRA established for the child and designated as a Trump Account at the time of opening.
• To enroll, a parent or guardian files IRS Form 4547, or registers through the online portal at www.trumpaccounts.gov. This can be done at any time, including when filing a 2025 income tax return.

Estate Planning Benefits

• Tax-efficient gifting: Grandparent contributions (up to $5,000/year, shared with other family contributors) fit within the annual gift tax exclusion, moving money and future growth out of the grandparent's estate with no gift tax return or exemption use required
• Long compounding runway: No earned income requirement means funding can start at birth, giving grandparent contributions up to 17 years to compound before the growth period ends — complementing (not replacing) 529 plans, which remain the better vehicle for larger education-focused transfers.
• Coordination and legacy value: The $5,000 cap is shared across all contributors, so family coordination matters, and account-opening priority favors legal guardians/parents over grandparents — but beyond the tax mechanics, the account also offers a visible, engaging way to build financial literacy and multigenerational connection with grandchildren.

Contribution Rules

• Family members, other individuals, and employers may contribute up to $5,000 per child per year until the year the child turns 17 (this limit is indexed for inflation beginning in 2028). The government's $1,000 seed deposit does not count against this limit.
• Employers may contribute up to $2,500 per employee per year, including through cafeteria plans covering dependents.
• The child owes no income tax when deposits are made. However, contributions come from the giver's after-tax funds, and the full balance is eventually taxed as income to the child upon withdrawal.

Investment Structure

• Funds may only be invested in low-cost mutual funds or ETFs tracking a broad U.S. equity index, such as the S&P 500, with at least 90% exposure to U.S. companies, no leverage, and an expense ratio cap of 0.10%.

Access to Funds

• Distributions are generally restricted until December 31 of the year the child turns 17 (referred to as the "growth period"). After age 18, traditional IRA rules generally apply.
• One planning note: if the account is kept separate from other IRAs after age 18, it will not be combined with those accounts when calculating taxes and penalties on withdrawals, which may offer some flexibility down the road.

If you have any questions, please reach out to the Vista team.

Have a wonderful 4th of July weekend!