Savings
Trump Account
Definition
A tax-advantaged savings and investment account created by the OBBBA to build long-term wealth for children under age 18.
Key Takeaways
- Created under the One Big Beautiful Bill Act (OBBBA) in 2025.
- Allows tax-deferred compounding for minors in U.S. index funds.
- Converts to a Traditional IRA at age 18.
- Withdrawals of earnings and employer money are subject to income tax.
Detailed Explanation
A Trump Account (formally a Section 530A account) is a tax-advantaged account designed to kickstart financial security for U.S. children. Contributions grow tax-deferred and are invested in low-cost equity index funds. At age 18, it converts into a Traditional IRA, transferring control to the child. Unlike a Roth account, growth is taxable on withdrawal.
Real-World Example If a parent opens a Trump Account for their child born in 2026, the child receives a one-time $1,000 government seed. If the parent contributes $2,000 annually until the child is 18, the account accumulates a significant balance. At age 18, this account converts into a Traditional IRA in the child's name, allowing the savings to continue compounding.
See Also:Traditional IRA•Roth IRA•529 Plan