By Elizabeth O'Brien
Trump Accounts are set to become available in early July, giving parents a new way to save on behalf of their children. The accounts will have their pros and cons, and your best use will depend on your goals and timeline.
On Thursday, the Treasury Department announced the next steps for the program, which is set to begin on July 4. These include the launch of the Trump Accounts app and start of email communications for parents who have already signed their children up for accounts by submitting IRS Form 4547. Treasury Secretary Scott Bessent said on Thursday that nearly six million children had been signed up so far. Parents can get started at trumpaccounts.gov.
Accounts will be able to accept contributions beginning on July 4. That day, babies born from 2025 onward will start to receive their $1,000 contribution from the government pilot program that runs through 2028. Babies born from 2025 to 2028 who are American citizens and have a Social Security number are eligible for the seed money. The accounts are open to children 17 and under.
Bank of New York Mellon will manage the initial accounts in partnership with Robinhood. An S&P 500 exchange-traded fund will be the default investment at launch, with other broad-based index options expected to become available afterward, The Wall Street Journal reported .
If your child is eligible for the $1,000, opening an account is a no-brainer, advisors say. Some employers are also matching the government contributions for this cohort.
"It's free money," says David A. Perez, founder of Tax Maverick AI. His wife is expecting the couple's first child in November, and they plan to open an account.
Beyond that, it depends. Here's what to consider for different goals:
Education
You can't beat a 529 account if your goal is saving for education, says Tim McGrath, a certified financial planner with Riverpoint Wealth Management in Chicago. Unlike retirement accounts, these accounts don't have an annual contribution limit. The IRS says, "contributions can not exceed the amount necessary to provide for the qualified education expenses of the beneficiary," and states impose their own lifetime contribution caps.
Contributions to a 529 plan aren't deductible at the federal level, though earnings grow tax-free and can be withdrawn tax-free for qualified education expenses.
It's easy to switch the beneficiary to another family member if the original beneficiary doesn't go to college, and you can transfer up to $35,000 in unused 529 funds to a Roth IRA for the same beneficiary.
With a standard 529, the account owner retains control of the funds. This is attractive to parents who don't want their child getting unfettered access to a pot of money when they turn 18.
Retirement
One plus of the Trump Accounts is they allow parents to begin saving for their child's retirement before the child earns any income of their own. For a minor to have a traditional or Roth IRA, they need to have income from a job. (For a child to make their own contribution to their Trump Account, they will need earned income.)
The parent owns the account until the child reaches 18. At that time, withdrawals can be made for qualifying uses such as education, a first-time home purchase or starting a business. Withdrawals will be taxed at ordinary income rates.
Trump Accounts have lower annual contributions limits than IRAs. The cap is $5,000, indexed for inflation, excluding the government seed money and any company match. The 2026 contribution for IRAs is $7,500 in 2026.
A big way the Trump Accounts differ from IRAs is the money in the former generally can't be tapped at all before age 18. You can't fall back on that money in an emergency like you could with a retirement account. With a traditional IRA, funds tapped before age 59 1/2 are assessed a 10% penalty and subject to ordinary income taxes. With a Roth IRA, you can withdraw contributions at any time tax and penalty free, but earnings may be subject to taxes and penalties before age 59 1/2 .
Trump Account holders will be able to convert their account to a Roth IRA starting at age 18. This is an excellent way to create flexible, tax-free withdrawals, Perez says. While the owner will owe income taxes on the amount converted, they'll be in a lifetime-low tax bracket.
Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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May 28, 2026 16:10 ET (20:10 GMT)
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