IRS Issues Update on Trump Accounts

Published: Wednesday, December 3, 2025 at 10:48 am

IRS Announces New Guidelines for Trump Accounts

The Internal Revenue Service (IRS) released an update on Tuesday regarding regulations and guidance for Trump Accounts, a new type of Individual Retirement Account (IRA) designed for children under 18. These accounts were established under the Working Families Tax Cuts initiative, aiming to provide long-term financial security for young Americans and help families build generational wealth.

The program, created under the One Big Beautiful Bill Act, combines government contributions with additional funding from parents, employers, and charities. The IRS update clarifies key aspects of the program, which is expected to impact millions of young Americans.

Parents or guardians can begin opening Trump Accounts in early 2026, with contributions starting July 4, 2026. A notable feature is a pilot program offering a one-time $1,000 government contribution to eligible U.S. children born between January 1, 2025, and December 31, 2028, provided parents or guardians opt in when opening the account.

The IRS also outlined contribution limits. The annual contribution limit is set at $5,000 per child from all sources, including up to $2,500 per year from employers as a nontaxable benefit. These limits will be adjusted for inflation starting after 2027. Additionally, charities and state, local, or tribal governments can make qualified general contributions that do not count toward the $5,000 cap, provided they meet certain eligibility rules.

Investment options for Trump Account funds are restricted to mutual funds or exchange-traded funds (ETFs) that track broad U.S. stock market indices. Withdrawals are generally prohibited until the child turns 18, with exceptions for rollovers, death, or disability. Upon reaching adulthood, the account will convert to a traditional IRA, subject to standard distribution and tax rules.

The initiative has received a boost from a $6.25 billion charitable contribution from Michael and Susan Dell, which will add $250 to the Trump Accounts of the first 25 million eligible children aged 10 and under living in ZIP codes where the median household income is below $150,000.

The IRS stated it will continue to provide updates and additional information via its website.

BNN's Perspective:

While the concept of providing financial security for children is laudable, the long-term impact of this program remains to be seen. The success of Trump Accounts will depend on factors such as market performance, parental participation, and the ability of the program to reach those most in need. Careful monitoring and adjustments may be necessary to ensure the program achieves its intended goals without unintended consequences.

Keywords: Trump Accounts, IRS, IRA, Working Families Tax Cuts, One Big Beautiful Bill Act, financial security, generational wealth, government contributions, annual contribution limit, investment, withdrawals, Michael Dell, children, tax benefits, retirement accounts, financial planning

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