Whether to open a Trump Account depends on your savings goals and how much you can contribute regularly
A Trump Account is a tax-advantaged savings program for children under 18. The main decision is whether the tax benefits and growth potential are worth opening and maintaining the account for your family. If you plan to save money specifically for your child's future—whether for education, a first car, or other major expenses—the account can reduce the taxes you owe on the money that grows. If you have no savings plan or only small amounts to set aside, the account may not be necessary.
The account works by letting you deposit money that grows tax-free as long as it stays in the account until your child reaches the age specified in the program rules. You control the money and the investment choices until your child takes it out. The trade-off is that the money is legally your child's, and using it for anything other than the stated purpose may trigger taxes and penalties.
Key Takeaways
- Trump Accounts offer tax-free growth on money saved for your child, which means you pay no federal tax on the earnings as long as the money stays in the account.
- You decide how much to contribute and when, with no annual minimum requirement, but there are annual contribution limits set by federal law.
- The money belongs to your child legally, so withdrawals for non-may have access to purposes trigger income tax plus a 10 percent penalty on the earnings.
- Opening an account takes 15 to 30 minutes online or at a financial institution, and you will need your Social Security number and your child's Social Security number.
- If you do not have a savings goal or cannot commit to leaving the money untouched, the account may create more hassle than benefit.
How much you can contribute each year
Federal law sets an annual contribution limit, which changes each year. For 2024, you can contribute up to $18,000 per child per year without triggering gift tax reporting requirements. If you are married and file jointly, you and your spouse can each contribute $18,000, for a total of $36,000 per child per year. These limits apply to all Trump Accounts combined—if you open accounts at multiple institutions, the total across all of them cannot exceed the annual limit.
There is no minimum contribution. You can open an account and deposit $50, or you can wait months before making your first deposit. You also do not have to contribute every year. The account will continue to exist and grow even if you make no new deposits for several years.
Tax benefits and how they work
The primary benefit is that money inside the account grows tax-free. If you deposit $5,000 and it grows to $7,000 over five years, you owe no federal tax on that $2,000 in earnings. In a regular savings account or investment account, you would owe tax on the $2,000 each year as it accumulates. Over time, especially with larger balances or longer time horizons, this tax savings can be substantial.
The tax-free growth only applies if the money stays in the account until your child reaches the specified age—typically 18 or 21, depending on the program. If you withdraw money early for a non-may have access to reason, the earnings portion of the withdrawal is subject to income tax plus a 10 percent penalty. The money you contributed (your principal) can always be withdrawn without penalty, but the growth is taxed and penalized if withdrawn early.
When you should not open an account
If you are uncertain whether you can leave the money untouched until your child reaches the age limit, opening an account creates a tax trap. Early withdrawal penalties are steep—10 percent on top of income tax on the earnings—and they apply even if you withdraw the money for a genuine emergency. If you think you might need access to the money within the next few years, a regular savings account is safer.
If you have no specific savings goal or no realistic plan to contribute regularly, the account adds administrative work without benefit. You will need to track contributions, report the account on your tax return if required, and manage investment choices. A Trump Account makes sense when you have a clear goal—saving for college, a car, or another major expense—and money you genuinely do not need to touch.
If your child is already 16 or 17, the time horizon is too short for meaningful tax-free growth. The account is designed for long-term savings, and opening one when your child is nearly an adult defeats the purpose.
How to open an account
You can open a Trump Account at most banks, credit unions, and investment firms. The process is typically online and takes 15 to 30 minutes. You will need your Social Security number, your child's Social Security number, your child's date of birth, and a valid ID. Some institutions may ask for proof of address.
After you open the account, you choose how to invest the money—usually from options like age-based portfolios (which automatically become more conservative as your child ages), stock index funds, bond funds, or money market funds. The institution will guide you through these choices, and you can change your investment selections once per year or when your child reaches certain ages.
Once the account is open, you can deposit money online, by check, or by automatic transfer from your bank account. You control all deposits and withdrawals until your child reaches the age of majority, at which point the account legally becomes your child's to manage.
What happens when your child turns 18 or 21
When your child reaches the age specified in the account agreement—usually 18 or 21—the account becomes legally theirs. You no longer have control over it. Your child can withdraw the money for any reason without penalty, though they will owe income tax on the earnings portion if they withdraw it all at once and it pushes them into a higher tax bracket.
Your child can also leave the money in the account and continue to benefit from tax-free growth. Some people keep Trump Accounts open into adulthood and use them for major expenses like a down payment on a house or graduate school tuition. There is no requirement to close the account or withdraw the money at any specific age.
Comparing Trump Accounts to other savings options
A Trump Account is not the only way to save for your child. A regular savings account or money market account offers flexibility—you can withdraw money anytime without penalty—but you pay tax on the earnings each year. A custodial brokerage account (UGMA or UTMA) also grows tax-free but has different rules about when your child can access the money and how much you can contribute.
If you are saving specifically for college, a 529 college savings plan may offer more tax benefits in some states and more flexibility in how the money can be used. If you are saving for a specific purpose and want the simplest option, a high-yield savings account requires no paperwork and lets you access the money anytime, though you will pay tax on the interest.
The choice depends on your timeline, your contribution amount, and how certain you are that you will not need the money before your child reaches adulthood. Trump Accounts are best for families who can commit to long-term savings and want to minimize taxes on growth.
Frequently Asked Questions
Can I change my mind and close the account after I open it?
Yes. You can close a Trump Account at any time. If you withdraw the money before your child reaches the age limit, you owe income tax plus a 10 percent penalty on the earnings portion. The principal you contributed can be withdrawn without penalty. Closing the account itself is free and takes a few minutes.
What if my child does not want the money when they turn 18?
Once your child reaches the age of majority, the account is legally theirs. They can leave it alone, withdraw it, or continue to add their own money to it. You cannot force them to use it or prevent them from accessing it. If you are concerned about this, discuss your savings goals with your child as they grow older.
Do I have to report the account on my taxes?
You do not report the account itself on your tax return unless you withdraw money. If you withdraw earnings before your child reaches the age limit, you will owe tax on those earnings and must report the withdrawal. Your financial institution will send you a tax form if you have taxable withdrawals.
Can I open a Trump Account if my child does not have a Social Security number yet?
Most institutions require your child's Social Security number to open the account. If your child does not have one, you can apply for one at the Social Security Administration before opening the account. The process takes a few weeks. Some institutions may let you open the account and add the number later, but this varies.
What happens if I contribute more than the annual limit?
If you exceed the annual contribution limit, the excess amount may trigger gift tax reporting or tax liability. You should track your contributions carefully, especially if you have multiple accounts or if you and your spouse are both contributing. Your financial institution can help you stay within the limits, and you can contact a tax professional if you are unsure.