A Trump Account is a tax-advantaged savings account for children

A Trump Account is a custodial savings account designed to help families set aside money for a child's future. The account is opened in the child's name, with a parent or guardian acting as custodian until the child reaches the age of majority (usually 18 or 21, depending on state law). Money deposited into the account grows tax-free, and withdrawals for the child's benefit are not taxed as income to the child.

The account works like a regular savings account at a bank or credit union, but with tax advantages built in. You deposit money, it earns interest, and you can withdraw it when the child needs it—for education, medical care, or other expenses. The custodian controls the account and makes all decisions about deposits and withdrawals until the child comes of age.

Trump Accounts are not government-run programs. They are offered by individual banks, credit unions, and financial institutions. Each institution sets its own rules about minimum deposits, interest rates, and fees. Some accounts have no minimum; others require $25 or more to open.

Key Takeaways

  • A Trump Account is a custodial savings account opened in a child's name, with a parent or guardian managing it until the child reaches adulthood.
  • Money in the account grows tax-free, and the child does not pay income tax on the interest earned.
  • The account is offered by banks and credit unions, not by a government agency, so terms and interest rates vary by institution.
  • You control when money goes in and comes out, as long as withdrawals are for the child's benefit.
  • When the child reaches the age of majority, they take control of the account and can use the money as they choose.

How money grows in a Trump Account

Interest earned in a Trump Account is not taxed while it sits in the account. This is the main tax advantage. If you put $1,000 in a regular savings account earning 4% interest, you would owe income tax on the $40 earned that year. In a Trump Account, that $40 stays in the account and is not taxed—it compounds, meaning next year you earn interest on $1,040 instead of $1,000.

The interest rate offered depends on the bank or credit union. Some offer rates tied to the current market; others offer a fixed rate. You should compare rates across institutions before opening an account, because the difference between 0.5% and 4% interest adds up significantly over years.

The account is FDIC-insured (if held at a bank) or NCUA-insured (if held at a credit union), meaning your deposits are protected up to $250,000 if the institution fails. This protection applies to each account separately, so a Trump Account and a regular savings account at the same bank are each insured to $250,000.

Who can open a Trump Account and what you need

Any adult—parent, grandparent, aunt, uncle, or other family member—can open a Trump Account for a child. You do not need to be the child's legal guardian, though most institutions require you to be an adult and have a relationship to the child. Some banks ask for proof of relationship; others do not.

To open an account, you will typically need the child's Social Security number, the child's date of birth, and your own identification. Some institutions allow you to open the account online; others require you to visit a branch in person. A few allow you to open an account by phone or mail.

There is no age limit on the child. You can open a Trump Account for a newborn, a teenager, or anyone under the age of majority in your state. Some institutions allow you to open multiple accounts for the same child at different banks.

Deposits, withdrawals, and control of the account

As the custodian, you decide how much to deposit and when. There is no required minimum deposit each month or year—you can add money whenever you choose, or not at all. Some accounts have a minimum to open ($0 to $25 is common), but no minimum for ongoing deposits.

You can withdraw money from the account at any time. However, the money should be used for the child's benefit. If you withdraw money for your own use, the IRS may treat it as a taxable gift or income, depending on the circumstances. The bank does not police this—it is your responsibility to use the money appropriately.

Some institutions allow the child to make withdrawals once they reach a certain age (often 13 or 16), even though the custodian still controls the account. Others do not allow the child any access until they reach the age of majority. Check with your bank about their specific rules.

What happens when the child turns 18 or 21

When the child reaches the age of majority in your state (usually 18, sometimes 21), the custodianship ends. The account becomes the child's property, and they have full control. They can withdraw all the money, leave it in the account, move it to another bank, or do anything else they choose.

At this point, the tax advantages may change. Interest earned after the child takes control is taxed as the child's income. If the child is in a low tax bracket (for example, a college student with little other income), the tax rate may still be low. If the child has significant other income, the tax rate will be higher.

Some custodians worry about what will happen when the child takes control. There is no legal way to prevent the child from accessing the money or spending it on something other than education or savings. If you want to restrict how the money is used, a trust or a 529 education savings plan may be better options.

Trump Accounts compared to other savings options

A Trump Account is simpler than a trust but offers less control. A trust allows you to set conditions on how money is used and can delay when the child receives the money. A Trump Account gives the child full access at the age of majority, with no conditions.

A 529 education savings plan is a tax-advantaged account specifically for education expenses. Like a Trump Account, money grows tax-free. Unlike a Trump Account, withdrawals for non-education expenses are taxed and may be penalized. A 529 is better if you are certain the money will be used for college or other education; a Trump Account is better if you want flexibility.

A regular savings account has no tax advantages but offers complete flexibility. You can withdraw money for any reason, and there are no restrictions on what the child can do with it when they grow up. The trade-off is that you pay income tax on interest earned each year.

Fees and things that can reduce your balance

Most Trump Accounts have no monthly maintenance fee, but some do. Common fees include monthly service charges ($3 to $10), overdraft fees (if the account goes negative), and ATM fees (if you withdraw from an out-of-network machine). Some banks waive fees if you maintain a minimum balance or set up direct deposit.

Interest rates are low at many institutions. If a bank offers 0.01% interest on savings, your money barely grows. Shopping around for a bank offering 4% or higher makes a real difference over time. Online banks and credit unions often offer higher rates than large national banks.

If you close the account before the child reaches the age of majority, there are usually no penalties. The money is yours to withdraw. However, if you have already claimed the account as a gift to the child for tax purposes, closing it and taking the money back may create tax complications. Consult a tax professional if this situation applies to you.

Frequently Asked Questions

Does opening a Trump Account affect the child's taxes or financial aid?

A Trump Account is considered an asset in the child's name. If the child later applies for federal student aid (FAFSA), the account balance may reduce the amount of aid they receive. The impact depends on how much money is in the account and the child's other assets. Consult a financial aid advisor if this is a concern.

Can I change my mind and use the money for myself instead of the child?

Legally, the money belongs to the child once it is in the account. If you withdraw it for your own use, you may owe income tax or gift tax, depending on the amount and your circumstances. The bank does not stop you, but the IRS may question it later. It is best to treat the account as belonging to the child from the start.

What if the child dies before reaching the age of majority?

The money in the account becomes part of the child's estate. It passes to whoever is named in the child's will, or to the child's parents if there is no will. The account does not automatically go to you as the custodian. Consult an estate attorney if you want to plan for this possibility.

Can I open a Trump Account if I do not have a Social Security number?

Most banks require the child's Social Security number to open the account. If the child does not have one, you can apply for one through the Social Security Administration. Some banks may accept an Individual Taxpayer Identification Number (ITIN) instead, but this is less common. Call your bank to ask.

Is there a limit to how much I can deposit in a Trump Account?

There is no annual deposit limit for a Trump Account itself. However, if you deposit more than a certain amount in a single year (currently $18,000 per person, adjusted annually), you may trigger gift tax reporting requirements. Consult a tax professional if you plan to deposit large amounts.