A brand-new type of tax-advantaged savings account launched on July 4, 2026 — and if you have a child or grandchild under 18, it’s worth understanding what it is, how it works, and a recent IRS ruling that makes contributing to one significantly less complicated.
What Is a Trump Account?
Trump Accounts are a new type of tax-advantaged savings account created under IRC Section 530A by the One Big Beautiful Bill Act, signed into law on July 4, 2025. The accounts are designed to encourage long-term saving and investment for children from infancy through adulthood — and they function similarly to a nondeductible traditional IRA.
Any child under 18 with a valid Social Security number is eligible. There are no income restrictions for establishing an account. The child gains full control of the account at age 18.
The $1,000 Government Pilot Program
One of the most talked-about features of Trump Accounts is a one-time $1,000 government seed contribution available to children born between January 1, 2025, and December 31, 2028. Parents or guardians of children born during that window can elect to receive the $1,000 pilot program contribution by checking a box on Form 4547, Trump Account Election(s), which is filed through the IRS Individual Online Account portal. As of early June 2026, nearly 6 million elections to open Trump Accounts had already been filed.
Who Can Contribute — and How Much
Parents, guardians, grandparents, and other family members and friends can all contribute to a child’s Trump Account, up to a combined annual limit of $5,000 per year. That $5,000 cap applies to the account as a whole, not to each individual donor — so multiple family members contributing to the same child’s account need to coordinate to stay within the limit.
Employers may also contribute up to $2,500 annually. Employer contributions count against the $5,000 yearly limit and are taxable upon withdrawal. Contributions from parents and other individuals are not tax-deductible, but are also not taxable upon withdrawal.
Contributions to Trump Accounts became available beginning July 4, 2026.
The Gift Tax Question — and the IRS's New Safe Harbor
Here’s where things had gotten complicated — and where a very welcome new ruling from the IRS comes in.
Because Trump Accounts lock up contributions until the child reaches adulthood, there was a legitimate concern that contributions by family members might be classified as gifts of “future interest” rather than “present interest.” That distinction matters because gift tax rules only allow the annual gift tax exclusion to apply to present-interest gifts. If Trump Account contributions were treated as future-interest gifts, donors — including grandparents making a modest $5,000 contribution — would have been required to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, even if no gift tax was actually owed. That paperwork burden was holding some families back from contributing.
On June 29, 2026, the Department of the Treasury and the IRS issued Revenue Procedure 2026-25 to resolve this concern. The ruling creates a safe harbor under which qualifying contributions to Trump Accounts are treated as completed, present-interest gifts — meaning they qualify for the annual gift tax exclusion and do not, on their own, require the donor to file a gift tax return.
For 2026, the annual gift tax exclusion is $19,000 per recipient. Since the maximum annual Trump Account contribution is $5,000 — well below that threshold — most family contributors will have no gift tax filing obligation at all.
The Conditions You Need to Meet
The safe harbor is not automatic. To qualify, all of the following conditions must be true for the year in which you make the contribution:
- The contribution is made in cash before the child turns 18
- The only taxable gifts you made during that year are cash contributions to one or more Trump Accounts
- Your total gifts to that child for the year — including the Trump Account contribution and any other gifts — do not exceed the $19,000 annual exclusion
- The contribution does not trigger gift or generation-skipping transfer tax once your remaining lifetime exclusion is applied
- You are not otherwise required to file a gift tax return for any reason during that year
That last condition is important — and it’s the one most likely to catch people off guard. If you made any other gifts during the year that require you to file Form 709 for any reason, the safe harbor does not apply to your Trump Account contributions, and those contributions will need to be reported as well.
What Families With Multiple Children or Significant Gifting Should Know
For families making larger gifts alongside Trump Account contributions, the interaction between this safe harbor and your overall annual gifting strategy requires careful attention. The $19,000 annual exclusion applies per recipient — meaning gifts to multiple children can be structured to stay within the exclusion for each. But if you’re already giving substantial amounts to a child through other means, adding a Trump Account contribution could push total gifts above the exclusion threshold and disqualify the safe harbor entirely for that year.
High-net-worth families who make substantial cash gifts alongside Trump Account contributions need to track total per-beneficiary giving carefully. And for families with complex giving situations — trusts, multiple beneficiaries, prior taxable gifts — this is exactly the kind of planning that requires personalized professional guidance rather than a general rule of thumb.
How to Open a Trump Account
Parents and guardians can open an initial Trump Account through the IRS Individual Online Account by completing Form 4547. The election must be made before the calendar year in which the child turns 18. An online application at trumpaccounts.gov is also available for additional information and enrollment.
This Is New Territory — Get the Details Right
Trump Accounts are a genuinely new and still-evolving area of tax law. The IRS has been issuing guidance in stages, and the rules around contributions, withdrawals, employer participation, and gift tax interactions are not fully settled in every scenario. Making assumptions based on general knowledge — or a quick online article — about how these accounts work in your specific situation is a risk worth avoiding.
At Morris and Associates, Ken Morris meets personally with every client to review how new tax developments apply to their unique circumstances. Whether you’re a parent looking to start a Trump Account for your newborn, a grandparent who wants to contribute without triggering unexpected paperwork, or a family with a more complex gifting strategy that needs to be coordinated carefully, we can help you navigate the details correctly.
Contact Morris and Associates today for a free consultation.
Morris and Associates serves individuals and businesses throughout metro Atlanta and across Georgia. Call (678) 641-3193 or visit morristaxadvisors.com to get started.
