crs_reports: R48910

Congressional Research Service reports with summaries, authors, and topic classifications.

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R48910 Trump Accounts: Overview and Policy Considerations 2026-04-16T04:00:00Z 2026-04-18T05:08:52Z Active Reports Brendan McDermott Poverty Reduction Tax Policy, Individual Tax, Savings & Investment Tax Policy, Tax Reform Trump Accounts are a new form of traditional individual retirement account (IRA) that the 2025 reconciliation law (P.L. 119-21) created for the benefit of children. Savers will be able to contribute to Trump Accounts starting on July 4, 2026. Traditional IRAs are typically tax-advantaged accounts for individuals who have income from work to save for retirement. Trump Accounts differ from other traditional IRAs in that they have special rules, described below, that apply prior to the start of the year in which a beneficiary reaches the age of 18 (i.e., during the account’s growth period). Contributions to Trump Accounts are allowed from several sources. Anyone can contribute to a child’s Trump Account, although individual contributions during the growth period are not tax-deductible for either the contributor or the beneficiary. Employers can contribute up to $2,500 (adjusted for inflation after 2027) tax-free to the Trump Accounts of employees or their dependents (amount is per employee, per year). Tax-free contributions are also allowed from state or local governments and from 501(c)(3) tax-exempt organizations, provided the state, locality, or organization contributes an equal amount to the account of each child in a qualified group of either (1) all children, (2) all children in a certain geographic area, or (3) all children born in one or more calendar years. Contributions during the growth period are generally subject to an annual combined limit of $5,000 in 2026 (adjusted for inflation after 2027), which is lower than the traditional IRA limit ($7,500 in 2026). Contributions during the growth period are not limited to the beneficiary’s taxable compensation (as is the case for other traditional IRAs), making saving viable for children with little or no income of their own. During the growth period, beneficiaries cannot deduct contributions from their taxable income, whether those contributions are made by themselves or by others. Any income earned within the account (e.g., investment earnings) will not be taxed until withdrawal, similar to other traditional IRAs. During the growth period, savings in Trump Accounts must be invested in a diversified index fund of U.S. stocks and must minimize fees and expenses. After the growth period ends, contributions and investments follow the same rules as for other traditional IRAs. Distributions are not allowed during the growth period, except to roll the funds into an ABLE account for disabled individuals. After the growth period ends, distributions follow the same rules as for other traditional IRAs. The amount of the distribution allocable to post-tax contributions from individuals (the beneficiary, parents, etc.) is exempt from tax. Pretax contributions—including from employers, charities, and the government—are taxable at the time of withdrawal as ordinary income. Investment returns on any contribution are subject to tax. Distributions before the beneficiary reaches age 59½ may be subject to an additional 10% tax, unless an exception applies, following traditional IRA rules. Exceptions include withdrawals for higher education expenses, for the purchase or construction of a first home (up to $10,000), for birth or adoption expenses (up to $5,000 per child), for emergency personal expenses (up to $1,000 per year), for certain medical expenses, and for certain other uses. The 2025 reconciliation law also created a new one-time refundable tax credit of $1,000 for each qualifying child, which the U.S. Treasury is to contribute directly to the child’s Trump Account once an authorized individual has opened an account on behalf of the child. To be eligible for the one-time tax credit, the child must be a U.S. citizen born between January 1, 2025, and December 31, 2028. https://www.congress.gov/crs_external_products/R/PDF/R48910/R48910.2.pdf https://www.congress.gov/crs_external_products/R/HTML/R48910.html

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