A Summit Financial Group briefing | July 2026
As of July 2026, a new savings account for children is open for enrollment. It’s officially a tax-advantaged custodial investment account created under the 2025 tax law, though most people are calling it a Trump Account. If you have children or grandchildren under 18, you’ve probably already heard the headlines. The IRS reported that roughly 6.5 million children were signed up by the end of July 2026, with about 1.5 million claiming the one-time $1,000 federal contribution.
The accounts are new, the rules are specific, and a few of the details being passed around are already getting garbled. So here is a clear read on what a Trump Account actually is, who benefits most, and how it fits alongside the plan we’ve already built with you.
What is a Trump Account?
A Trump Account is a long-term investment account opened on behalf of a child under 18 who has a valid Social Security number. There’s no requirement for the child to have earned income, which sets it apart from a custodial Roth IRA. The money is invested for growth and stays put until the child reaches 18, with a handful of narrow exceptions.
Think of it as a retirement-style account that starts in childhood. It is not an education account like a 529, and it is not a general-use custodial account like an UTMA. It sits in its own category.
The three things clients ask about first
The $1,000 federal contribution. Children born between January 1, 2025 and December 31, 2028 qualify for a one-time $1,000 federal contribution when an account is opened for them. That federal contribution does not count against the annual contribution limit. Children outside that birth window can still have an account. They just don’t receive the federal contribution.
The contribution limits. Individuals and families can contribute up to $5,000 per child per year in 2026, with cost-of-living adjustments expected in future years. Anyone may contribute to a child’s Trump Account as long as total annual contributions do not exceed that limit. The $1,000 federal contribution sits on top of that. Individuals and families do not receive a tax deduction for their contributions.
The employer angle. This is the piece most people miss. If the employer offers it, employers may contribute up to $2,500 per year per employee’s child through a qualifying Trump Account Contribution Program, and those contributions are excluded from the employee’s taxable wages. Employer contributions generally count toward the annual contribution limit. If you own a company, this is worth considering for the future.
Children age 10 or older may qualify for a $250 contribution if they live in a lower-median-income ZIP code and household income is $150,000 or less. Philanthropic foundation contributions may also be available in the future.
How the money is invested
The investment menu is deliberately narrow and low-cost. Trump Accounts can hold mutual funds or ETFs that track the S&P 500 or a similar broad U.S. equity index, keep at least 90% of assets in U.S. companies, and charge an expense ratio of 0.10% or less. No bonds, no international funds, no sector bets, no cash. The idea is simple, diversified, inexpensive exposure to U.S. stocks over a very long horizon.
What happens at 18?
Here’s where we want to correct something. You may have seen material saying the account “automatically converts” to a Traditional IRA at 18. Read the fine print carefully, because guidance from fund providers indicates the account does not convert on its own. Action may be required to roll it into a Traditional IRA or convert it to a Roth. This is exactly the kind of detail that costs families money when it slips through the cracks, and it’s a good reason to have an advisor watching the calendar.
Once the child turns 18, the account follows IRA-style rules. Withdrawals for retirement are taxed as ordinary income, and there’s generally a 10% penalty for taking money out before age 59 and a half. Some early withdrawals avoid the penalty, including qualified higher education expenses, a first home purchase (up to $10,000), and birth or adoption costs (up to $5,000).
How a Trump Account compares to accounts you may already have
Many of our clients are already funding 529 plans or custodial accounts. A Trump Account doesn’t replace those. It answers a different question.
| Feature | Trump Account | 529 Plan | Custodial Roth / UTMA |
| Purpose | Long-term savings | Education | Retirement / general use |
| Earned income required | No | No | Roth: Yes / UTMA: No |
| Tax-free withdrawals | Based on IRA rules | Yes, for education | Roth: qualified / UTMA: no |
| Investment flexibility | Qualifying U.S. equity funds | Plan options | Broad |
A 529 is still the stronger tool if your primary goal is college. A custodial Roth IRA is often better if the child has a summer job and earned income. The Trump Account earns its place when you want a low-cost, hands-off, long-horizon account with a federal contribution on the front end for eligible kids.
A few things to weigh before you open one
Contributions from individuals are treated as gifts for federal gift-tax purposes, so large contributions from multiple relatives are worth coordinating. The kiddie tax can apply to certain unearned income. And once money goes in, it’s locked until 18. These aren’t reasons to avoid a Trump Account. They’re reasons to open one as part of a plan rather than in isolation.
How to open one
Accounts are opened using IRS Form 4547, either with a tax filing or online at TrumpAccounts.gov. The federal contribution election for eligible children happens on the same form. Before you file anything, let’s make sure the account is set up to complement what you already have in place, not compete with it.
Let’s put it in context for your family
We’ve spent years building your plan around your goals, not around whatever product is in the headlines this month. Trump Accounts are a genuinely useful tool for the right family, and a distraction for others. The only way to know which one you are is to look at it against your full picture.
If you have children or grandchildren who might benefit, book a consultation with your Summit advisor. We’ll walk through eligibility, employer contributions if the employer offers them, and how a Trump Account fits alongside your existing accounts.
Call (800) 475-0991, email wealthteam@yoursummit.com, or visit yoursummit.com to schedule time to discuss.
Not FDIC insured. May lose value. No bank guarantee. Trump Account rules are subject to change; please consult a tax professional before opening an account. This material is for informational purposes only and is not intended as tax or legal advice. Securities offered through Cetera Wealth Services, LLC, member FINRA/SIPC. Advisory services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. 5420 LBJ FREEWAY STE 1940 DALLAS, TX 75240
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