The Working Families Tax Cut Act, also known as “The One Big Beautiful Bill” created a new type of tax‑favored individual retirement account known as a Trump account. A Trump account is a special form of traditional IRA established for the exclusive benefit of an eligible child or young individual and is subject to unique contribution, investment, and distribution rules during a designated “growth period” before age 17.

During the growth period, Trump accounts:

• Must be established and governed under specific IRS rules that differ from standard IRAs.
• May receive certain government- or employer-funded contributions under newly added Code provisions.
• Are restricted to approved low‑fee index‑type investments intended to promote long‑term, diversified growth.

Children who are born during the special pilot-program window may be eligible for a one-time $1,000 contribution from the U.S. Treasury to their Trump account. In general, an eligible child must be a U.S. citizen, born after December 31, 2024 and before January 1, 2029, have a Social Security number, and have no prior pilot program election made on their behalf.  A parent or other pilot program-electing individual must file an election (such as on Form 4547 or via the IRS online tool, once available) for that child; once processed, the $1,000 is deposited into the child’s Trump account and does not count toward the annual $5,000 contribution limit.  The Treasury started depositing these pilot program contributions after July 4, 2026.  

Employer contributions to Trump accounts work differently from contributions made by parents or other family members. Employer contributions made under a qualifying Trump account contribution program can be excluded from the employee’s income, up to $2,500 per year (indexed after 2027), but they still count toward the child’s overall $5,000 annual Trump account contribution cap. By contrast, contributions made directly by parents, relatives, or other individuals are not deductible, are always made with after‑tax dollars, and count fully toward the same $5,000 annual limit. Coordinating employer contributions with family contributions can help avoid exceeding the annual cap while maximizing tax‑favored funding for the child’s account.

More‑than‑2% S corporation shareholders, and other self employed taxpayers who make contributions to a child’s Trump account are treated like other individuals: their contributions are not deductible for federal income tax purposes. Guidance on Trump accounts makes clear that contributions from friends or family members (including owners of pass‑through entities) are non‑deductible and simply create basis in the account, and other non‑section 128 employer contributions are also treated as non‑deductible contributions under the IRA rules.  In other words, unless the contribution is made by an employer under a qualifying Trump account contribution program and excluded from wages under the section 128 rules, an S corporation shareholder cannot take an income tax deduction for amounts they personally contribute to a child’s Trump account.

After the growth period ends (generally the year the beneficiary turns 17), most of the special Trump account rules fall away and the account is generally treated like a traditional IRA, with normal IRA contribution and distribution rules applying.

For families, Trump accounts may offer:

• A structured way to build long‑term retirement savings for children.
• Potential tax‑favored contributions, including a one‑time federal “pilot program” deposit for qualifying children.
• Estate and gift planning benefits, since contributions can qualify for favorable gift‑tax treatment under safe‑harbor rules.

Because Trump accounts are new and subject to detailed IRS guidance and future regulations, we recommend:

• Reviewing eligibility for your children or grandchildren.
• Coordinating Trump account contributions with your overall retirement, education, and estate planning.
• Monitoring forthcoming IRS regulations that will clarify how to open accounts, what investments are permitted, and how reporting will work.

Our firm is closely following these developments and can help you evaluate whether Trump accounts fit into your long‑term financial plan. Please contact us if you would like to discuss this opportunity.