News & Insights

If a family has children under 18, those children likely have a Trump Account, even if their parents never opened one.  

After the Treasury’s recent automatic enrollment, nearly 70 million children nationwide now have these new tax-advantaged investment accounts.  

Naturally, that’s leading to questions from parents and business owners. What is this account? Do parents need to do anything? Should they contribute to it? And, for employers, could this make sense as an employee benefit?  

Like most tax-planning questions, the answer doesn’t start with the account itself. It starts with what the family or business is trying to accomplish. Here’s what to consider when deciding whether a Trump Account makes sense for a family or business.  

What Is a Trump Account?  

Trump Accounts are tax-advantaged investment accounts for eligible children under age 18 with valid Social Security numbers.  

Although the Treasury has automatically established accounts for millions of children, parents or guardians still need to claim the account before they can manage it and begin making contributions.  

Children who are U.S. citizens born between January 1, 2025, and December 31, 2028, may also qualify for a one-time $1,000 federal contribution. Parents need to complete the required election to receive those funds.  

For parents, that’s the first place to start. Find out whether a child has an account, whether it’s been claimed, and whether the child qualifies for the federal contribution.  

Then comes the more interesting question: Should your family contribute?  

A Trump Account Is Another Tool, Not Automatically the Best Tool  

Before making contributions, families should consider how a Trump Account fits into their broader financial plan.  

During childhood, these accounts generally allow only eligible, low-cost funds that track broad U.S. stock market indexes, with separate rules for certain donated stocks. Once the child reaches age 18, the account generally becomes subject to traditional IRA rules, including the tax consequences and potential penalties associated with withdrawals.  

That can make a Trump Account an attractive way to start investing for a child early. But it doesn’t mean families should automatically redirect money from a 529 plan or other savings.  

If the primary goal is paying for college, for example, a 529 plan may still make more sense. Michigan families may also receive a state income tax deduction for eligible contributions to Michigan’s 529 programs.  

If the focus is building longer-term wealth for a child, the options may look different.  

Good tax planning isn’t about collecting every deduction, credit, or tax-advantaged account available. It’s about choosing the right strategies to accomplish specific financial goals.  

Before deciding where the next dollar should go, families should consider when they’ll need the money, what they want it to accomplish, and what they’re already funding elsewhere.  

Should Employers Consider Trump Account Contributions?  

For business owners, there’s another piece worth paying attention to.  

Employers can make tax-favored contributions to qualifying Trump Accounts for employees’ children, subject to IRS requirements and contribution limits. Current guidance allows employers to contribute up to $2,500 per employee per year to qualifying accounts. These contributions generally count toward the child’s $5,000 annual contribution limit.  

As companies plan their 2027 benefits, this option may come up more often in conversations. To qualify for exclusion from an employee’s taxable income, contributions must be made through a qualifying employer-sponsored Trump Account contribution program.  

Could this help with recruiting and retention? For employees with young families, even a modest contribution toward a child’s future could be meaningful. But a benefit shouldn’t be added simply because it’s new.  

First, work through practical questions including payroll administration, written plan requirements, nondiscrimination rules, and how the benefit would fit alongside existing retirement and employee benefit programs.  

The better question isn’t, “Can the company offer this?” It’s, “Will employees value it, and does it make sense for the business?”  

What About Contributing Stock?  

Another development is worth watching closely.  

Recent Treasury and IRS guidance addresses contributions of certain qualifying stock to Trump Accounts, and a related proposed rule is open for public comment through November 30, 2026.  

This may interest individuals, businesses, and charitable organizations that hold appreciated stock and want to make larger-scale philanthropic gifts.  

The rules are fairly specific, though. This isn’t an opportunity to transfer shares directly into a child’s Trump Account. Qualifying contributions generally must be made through eligible donors for designated groups of children, and contributed shares are subject to certain holding-period requirements.  

Individuals and organizations with appreciated assets and existing charitable giving strategies may want to discuss this with a tax advisor before taking action, especially as additional guidance develops.  

Don’t Make This Decision in Isolation  

For some families, their goal may be saving for a child’s education. For others, it may be building generational wealth. Business owners may be looking for another meaningful way to invest in their employees and their families.  

Tax strategy, investments, retirement savings, education planning, charitable giving, and business decisions all affect one another. That’s why Maner takes a holistic approach to these conversations.  

Families considering a Trump Account or business owners considering adding employer contributions to their 2027 benefits plans should consult Maner’s tax team. The team can help clarify the rules, evaluate the broader financial picture, and determine which strategies make the most sense.  

Contact us to discuss how Trump Accounts could fit into your broader tax, wealth, or business planning strategy with a member of Maner’s tax team.