By Michael Salad, Esq. and Nicholas R. Campbell
Beginning July 4, 2026, families will have a new savings vehicle to consider when planning for children, grandchildren and other young family members: Trump Accounts. Although the name may draw political attention, the planning issue is more practical than partisan.
Trump Accounts are federally created accounts for minors that share many characteristics with traditional IRAs, with a parent or guardian managing the account until the beneficiary reaches adulthood. Children born between January 1, 2025 and December 31, 2028 who are U.S. citizens and have valid Social Security numbers may receive a one-time $1,000 federal pilot contribution, and parents, grandparents, employers, charitable organizations, and certain governmental entities may also be able to contribute, subject to applicable limits.
From an estate planning perspective, the accounts raise a familiar question in a new context: how can families make contributions for younger generations while balancing tax treatment, investment growth, access restrictions, and coordination with existing planning tools.
Contribution Limits and Eligibility
Families will be limited in how much they can contribute each year.
- Families can contribute up to $5,000 per child per year
- Certain contributions do not count toward that limit, including:
- The $1,000 federal contribution for eligible children
- Certain government contributions
The annual limit will be adjusted for inflation after 2027.
Growth Period and Access to Funds
Contributions may continue during the growth period, while the child is a minor. This period ends at the beginning of the calendar year in which the beneficiary reaches age 18.
No distributions are permitted before that time except in limited circumstances, such as correction of excess contributions, certain rollovers, or the beneficiary’s death.
After the growth period, the account becomes subject to rules similar to those governing traditional IRAs, meaning withdrawals may be permitted but could be subject to ordinary income tax and, if made before age 59½ without an applicable exception, an additional 10% early-withdrawal penalty.
Estate and Gift Tax Considerations
The estate and gift tax implications are still developing.
Individual contributions to Trump Accounts are expected to be treated as gifts, but for federal gift tax purposes, the annual exclusion generally applies only to gifts the recipient can use right away.
Because children cannot withdraw funds from a Trump Account until adulthood, it is not yet clear whether contributions will qualify for the annual gift tax exclusion.
If they do not, some contributors may need to file a gift tax return, even if no gift tax is ultimately owed.
Planning Considerations
For that reason, Trump Accounts should not be viewed as a replacement for traditional planning strategies such as:
- 529 college savings plans
- custodial accounts for minors
- trusts designed for children or grandchildren
- other wealth-transfer vehicles
Instead, they should be evaluated as an evolving planning tool that may become useful for modest, structured contributions to children or grandchildren, particularly as Treasury and IRS guidance continues to clarify how the accounts will operate in practice.
Michael Salad is an attorney in Cooper Levenson’s Business & Tax practice group. He concentrates his practice on estate and asset protection planning, probate and trust administration, special needs planning, business transactions, mergers and acquisitions and tax matters. Michael holds an LL.M. in Estate Planning and Elder Law. Michael is licensed to practice law in Florida, New Jersey, New York, Pennsylvania, Maryland, Connecticut, Georgia, Massachusetts, Alabama, Arizona, Virginia and the District of Columbia. Michael may be reached at (954) 889-1850 or via e-mail at msalad@cooperlevenson.com.
Nicholas R. Campbell is a Summer Associate at Cooper Levenson. Nick is a J.D. candidate at the William S. Boyd School of Law in Las Vegas, NV.
The content of this post should not be construed as legal advice. You should consult a lawyer concerning your particular situation and any specific legal question you may have.