Trump Accounts Are Open: The $1,000 You Shouldn’t Leave on the Table

What just changed at the IRS

On May 28, 2026 the IRS announced that taxpayers can view and submit Trump Account elections directly through their IRS Individual Online Account. You file Form 4547, Trump Account Election(s), check its status, and submit it electronically — no paper, no waiting on a mailed form. The first $1,000 pilot deposits from the Treasury start landing in eligible accounts on July 4, 2026. The IRS says about 4 million children have already been signed up and roughly 1 million have claimed the $1,000.

That’s the headline most people miss: the $1,000 is a federal contribution, not a tax break you calculate later. It’s a deposit into your child’s account. You don’t get it unless someone makes the election, and a million families have already moved.

What a Trump Account actually is

A Trump Account is a new tax-advantaged account for children, created by the One Big Beautiful Bill under the “Working Families Tax Cuts.” Think of it as an IRA built for a kid. You can open one for a child who hasn’t turned 18 by the end of the year you make the election and who has a valid Social Security number. The $1,000 federal pilot contribution goes to children born between January 1, 2025 and December 31, 2028.

Beyond the federal seed, anyone can contribute — parents, grandparents, even an employer — up to a combined $5,000 per child per year for 2026 and 2027, indexed in $100 steps after that. The $1,000 pilot deposit, contributions from governments or 501(c)(3) organizations, and rollovers don’t count against the $5,000. Put in more than the cap and the excess draws a 6% penalty each year until you pull it back out.

The tax treatment is the part worth slowing down on

Here’s where families need to be clear-eyed. Contributions go in after tax — no deduction for putting money in. The money then grows tax-deferred, and the earnings are taxed when they come out, the same way a traditional IRA works. Withdrawals are allowed for any reason starting January 1 of the year the child turns 18.

So the Trump Account isn’t a Roth. A custodial Roth IRA grows tax-free and comes out tax-free, which is better on the math — but a Roth needs the child to have earned income, and most toddlers don’t have a W-2. That’s the real gap a Trump Account fills: a place to invest for a young child who can’t yet fund a Roth. We talk through this tradeoff with families during tax strategy conversations, because the right account depends on the kid’s age, income, and what the money is for.

What it means by situation

Families with a newborn or young child

File Form 4547 through the IRS online account and lock in the $1,000. It’s the clearest win here. Even if you never add another dollar, that seed compounds for 18 years.

High earners deciding whether to fund it

The $5,000 cap is modest, and the after-tax-in, taxable-out structure means it isn’t automatically the best home for college or wealth-transfer money. For education, a 529 still has a cleaner tax profile. For general long-term saving on a child with no earned income, the Trump Account earns its place. We weigh it against 529s and custodial accounts as part of planning for high net worth families.

Business owners thinking about employees

Employers can contribute to employees’ children’s Trump Accounts, and that’s an angle worth a look if you’re rethinking benefits. We can model the cost and the mechanics alongside your business planning before you commit to it as a perk.

What’s still being written

The IRS issued initial guidance (Notice 2025-68) and has said more regulations are coming, so some mechanics — investment options, exactly how distributions get reported, how the account interacts with other savings vehicles — will firm up over the next several months. The election system and the $1,000 pilot are live now; the finer rules are still arriving. None of that is a reason to skip the free contribution. It’s a reason to revisit the funding decision once the full picture is set.

How The Reed Corporation helps

If you have kids and you’re not sure whether to just grab the $1,000 or build the Trump Account into a longer plan, we’ll lay out the options next to a 529 and a custodial Roth and tell you what we’d actually do. For business owners, we’ll price out what employee contributions would cost and whether they make sense. The election itself is quick — the planning around it is where we earn our keep.