The IRS Just Changed the Rules for Trump Accounts. Here's What 60 Million Parents Need to Know

Key Points:

• Over 60 million American children under 18 with valid Social Security numbers now have automatically enrolled tax-deferred retirement accounts called Trump Accounts, following new Treasury Department regulations effective October 1, 2026.
• These accounts remain inactive until a parent or guardian claims them via the Trump Accounts app, which is necessary to access the government's $1,000 seed deposit and allow contributions from family or employers.
• The Trump Account functions as a traditional IRA with special rules, allowing combined family and friends' contributions up to $5,000 annually, with employer contributions up to $2,500 per year also possible without immediate income tax.
• Withdrawals follow traditional IRA tax rules, where contributions are returned tax-free but earnings are taxed as ordinary income, and early withdrawals before age 59½ may incur penalties; the $1,000 seed deposit and charitable contributions have distinct tax treatments.
• Parents must claim the account first to activate it and receive the seed money; the program is still subject to regulatory changes, and families are advised to consult financial professionals when comparing Trump Accounts to other education or retirement savings options.