What happens when you open a Trump Account
A Trump Account is a savings account opened in a child's name, held by a parent or guardian, that grows tax-free until the child turns 18. You deposit money into it, the money earns interest, and neither you nor the child pays federal income tax on that growth. When the child reaches 18, they can withdraw the money for any reason — there are no restrictions on how it gets spent.
The account itself is straightforward: it works like a regular savings account at a bank or credit union. You make deposits when you can, the institution pays interest on the balance, and the money sits there accumulating until the child is old enough to take control of it. The tax advantage is what makes it different from a regular account in the child's name.
Key Takeaways
- You open the account at a bank or credit union in the child's name, with yourself as custodian, and you control it until the child turns 18.
- Money deposited grows tax-free, meaning you pay no federal income tax on the interest earned, which lets the balance grow faster than in a taxed account.
- The child can withdraw the full balance at 18 for any purpose — education, housing, starting a business, or anything else.
- Annual contribution limits exist (the amount changes yearly), so you cannot deposit unlimited amounts, but there is no limit on how much the account can grow through interest.
Who opens the account and who controls it
You, as the parent or guardian, open the account. You will need the child's Social Security number and your own identification. At the bank or credit union, you will be listed as the custodian, which means you have full control of the account while the child is under 18. You decide when to deposit money, you receive the statements, and you manage the balance.
The account is legally in the child's name, so it belongs to them, but you are the one making decisions about it. This is different from a joint account where both people can withdraw money — only you can access it until the child reaches 18. At that point, the account transfers to their control and you no longer have authority over it.
How much you can deposit each year
There is an annual limit on how much you can put into a Trump Account in a single year. This limit changes each year based on inflation. For 2024, the limit is $18,000 per child per year if you are filing taxes as a single person, or $36,000 if you are married and filing jointly. If you deposit more than the limit, you will face tax penalties, so it is important to know the current year's number before you deposit.
The limit applies to contributions — the money you put in. It does not explore to growth. If your account earns $500 in interest in a year, that does not count against your limit. You can deposit up to the annual limit every single year, so over time the account can hold a much larger balance than any single year's contribution.
How the money grows tax-free
When you deposit $1,000 into a Trump Account, the bank or credit union pays you interest on that money, just as it would on any savings account. The difference is that you do not owe federal income tax on that interest. If a regular savings account earned $50 in interest and you were in the 22% tax bracket, you would owe $11 in taxes. In a Trump Account, you owe nothing.
This tax advantage compounds over time. Because you are not paying taxes on the interest each year, that interest stays in the account and earns interest of its own the following year. A $5,000 deposit at 4% interest grows to $5,200 after one year in a Trump Account. In a taxed account at the same rate, after taxes it might grow to only $5,156. The difference seems small at first, but over 10 or 15 years, the tax savings add up significantly.
What the child can do with the money at 18
When the child turns 18, the account becomes theirs to control. They can withdraw some or all of the balance for any reason. There is no requirement that they use it for college, no restriction that it go toward education, and no penalty for spending it on something else. If they want to use it for tuition, they can. If they want to use it as a down payment on a car or to start a business, they can do that too.
Once they have control, you have no say in how the money is used. This is an important point to understand before you open the account — you are building savings for them, but you cannot dictate what they do with it after they reach 18. Some families discuss their hopes for the money with the child as they grow older, but legally the child's choice is final.
How to open a Trump Account
You start by contacting a bank or credit union and asking about opening a Trump Account, sometimes called a custodial account or a minor's savings account. Not every institution offers them, so you may need to call a few places. When you find one that does, you will need to bring or provide the child's Social Security number, your own identification, and proof of your address.
The bank or credit union will have you fill out forms naming you as custodian and the child as the account owner. You will choose how much to deposit initially — you can start with as little as $25 at some institutions, though minimums vary. Once the account is open, you can deposit money whenever you want, up to the annual limit. The institution will send you statements showing the balance and interest earned.
What happens if you need the money before the child turns 18
You can withdraw money from a Trump Account before the child turns 18, but there are tax consequences. Any earnings (interest) that you withdraw are subject to income tax, and you will also owe a 10% penalty on those earnings. The money you originally deposited can be withdrawn without penalty, but the growth is taxed and penalized.
Because of these penalties, Trump Accounts work best when you are confident you will not need the money before the child reaches 18. If there is a chance you might need to access it for an emergency, a regular savings account might be a better choice, even though you will pay taxes on the interest. Talk honestly with yourself about your financial situation before opening the account.
Frequently Asked Questions
Can I open a Trump Account for a grandchild or other relative?
Yes. You do not have to be the parent to open one. Any adult can open a Trump Account for any child, as long as you have the child's Social Security number and your own identification. You become the custodian and control the account until the child turns 18.
What if I want to change who controls the account?
You can name a successor custodian — usually another adult like a spouse or family member — who takes over if something happens to you. The bank or credit union can explain how to set this up. When the child turns 18, control passes to them automatically, regardless of who the custodian was.
Does the money in a Trump Account affect financial aid for college?
Yes, it can. Money in a Trump Account in the child's name is counted as the child's asset when calculating financial aid, which can reduce the amount of aid they receive. Money in a parent-owned account is treated differently. Talk to the college's financial aid office about how they count different types of accounts.
Can the child access the account before turning 18?
No. As the custodian, only you can withdraw money while the child is under 18. The child cannot access it, and neither can creditors or other people with claims against the child. This protection is one reason families use these accounts.
What if the child does not want the money when they turn 18?
That is their choice. Once they turn 18, the account is theirs. They can leave the money there, withdraw it, or do anything else they want with it. You cannot force them to keep it invested or use it a certain way.