A Trump Account is a tax-free savings account for children under 18

A Trump Account is a savings account designed specifically for children, where money grows without being taxed on the earnings. The account is opened in the child's name, but a parent, guardian, or other adult manages it until the child turns 18 or 21 (depending on state law). The money inside belongs to the child and can be used for any purpose once they reach the age of majority.

The account works like a regular savings account at a bank or credit union, except the interest or investment earnings are not subject to federal income tax. This means more of the money stays in the account and continues to grow. Some states offer Trump Accounts through specific programs, while others allow them through standard financial institutions.

The primary purpose is to help families build savings for children over time. Parents might use these accounts to save for education, a first car, a down payment on a home, or straightforward to teach children about money management. Because the earnings are tax-free, a small deposit can grow into a meaningful amount by the time the child becomes an adult.

Key Takeaways

  • A Trump Account is opened in a child's name but managed by an adult until the child reaches the age of majority, which varies by state.
  • Money in the account grows without federal income tax on the earnings, allowing savings to accumulate faster than in a regular account.
  • The child owns the money and can use it for any purpose once they reach the age set by their state law.
  • Trump Accounts are offered through banks, credit unions, and some state-specific programs, so availability and features vary by location.
  • There are no income limits or restrictions on who can open an account for a child, making them available to most families.

How money grows in a Trump Account

The tax-free growth is the main advantage. When you deposit money into a Trump Account, any interest the bank pays or any investment gains are not taxed by the federal government. In a regular savings account, the bank would report that interest to the IRS, and you would owe tax on it. In a Trump Account, that does not happen.

The amount of growth depends on how much you deposit, how long the money stays in the account, and the interest rate the bank offers. A small monthly deposit over 10 or 15 years can grow substantially because the earnings themselves earn more money. The longer the money sits untouched, the more time it has to compound.

Some Trump Accounts allow you to invest the money in stocks, bonds, or mutual funds rather than keeping it in a savings account. This can lead to higher growth, but it also carries more risk. Other accounts are straightforward savings accounts with a fixed interest rate. The options available depend on where you open the account.

Who can open a Trump Account and how to start

Any adult can open a Trump Account for a child, including parents, grandparents, aunts, uncles, or family friends. You do not need to be the child's legal guardian. You will need the child's Social Security number and proof of the child's age and identity. The adult opening the account will need to provide identification and proof of address.

Trump Accounts are offered through banks, credit unions, and some brokerage firms. You can also look for state-specific programs that may offer Trump Accounts with additional features or incentives. Some states have matching programs where the government adds money to the account if you meet certain conditions, though these vary widely.

To open an account, contact a financial institution in your area and ask if they offer Trump Accounts. You can do this in person, by phone, or online depending on the bank. The process usually takes a few days to a week. Once the account is open, you can deposit money whenever you want, in any amount.

What happens when the child turns 18 or 21

The age at which the child takes control of the account depends on state law. In most states, this happens at 18. In some states, it may be 21. When the child reaches that age, the account transfers to their control, and they can withdraw the money or continue letting it grow.

The adult managing the account has no say in what the child does with the money once they reach the age of majority. The child can withdraw it all at once, spend it on anything they want, or leave it invested. This is why some parents use these accounts as a teaching tool—the child learns that the money is theirs and they must decide how to use it responsibly.

If the child does not withdraw the money, the account continues to grow tax-free. The child can keep adding to it or let it sit. There is no requirement to use the money by a certain age or for a specific purpose.

Trump Accounts versus other savings options for children

A Trump Account is different from a regular savings account because of the tax-free growth. In a regular account, you pay tax on the interest. In a Trump Account, you do not. Over time, this difference adds up.

Another option is a 529 plan, which is also tax-free but is limited to education expenses. If you withdraw money from a 529 plan for anything other than school costs, you pay tax on the earnings and a penalty. A Trump Account has no such restrictions—the money can be used for anything.

A Coverdell Education Savings Account is similar to a 529 plan but with lower contribution limits. A regular savings account or a certificate of deposit (CD) offers no tax advantages but gives you full control and flexibility. The right choice depends on your goals, how much you plan to save, and whether you want to restrict the money to education or keep it open for any use.

Contribution limits and rules

Most Trump Accounts have no annual contribution limit set by federal law. You can deposit as much as you want, whenever you want. However, some financial institutions may set their own limits, so check with your bank.

The money you deposit is not tax-deductible. You cannot reduce your taxable income by putting money into a Trump Account. Only the earnings are tax-free, not the deposits themselves.

There are no income limits. Anyone can open a Trump Account for a child, regardless of how much money they make. This makes Trump Accounts available to families at any income level.

Potential drawbacks and things to consider

Once the child reaches the age of majority, you lose control of the money. If you were hoping to use it for a specific purpose like college, but the child decides to spend it on something else, there is nothing you can do. This is why some parents prefer 529 plans, which restrict the money to education.

If the account is in the child's name, it may affect their financial aid may be able to access for college. Schools consider assets in the child's name when calculating how much aid to offer. Money in a parent's name is treated differently and may have less impact on aid. Check with the school's financial aid office if this is a concern.

Some Trump Accounts charge fees for account maintenance, transfers, or withdrawals. Compare the fees at different banks before opening an account. A bank with no monthly fee and a competitive interest rate is usually the best choice.

Frequently Asked Questions

Can I withdraw money from a Trump Account before the child turns 18?

Yes, you can withdraw money at any time. As the account manager, you control the account until the child reaches the age of majority. However, the money still belongs to the child, so withdrawing it means less will be available for them later. Some accounts may charge a fee for early withdrawal.

What happens to a Trump Account if the child passes away?

The money in the account becomes part of the child's estate and is distributed according to the child's will or state law. If there is no will, the money goes to the parents or next of kin. The account itself does not disappear—it is treated like any other asset the child owned.

Can a child have more than one Trump Account?

Yes, a child can have multiple Trump Accounts opened by different people or at different banks. There is no limit on the number of accounts. However, the total earnings across all accounts are still tax-free, so there is no tax advantage to splitting the money across multiple accounts.

Do Trump Accounts affect Social Security benefits or other government programs?

Money in a Trump Account in the child's name may be counted as an asset when determining may be able to access for means-tested programs like Supplemental Security Income (SSI) or Medicaid. If the child receives these benefits, having a large balance in a Trump Account could affect their may be able to access. Speak with a benefits counselor before opening an account if this applies to your situation.

Is the money in a Trump Account protected if the bank fails?

If the account is at a bank or credit union insured by the FDIC or NCUA, deposits up to $250,000 are protected. This means if the bank fails, you will not lose the money. Most Trump Accounts at mainstream banks and credit unions have this protection, but confirm with your institution.