'Trump Accounts' provide youngsters an additional choice to benefit from tax-deferred compounding.
Clients who are welcoming new babies into the family, or who already have children or grandchildren, likely have questions about the new “Trump Accounts,” also known as 530A accounts. With summer around the corner, 530A accounts debut soon, presenting a planning opportunity for CFP® professionals to share with their clients.
Created by the “One Big Beautiful Bill Act” that passed into law on July 4, 2025, these new accounts provide an additional option to boost savings for young people, harnessing the power of compounding. CFP Board’s Key Elements: ‘One Big Beautiful Bill Act’ guide offers essential information to help you and your clients consider this option.
First, the basics: A 530A account may be established by a parent for their child before the year the child turns 18. These accounts may not be opened and funded before July 4, 2026. But enrollment has begun: According to the IRS, taxpayers can make an election on their 2025 tax return to enroll an eligible child or file the enrollment form separately online. The maximum annual contribution is not tax deductible by the contributor, and the account has tax-deferred growth benefits.
Contribution Rules
Through a pilot program, accounts for children born within the years 2025 through 2028 may qualify for a $1,000 contribution directly from the federal government. The one-time federal contribution does not count toward the annual maximum of $5,000, which will be inflation indexed after 2027.
In addition to parents and grandparents, business owners may also want to consider 530A account contributions. Employers may contribute up to $2,500 of the initial $5,000 annual limit and may deduct this contribution as a business expense, provided they meet regulatory guidelines. All contributions are irrevocable gifts to the child.
Pathways for the account owner to continue contributions to their own accounts are expected to follow traditional IRA limits with some restrictions on the deductibility of contributions.
Withdrawal Rules
Withdrawals from 530A accounts are not permitted until the calendar year in which the child turns 18 and may only be withdrawn by the child as a legal owner. Each withdrawal will be taxed as ordinary income and a return of basis, pro rata.
Funds may grow tax deferred in these accounts until the account owner’s required beginning date for traditional IRA distributions, at which point required minimum distributions must begin.
Learn more on page 25 of CFP Board’s Key Elements: ‘One Big Beautiful Bill Act.’ Stay tuned for updates: Because these accounts are babies themselves, guidance is evolving, with more to come from the IRS.
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