Four Million IRA Accounts for Children
Published April 3, 2026
On March 31, 2026, the Internal Revenue Service (IRS) announced that more than four million tax-favored accounts for children have been established since newly authorized in 2025. Of those accounts, one million qualified for a $1,000 government contribution to the plan. Children residing in zip codes with a median income under $150,000 and who are not eligible for the $1,000 funding, may also qualify for a $250 contribution from two private donors. The accounts are referred to as Trump Accounts under Sec 530A.
IRS CEO Frank J. Bisignano noted, "The IRS has been working closely with the Treasury Department to make the election process as simple and easy as possible by permitting taxpayers to fill out a one-page form when they file their tax return. Families with eligible children born between 2025 and 2028 just need to check the box on a form to stake their claim for the $1,000 contribution."
Contributions to plans set up through the program may not begin until July 4, 2026. In addition to the $1,000 government contribution for children born from January 1, 2025, to December 31, 2028, parents and other qualified donors may contribute up to $5,000 each year to an account. Employers may contribute up to $2,500 per year for children of employees.
If a child receives a $1,000 government contribution as well as contributions from others totaling $5,000 each year, the tax-free growth may be significant. For example, if the index fund earns 6%, the account could be valued at $191,000 by age 18. If the beneficiary transitions the Trump Account to an IRA at age 18 and the index fund continues with steady investment returns, the balance could grow substantially by retirement age.
The account’s investment must be in index funds with low expenses. The maximum expense permitted for eligible index funds is 0.10%. With the low cost for the index fund and tax-free growth, modest contributions can produce a very significant fund by retirement. As is true with other IRA funds, there are exceptions that allow early distributions for education or purchase of a first home.
