WHAT IS A TRUMP ACCOUNT—AND SHOULD YOU HAVE ONE?
BY SARAH MELLGREN, JD, CFP*
The “One Big Beautiful Bill” was signed into law on July 4, 2025, bringing with it a number of changes—including the introduction of Invest America accounts, colloquially referred to as “Trump” accounts. The purpose of this article is to provide an overview of how these accounts are structured, their potential benefits and limitations, and the role they may play in a family’s overall financial strategy.
HOW INVEST AMERICA ACCOUNTS WORK
Invest America accounts may be opened for children under age 18 who have a Social Security number. Funds generally cannot be withdrawn during the account’s growth period, which ends on December 31 of the year before the child turns 18.
Beginning January 1 of the year the child turns 18, most of the rules that apply to traditional IRAs generally apply to the account. Distributions taken before age 59½ may be subject to ordinary income tax and an additional 10% tax unless an applicable exception applies. Certain exceptions may allow penalty-free withdrawals for purposes such as qualified higher education expenses or a first-time home purchase.
There is a contribution limit of $5,000 per year per child until the child turns 18. Contributions are generally made on an after-tax basis, and investment earnings grow tax-deferred. After the growth period, distributions generally follow traditional IRA tax rules. Withdrawals may be taxable as ordinary income and, if taken before age 59½, may also be subject to the additional 10% tax unless an exception applies.
POTENTIAL BENEFITS
Invest America accounts offer several notable advantages. First, the federal government will provide a one-time $1,000 pilot contribution for eligible U.S. citizen children born between 2025 and 2028, provided the applicable requirements are satisfied. In addition, Michael and Susan Dell contributed $6.25 billion to fund a $250 contribution for children age 10 and under who were born prior to 2025 and who live in ZIP codes where the median household income is below $150,000. It is possible that additional philanthropic contributions may be made in the future.
Perhaps the most intriguing feature of Trump Accounts is their eligibility for Roth conversion. Unlike custodial Roth IRAs, there is no requirement that the child have earned income for contributions to be made during the account’s growth period. Beginning in the year the child turns 18, traditional IRA rules generally apply, including the ability to convert some or all of the account to a Roth IRA. The taxable portion of any amount converted generally would be included in income in the year of conversion. Because many young adults may be in a relatively low tax bracket at that stage of life, a Roth conversion could be an attractive planning opportunity. Once converted, the funds may grow tax-free and will not be subject to required minimum distributions during the child’s lifetime, making this a potentially powerful long-term wealth-building tool.
Additionally, parents’ employers may contribute up to $2,500 per year on a pre-tax basis to Invest America accounts. These employer contributions count toward the $5,000 annual contribution limit. It will be interesting to see whether employers begin offering these contributions as a formal employee benefit.
LIMITATIONS TO CONSIDER
Despite their appeal, Invest America accounts also have meaningful limitations. Investment options are restricted to certain mutual funds and exchange-traded funds that primarily track U.S. equity indexes, such as the S&P 500. As a result, achieving broad global diversification within these accounts may be challenging.
Another important consideration is control. The child is the account owner, while a parent, guardian, or other authorized individual generally serves as the responsible party while the child is a minor. Beginning in the year the child turns 18, the special growth-period restrictions end and traditional IRA rules generally apply. This differs from Uniform Transfers to Minors Act (UTMA) accounts—which in some states may delay control until age 24—and from 529 plans, where the account owner retains control and may even change the beneficiary if desired.
Depending on your objectives, other account types may offer greater tax efficiency or flexibility. For example, 529 plans may remain a more attractive option for education-specific savings due to their tax-free treatment of qualified education expenses, the ability to change beneficiaries, and access to a broader range of investment options. Additionally, if a child has earned income, funding a Roth IRA may be preferable from a tax perspective, potentially in combination with an Invest America account that is later converted to Roth status when the child turns 18.
FINAL THOUGHTS
For families focused on long-term wealth building rather than education-specific savings, Invest America accounts may be a compelling option—particularly for children who do not yet have earned income. It may also make sense to open Invest America accounts for children born between 2025 and 2028 in order to take advantage of the $1,000 per-child pilot program.
That said, Invest America accounts are a new planning tool. These accounts became available July 2026, and additional regulatory guidance is expected over time. As with any financial decision, it is important to consider how this account fits within your broader goals and circumstances.
If you would like to explore whether an Invest America account is appropriate for your family, please don’t hesitate to reach out to Roehl & Yi. We are happy to help you evaluate your options and determine the account type that best supports your goals.
Disclaimer: This article is provided for informational purposes only and does not constitute investment, tax, or legal advice. The information presented is based on current legislation and is subject to change. Please consult your financial advisor, tax professional, or legal counsel regarding your specific circumstances.
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