Insights

Trump accounts officially launched on July 4, and there has been no shortage of coverage. Here is what actually matters, what we would do, and how to sign up.

Prefer to watch? Sara Emru, CFP® covers the same ground in a short video, including when converting to a Roth IRA after age 18 makes sense.

What Is a Trump Account?

Created by the 2025 tax law, a Trump account is an investment account any child under 18 can have (U.S. citizen with a Social Security number). The money is invested in a low-cost U.S. stock index fund (at launch, an S&P 500 ETF), grows tax-deferred, and is locked until January 1 of the year the child turns 18, when the account automatically becomes a traditional IRA in the child’s name. Family, friends, and employers can contribute up to $5,000 per year combined, with employers capped at $2,500 of that; there is no tax deduction for contributing.

The real draw is the starter deposits. Even untouched, $1,000 at a hypothetical 7% annual return grows to roughly $3,400 by age 18, and to more than $55,000 by age 60.

Who Gets a Starter Deposit?

The federal $1,000 goes to children born January 1, 2025 through December 31, 2028. That is the whole test; there is no income limit. Kids born earlier get nothing from the government, but charities, states, and employers can also deposit money (their gifts do not count against the $5,000 cap), and a wave of programs has been announced:

For Washington families: no state or local program has been announced here. Your paths to a starter deposit are the federal program, the Dell gift, and your employer. Dell eligibility is set by ZIP code, and some higher-income Eastside ZIP codes may sit above the $150,000 threshold, so check your specific ZIP. And ask your employer; many large companies have started contributing for employees’ children.

Two timing notes: the Dell gift goes to the first 25 million activated accounts, so open and activate promptly rather than waiting. And this list is growing weekly, so re-check what is available when you enroll.

Trump Account vs. 529: The Comparison That Matters

The key tax point in plain English: only the dollars your family contributes directly come back tax-free, and that tax-free portion is spread proportionately across withdrawals. The $1,000 federal deposit, any employer or charity deposits, and all of the growth are taxed as ordinary income on the way out. Qualified 529 withdrawals for education, by contrast, are tax-free. That is why the 529 stays our default for education savings.

What We’d Do, In Order

1. Claim the starter deposits. Everyone eligible. Fifteen minutes, zero cost, 18-plus years of compounding. We see little reason to leave these deposits unclaimed.
2. Put education savings in a 529. Tax-free withdrawals for school, far higher limits, better investment menus, and up to $35,000 of leftovers can roll into the child’s Roth IRA (conditions apply).
3. Put flexible gifts in a UTMA or trust. If the child might need the money before retirement, for a car, a wedding, or a down payment, a UTMA keeps it accessible, and growth is taxed at capital gains rates rather than as ordinary income (kiddie-tax rules can apply). Keep in mind the child gains full control at the age of majority; for larger gifts where control matters, use a trust.
4. Only then consider extra Trump account contributions. The account is locked until 18, generally penalized until 59 1/2, and growth is taxed at ordinary income rates. The one strong use: money meant for the child’s retirement, converted to a Roth IRA in their low-earning years after 18 for decades of tax-free growth. Talk to a tax professional before converting.

How to Sign Up

Three ways, all running through the same IRS application (Form 4547), and any of them claims the $1,000 if your child qualifies:

• Online: irs.gov/trumpaccounts or trumpaccounts.gov, using an ID.me login. About 15 minutes.
• The Trump Accounts app: Treasury’s app handles enrollment, activation, contributions, and lets kids watch their investments.
• With your tax return: file Form 4547 with your return, or have your tax preparer do it.

After you apply, expect a wait: Treasury emails activation instructions in phases, with an identity verification step. A gap between applying and seeing the account is normal. Once activated, the starter deposit arrives and is automatically invested in an eligible low-cost U.S. stock index fund, and you can manage everything in the app or online.

The Bottom Line

A no-cost head start for the kids in your life, worth 15 minutes of your time. Beyond that, keep serious savings where they work hardest: a 529 for education, a UTMA or trust for flexible gifts. Questions about your family, or want us to walk through enrollment with you? Reach out to our team.

team@stablerwm.com | (425) 646-6327

This material is for general information only and is not intended to provide specific tax, legal, or investment advice. Rules for Trump accounts are new and additional IRS guidance is expected; details described here may change. Hypothetical growth figures are for illustration only, assume a constant rate of return, and do not represent the performance of any specific investment. Consult a qualified tax professional regarding your individual situation.

Securities and Advisory services are offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Stabler Wealth Management is not registered as a broker-dealer or investment advisor.