Trump Accounts Explained: A Guide for Florida Families

If you have welcomed a child or grandchild recently — or expect to before the end of 2028 — the federal government has, unusually, offered to help pay for the future. The One Big Beautiful Bill Act created a new tax-advantaged savings vehicle for minors known officially as a "Trump Account," and it comes with a $1,000 deposit courtesy of the U.S. Treasury.

Like most things Congress names after a marketing department, the account is simpler in headline than in fine print. Below is what Florida families actually need to know: who qualifies, how the money is taxed, where it helps, where it doesn't, and how it fits alongside the estate planning tools you may already have in place.

This article is general information, not legal or tax advice. The Treasury and IRS are still finalizing regulations, and some details will change. For guidance on your own situation, speak with a qualified attorney or tax professional.

What Is a Trump Account?

A Trump Account is a tax-deferred investment account opened in a child's name and funded on their behalf until they reach adulthood. Think of it as a hybrid: it is built on the framework of a traditional IRA, but it is designed to be opened at birth rather than at your first job.

Three features define it:

• A one-time $1,000 federal contribution for eligible children, deposited by the Treasury.
• Tax-deferred growth — the account's investment gains are not taxed year to year.
• A locked "growth period" during childhood, after which the account converts to standard traditional-IRA treatment.

One account is permitted per child, and contributions must be made in cash. Accounts are being administered initially through the Bank of New York (in partnership with Robinhood), and balances can later be rolled to other qualified institutions.

Who Qualifies for the $1,000?

Here the distinction matters, because two different things are often blurred together.

The account is broadly available: essentially any U.S.-citizen child with a valid Social Security number who has not yet turned 18 can have a Trump Account opened for them.

The $1,000 federal seed money is narrower. It is a pilot program limited to children born between January 1, 2025, and December 31, 2028. A child born in 2024 or 2029 can still have an account — they simply do not receive the federal deposit.

A few additional conditions apply to the $1,000:

• The child must be a U.S. citizen with a valid Social Security number.
• The person claiming it must be able to claim the child as a dependent for tax purposes.
• Enrollment is not automatic. The Treasury will not create an account for you. Someone must affirmatively open it.

If more than one adult could open the account, the law sets a priority order: legal guardian first, then a parent, then an adult sibling, then a grandparent.

How Do You Open a Trump Account?

As of mid-2026, there are two paths:

1. File IRS Form 4547 to elect the child and establish the account. This can be submitted with your 2025 federal tax return.
2. Enroll online at TrumpAccounts.gov, the government portal that opened to families in mid-2026. The IRS estimates the online election takes five to ten minutes.

There is no published hard deadline to claim an existing child's bonus, but the eligibility window itself closes after December 31, 2028. Procrastination has a cost here only in the sense that compounding does: every year an unfunded $1,000 sits unclaimed is a year of growth forfeited.

How Much Can You Contribute — and Who Can Contribute?

Beyond the federal seed, the account can be fed from several directions:

• Family and friends: up to a combined $5,000 per year, indexed for inflation after 2027. These are after-tax dollars and are not tax-deductible.
• Employers: up to $2,500 per employee per year (this counts toward the $5,000 cap). Employer contributions are permitted beginning in July 2026 and are not treated as taxable income to the employee.
• Nonprofits and government entities: no dollar limit, though they must contribute equally across a defined group of beneficiaries.

Importantly, the federal $1,000 does not count against the annual $5,000 cap.

How Are Trump Accounts Invested?

Modestly, and by design. During the childhood growth period, the money may only be invested in a low-cost fund that tracks a broad index of primarily U.S. equities. No individual stocks, no bonds, no actively managed strategies, and no leverage. Fund fees are capped at 0.1% (ten basis points).

This is a feature, not a bug — it keeps the accounts cheap and simple — but it also means you are buying a single flavor of market risk. Families who want diversification beyond U.S. large-cap equities will find it elsewhere in their plan, not here.

The Tax Treatment — Read This Part Twice

This is where Trump Accounts are most often misunderstood, so it is worth being precise.

• Going in: family contributions are made with after-tax dollars. You get no deduction.
• While invested: growth is tax-deferred. No annual tax on dividends or gains inside the account.
• Coming out: the account is treated like a traditional IRA. Because family contributions were already taxed, that portion (your "basis") is generally not taxed again — but the investment growth, and any pre-tax employer contributions, are taxed as ordinary income on withdrawal.

That last point is the catch. Unlike a Roth account or a 529 used for education, the earnings do not come out tax-free — and ordinary-income rates are typically higher than long-term capital-gains rates. The IRS has signaled that the final withdrawal mechanics will be "complex," with different portions taxed differently, and regulations are still being written.

The Florida footnote: because Florida imposes no state income tax and no state estate tax, a Florida beneficiary owes only federal ordinary income tax on those earnings — a genuine, if quiet, advantage over families in high-tax states.

When Can the Money Be Withdrawn?

During the growth period — from birth through December 31 of the year the child turns 17 — the funds are effectively untouchable. Money cannot be withdrawn under any circumstances short of the beneficiary's death.

Beginning January 1 of the year the beneficiary turns 18, the account converts to traditional-IRA rules and the beneficiary takes control. From that point:

• Withdrawals before age 59½ generally trigger a 10% early-withdrawal penalty, on top of ordinary income tax.
• The penalty is waived for certain purposes, including qualified higher-education expenses, up to $10,000 toward a first home, and specified disaster or hardship situations.

For estate-planning purposes, note carefully who is holding the keys: at 18, the money is the child's to direct. That is worth pausing on.

Where a Trump Account Fits in Your Estate Plan

For clients focused on transferring wealth to the next generation — and reducing what is exposed to estate tax along the way — Trump Accounts are a small but tidy tool. A few observations:

1. Grandparent gifting made simple. A grandparent who contributes $5,000 a year to a grandchild's account is making a completed gift that sits comfortably under the 2026 annual gift-tax exclusion of $19,000 per recipient ($38,000 for a married couple splitting gifts). No gift-tax return, no erosion of the lifetime exemption, and every dollar of future appreciation moves out of the grandparent's taxable estate. For families who gift systematically to reduce a taxable estate, it is one more clean channel.

2. It complements, rather than replaces, the big exemption. Under the One Big Beautiful Bill Act, the federal estate and gift tax exemption became permanent at $15 million per person ($30 million per married couple) in 2026. Most families are now comfortably below the threshold — but for those who are not, disciplined annual gifting into vehicles like this still shifts growth downstream, year after year.

3. Control is the caveat. A Trump Account hands the beneficiary full control at 18. Many parents and grandparents do not consider an 18-year-old the ideal steward of a five-figure balance. If control, timing, creditor protection, or conditions matter to you, a revocable living trust or an irrevocable trust for descendants remains the better instrument — the Trump Account is a supplement to those structures, not a substitute for them.

Trump Account vs. 529 Plan: Which for College?

Florida families saving specifically for education should not abandon the 529 plan (including the Florida Prepaid College Plan and the Florida 529 Savings Plan). The comparison is not close for that purpose:

Feature

Trump Account

529 Plan

Federal seed money

$1,000 (2025–2028 births)

None

Tax on qualified education use

Growth taxed as ordinary income

Tax-free for qualified education

Investment options

U.S. equity index only

Multiple portfolios and risk levels

Who controls the money

Beneficiary, at 18

Account owner keeps control

Financial-aid (FAFSA) treatment

Likely a student asset (assessed ~20%)

Parent asset (assessed up to ~5.64%)

Roth conversion

Permitted after 18

Up to $35,000 rollover to Roth IRA

The practical takeaway: for pure college savings, a 529 usually wins on taxes, control, and financial aid. The Trump Account earns its place as a flexible, non-earmarked, long-horizon account — and, of course, as the only one of the two that comes with a free $1,000.

Should You Open One?

For most eligible families, claiming the $1,000 is close to a free lunch — it costs nothing but ten minutes and a Form 4547. Whether to contribute beyond that is the more interesting question, and it depends on where the account sits in your broader plan: your 529s, your IRAs and 401(k)s, and any trusts you have established for children or grandchildren. As one analysis put it, a couple with two children could commit well over $100,000 a year to other tax-advantaged accounts before a Trump Account becomes the highest priority.

In short: take the government's $1,000. Fund beyond it deliberately, not reflexively.

Frequently Asked Questions

Is enrollment in a Trump Account automatic? No. The Treasury will not open an account for you. A parent or guardian must actively elect by filing IRS Form 4547 or enrolling at TrumpAccounts.gov.

Which children qualify for the $1,000? U.S.-citizen children with a valid Social Security number who are born between January 1, 2025, and December 31, 2028, and who can be claimed as a dependent. Children born outside that window may still have an account, but without the federal deposit.

How much can be contributed each year? Up to a combined $5,000 per year from family and friends (indexed for inflation after 2027), including up to $2,500 from an employer. The federal $1,000 does not count toward this limit.

How are withdrawals taxed? Investment growth and any pre-tax employer contributions are taxed as ordinary income when withdrawn. Withdrawals before age 59½ generally carry a 10% penalty, subject to exceptions for education, a first home, and certain hardships. Florida residents owe no state income tax on the withdrawal.

When can my child access the money? Not during childhood. The account is locked until January 1 of the year the child turns 18, at which point the child gains control under traditional-IRA rules.

Is a Trump Account better than a 529 plan for college? Generally no. A 529 offers tax-free growth for qualified education expenses and keeps the parent in control; a Trump Account does not. Many families use both.

Talk to a Florida Estate Planning Attorney

A Trump Account is a useful thread — but a thread is not a plan. How it interacts with your gifting strategy, your trusts, and your goals for your children and grandchildren is where the real value lies, and where mistakes get expensive.

At Yergey & Yergey, P.A., we help families in Orlando, Winter Park, and throughout Central Florida build estate plans that move wealth to the next generation efficiently and on their own terms. If you would like to review how tools like Trump Accounts fit your plan — or you do not yet have a plan to fit them into — schedule a consultation with our office.