If you have a child under 18, you may have recently received a letter or seen news that your child now has a “Trump Account.” These new accounts were created by the 2025 federal tax law (Public Law 119-21), and on October 1, 2026, the U.S. Treasury announced that it had automatically opened accounts for more than 60 million eligible children. Here is what parents and grandparents in California should know.
Key takeaways
- A Trump Account is a special type of traditional IRA for a child under 18 with a valid Social Security number, governed by Internal Revenue Code section 530A.
- Treasury began automatically enrolling eligible children on October 1, 2026, but a parent or guardian must claim the account before it can be managed or receive contributions from family, friends, or employers.
- Children who are U.S. citizens born from January 1, 2025, through December 31, 2028, may qualify for a one-time $1,000 federal contribution, but a parent must still elect it on IRS Form 4547, even if the account was opened automatically.
- Family contributions are limited to $5,000 per child per year for 2026 and 2027, and the IRS has issued a gift tax safe harbor that lets many donors skip filing a gift tax return.
- California has adopted most of the federal Trump Account rules for state income tax purposes starting with the 2026 tax year (SB 180), with a few differences.
What is a Trump Account?
A Trump Account is an individual retirement account (IRA) set up for a child. According to IRS Notice 2025-68, the account is a traditional IRA with special rules that apply during a “growth period,” which runs until the end of the year before the child turns 18. After that, the account generally follows ordinary traditional IRA rules.
During the growth period, the money must be invested in eligible funds: U.S.-registered mutual funds or ETFs that track an index made up primarily of U.S. stocks, use no leverage, and keep annual fees and expenses within a 0.1% cap. The IRS states that the initial trustee and brokerage provider is Robinhood Securities LLC, with The Bank of New York Mellon serving as Treasury’s financial agent (IRS Trump Accounts FAQ).
Automatic enrollment: what changed on October 1, 2026
Originally, parents had to open an account by filing Form 4547. Under temporary Treasury regulations (T.D. 10056, effective September 30, 2026), Treasury may open an account automatically for each eligible child who does not already have one. On October 1, 2026, Treasury announced that automatic enrollment was complete.
Until a parent or guardian claims an automatically opened account, the account can only receive the $1,000 federal contribution and certain charitable or government contributions.
What parents need to do
- Claim the account. Use the official Trump Accounts app (iOS or Android) or the website listed on IRS.gov/trumpaccounts. You will verify your identity and your relationship to the child and accept the account terms.
- Elect the $1,000 contribution, if your child qualifies. For a U.S. citizen child born from 2025 through 2028, submit Form 4547 and select the pilot program option through the app, the website, or your IRS Individual Online Account. If you already requested it, you do not need to do so again.
- Check that names, Social Security numbers, and birth dates match Social Security records. The IRS warns that mismatches cause delays.
- Be cautious with unsolicited messages. Use only official channels (the IRS page, TrumpAccounts.gov, or the official app). The IRS lists 866-USA-4547 as the help line.
Contributions: who can give and how much
Under Notice 2025-68, contributions could not be made before July 4, 2026. Once an account is claimed:
- Parents, relatives, and friends may contribute, but total contributions from these sources (plus employer contributions) are capped at $5,000 per child per year for 2026 and 2027, with inflation adjustments after that.
- Employers may contribute up to $2,500 per year for an employee or the employee’s dependent under a written program, and that amount is excluded from the employee’s federal income. It counts toward the $5,000 cap.
- The $1,000 federal contribution and qualified “general” contributions from governments or charities to a broad group of children do not count toward the cap.
Contributions are not deductible. For federal purposes, after-tax contributions from family create “basis” that can later come out tax-free, while earnings, employer contributions, and the $1,000 federal contribution are generally taxed as ordinary income when withdrawn.
Withdrawals
No regular withdrawals are allowed during the growth period. Starting January 1 of the year the child turns 18, standard IRA distribution rules apply, which generally means a 10% additional tax on early withdrawals before age 59½ unless an exception applies.
Gift tax: good news for grandparents
On June 29, 2026, the IRS released Rev. Proc. 2026-25, which creates a gift tax safe harbor. When its conditions are met, cash contributions to a Trump Account are treated as present-interest gifts that qualify for the federal annual gift tax exclusion ($19,000 per recipient for 2026), and the donor does not need to file a gift tax return (Form 709) to report them.
Under the full text of Rev. Proc. 2026-25, the safe harbor applies for a year only if all of these conditions are met: (1) the donor is an individual; (2) the donor’s only taxable gifts that year are cash contributions (including checks and electronic transfers) to Trump Accounts, made before the year the child turns 18; (3) total gifts to each child that year, including the Trump Account contribution, do not exceed the annual exclusion; (4) the contributions create no gift or generation-skipping transfer (GST) tax; and (5) the donor is not otherwise required to file, and does not file, a gift tax return for that year for any other reason. If any condition is not met, the donor files a gift tax return as usual, and the IRS example indicates the Trump Account contributions are then reported as future-interest gifts, which do not qualify for the annual exclusion. A grandparent who also makes other gifts that year, such as to a 529 plan or a trust, or who files a gift tax return for another reason, should review the plan with a tax advisor before contributing. Donors should also keep records showing they met the conditions.
California tax considerations
California does not automatically adopt new federal tax law, but on July 13, 2026, the Governor signed SB 180 (Chapter 85, Statutes of 2026), a budget trailer bill that addresses Trump Accounts. For taxable years beginning on or after January 1, 2026, California’s personal income tax law generally follows the federal treatment of these accounts, including the federal exclusions for employer contributions and for qualified general contributions from governments and charities. In practice, earnings are generally not taxed by California while they stay in the account.
California keeps a few differences. For example, California’s additional tax on certain early distributions is computed at 2.5% rather than the federal rate. Earlier 2026 reports that California would not recognize these accounts as tax-deferred were published before SB 180 became law. Your tax preparer can confirm how these rules apply to your family’s returns.
How a Trump Account fits into your estate plan
A Trump Account belongs to the child. It is not a trust account that parents control indefinitely, and it does not pass under your own will or living trust. A few planning points to consider:
- Name a guardian. If something happens to both parents, the person managing the child’s affairs, including accounts like this one, depends on who is appointed guardian. A will that names a guardian for minor children is the place to address this. Our page on California living trusts explains how a trust and a pour-over will work together.
- Compare it with other options. A 529 plan, a custodial (UTMA) account, and a trust each have different rules on control, use of funds, and taxes. A Trump Account may complement these tools rather than replace them.
- Coordinate family gifts. If grandparents plan to give each year, decide which accounts receive which gifts so the total stays within the annual exclusion.
- Plan for the unexpected. If a child dies during the growth period, the account stops being a Trump Account and the untaxed growth is included in the recipient’s income. This is rare, but it is one more reason to keep your overall plan current.
- Keep records. Family contributions create federal basis, so track who contributed what and when.
For families who want to keep assets out of court, our guide to avoiding probate in California explains the main tools.
Frequently asked questions
Do I have to do anything if my child was automatically enrolled?
Yes. You must claim the account through the official app or website before you can manage it or before family and employers can contribute. If your child was born from 2025 through 2028 and is a U.S. citizen, you must also elect the $1,000 contribution on Form 4547.
Can grandparents contribute?
Yes, once the account is claimed. All family and employer contributions combined are limited to $5,000 per child per year for 2026 and 2027. Under Rev. Proc. 2026-25, a grandparent whose only gifts for the year are cash contributions to Trump Accounts, within the annual exclusion for each child, generally will not need to file a gift tax return.
Is a Trump Account better than a 529 plan?
They have different rules and tax treatment, so the answer depends on your family’s goals. Review the options with your financial and tax professionals.
Talk with a California estate planning attorney
If you would like to coordinate a child’s Trump Account with your will, trust, guardianship nominations, and family gifting, schedule a free 15-minute call or call 1 (800) 285-1140. Consultations are available in English, Romanian, and Russian. You can also review our legal fees.
Author: Andrei Jingan
This article is general information, not legal advice. Reading it does not create an attorney-client relationship. Attorney advertising.