Shawn McClelland, Partner in the Tax, Trusts, and Estates Practice Group, recently provided an in-depth overview of the newly announced “Trump Accounts” under Notice 2025-68, issued on December 2, 2025. These accounts have generated considerable interest, particularly due to their unique structure and potential benefits for minors. Here is a breakdown of the key takeaways.
What Are Trump Accounts?
The term “Trump Accounts” comes directly from the Notice, which instructs that these accounts be designated as such in a manner outlined by the Secretary. While initially it seemed the label might be optional, much like other government or financial programs named after public figures, the official guidance indicates that the “Trump” designation is required. For reference, the government has even established a website, trumpaccounts.gov.
How to Make the Election
Election to establish a Trump Account is expected to be done via Form 4547, which is not yet available, or online through trumpaccounts.gov. The accounts will officially open for election in July 2026, giving families time to prepare and understand eligibility.
Is the $1,000 “Free Money” Real?
Yes, but with qualifications. The Notice describes the initiative as a Pilot Program, providing a one-time $1,000 deposit for eligible children. However, not every child qualifies.
The child must be born between December 31, 2024, and January 1, 2029, and must have a Social Security number. Only one account per beneficiary is allowed. The persons able to make the election to open an account follow a priority order, including legal guardians, parents, adult siblings, and grandparents.
Trump Accounts are to function similar to an IRA once beneficiary reaches the age of 18. Prior to the year in which a beneficiary turns 18 there is what is referred to as a “Growth Period”. During this period, contributions can come from multiple sources:
- Pilot Program Contribution (if eligible)
- Qualified general contributions, including from states, political subdivisions, the federal government, Indian Tribal Governments, or 501(c)(3) organizations
- Employer contributions (up to $2,500, not included in gross income)
- Qualified rollovers from one Trump Account to another
- Other sources, such as family members or the beneficiary themselves
Contributions are not tax deductible, unlike traditional IRAs, and there are no income requirements to participate. Distributions are limited and include qualified rollovers, qualified ABLE accounts, returns on excess contributions, or distributions upon the death of the beneficiary.
What Happens When the Beneficiary Turns 18?
The account then functions like an IRA, with withdrawals subject to the same restrictions and exceptions. Questions remain about the possibility of Roth conversions, though the structure implies some flexibility may exist.
Recent Updates: Michael Dell’s Contribution
In a high-profile update, Michael Dell pledged to contribute $6 billion to add $250 to 25 million Trump Accounts. This initiative is in addition to the federal government’s $1,000 deposit and is targeted with specific parameters:
- Children must reside in zip codes with a median income under $150,000
- Children up to 10 years old are eligible
- Dell’s contribution is being referred to as philanthropy
Dell explained that the Treasury Department will facilitate the process to ensure funds are transferred to eligible accounts. Speculation suggests that this may be coordinated through an established foundation, such as Invest America, to streamline distribution and allow Mr. Dell to receive a charitable deduction by initially funding a charitable organization then having the charitable organization fund the accounts.
Conclusion
Trump Accounts represent a novel approach to youth savings, combining government support with private philanthropy. With unique rules for contributions, eligibility, and growth periods, they offer a fresh vehicle for encouraging early financial planning. Families, advisors, and trustees will want to stay informed as additional guidance, including forms and election instructions, becomes available in 2026.
For any questions, please reach out to Shawn R. McClelland at smcclelland@mblawfirm.com or at 973-974-9405.