July 4, 2026 saw the official launch of Sec. 530 “Trump Accounts” (TAs), a new type of ‘starter’ retirement account designed to be opened and funded on behalf of minor children so they can start accumulating tax-deferred retirement savings at an early age. Under the rules for TAs, parents and other individuals, employers, and government and charitable organizations can make contributions to a child’s TA up until the year before their 18th birthday, after which the account effectively converts into a traditional IRA – giving the account’s owner an incentive not to touch the account for many years, since distributions prior to age 59 ½ will be subject to a 10% penalty tax.
But although TAs may be similar to standard IRAs in many aspects (and effectively become IRAs after the pre-age-18 “growth period” ends), the process of opening and funding TAs is very different. Because unlike IRAs, which can be opened at any major broker-dealer or custodian and have no limits on the number of different IRAs that any individual can have open at one time, TAs can only be opened in a single location (a website and app administered by the retail broker-dealer Robinhood), and while other institutions will eventually be able to offer TAs of their own, they will only be available for ‘rollover’ purposes (i.e., to transfer into once the initial account is opened at Robinhood’s site).
The process of opening a TA starts by filing IRS Form 4547, a form that can be filled out (generally by a parent or legal guardian) either on the government’s official Trump Account app, online via the IRS’s website, or as an actual tax form to be filed along with the account opener’s tax return. Next, after the IRS approves the Form 4547, the account opener must ‘activate’ the account on the Robinhood-administered website, www.trumpaccount.com. Finally, when the account is open, the parent can contribute and invest funds on the child’s behalf (with the only current investment option being an S&P 500 index ETF, although broader U.S. equity funds will purportedly be available in the future).
After the TA has been opened, funded, and invested, the account can be kept at Robinhood or, likely starting sometime in 2027, transferred to a different custodian. However, once the account beneficiary reaches age 18, the TA will be automatically rolled over to a traditional IRA, at which point the responsibility for choosing investments, tracking the account basis (since there will likely be a mix of ‘pre-tax’ and ‘after-tax’ funds in the account), and designating a beneficiary shifts to the now-18-year-old account owner. In other words, at age 18, the TA beneficiary will ‘get’ not just control over the account and its funds, but also a new set of responsibilities for maintaining it as they cross into adulthood.
The key point is that although TAs may look in some ways like the IRAs that many people are familiar with, the real mechanics of opening, funding, and maintaining a TA (not to mention the eventual ‘handoff’ to the beneficiary at age 18) are much different than what many parents have likely encountered. For financial advisors, it’s worthwhile to understand how these mechanics work and where parents are likely to get tripped up along the way – because while not every parent will want to open a TA for their children (since other options like 529 plans or UTMA accounts might be a better fit for their goals), the ones who do will appreciate their advisor being able to walk them through the process and get them started smoothly on saving for the next generation!
And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast.
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