On May 22, 2025, the U.S. House of Representatives passed the “One Big Beautiful Bill Act” (the Act), a sweeping piece of legislation backed by President Trump. Among its many provisions is the introduction of a new tax-advantaged savings vehicle called a “Trump Account.”
As proposed, Trump Accounts would function similarly to Roth IRAs and Section 529 plans. Below is a high-level summary of the key features:
- Eligibility: Parents or legal guardians may open accounts on behalf of eligible children (i.e., those born as U.S. citizens after December 31, 2024, and before January 1, 2029).
- Initial Contributions: The Act calls for the federal government to seed each Trump Account with an initial $1,000 deposit upon creation.
- Additional Contributions: There are no relationship-based restrictions on contributions. Accordingly, parents, guardians, relatives, third parties, and employers may contribute to Trump Accounts. The Act calls for employers to receive a tax incentive for such contributions.
- Contribution Limits: Contributions would be capped at $5,000 per year, adjusted for inflation.
- Investment: The Act permits amounts held in Trump Accounts to be invested, with certain restrictions.
- Tax Treatment: Contributions would be made with after-tax dollars and distributions would be taxed as net capital gains. Favorable tax treatment would apply to payment of certain “qualified expenses,” including costs related to financing higher education, purchasing a home, or starting up a small business.
- Restrictions: No distributions are permitted until the beneficiary turns 18, except in limited circumstances. The Trump Account will automatically terminate on the beneficiary’s 31st birthday and its balance would be distributed.
It is important to bear in mind that the final contours of the Trump Accounts (if any) remain uncertain, as the Act must still pass the Senate and be signed into law by the President. If enacted in their current form, however, Trump Accounts could become a topic of interest to both employees and employers. As such, we intend to track the Act as it moves through the legislative process and stand ready to answer questions as they arise.
