Warren Buffett has said that the combination of living in America, some lucky genes, and compound interest built his wealth. Compound interest was the one variable he could control, and the earlier he had access to it, the more powerful it became.
That same principle is now available to every eligible child born in America.
Starting in 2026, children born between January 1, 2025, and December 31, 2028, may receive a one-time federal contribution of $1,000 through a new program called the Trump Account (officially IRC Section 530A), created under the One Big Beautiful Bill Act. Contributions open on July 4, 2026, but the election to establish the account can be made right now, including alongside your 2025 tax filing.
What is a Trump Account?
A Trump Account, also referred to as a 530A account, is a tax-advantaged investment account established for a child's exclusive benefit. Think of it as an IRA specifically designed for minors. (IRS Notice 2025-68)
During what the IRS calls the "growth period,” from account opening through December 31 of the year before the child turns 18, the account works as follows:
- $1,000 pilot contribution from the federal government for eligible children (U.S. citizens born between January 1, 2025, and December 31, 2028, with a valid Social Security number). This amount is excluded from income and not subject to offset or reduction.
- Annual contribution limit of $5,000, indexed for inflation after 2027. Employers may also contribute up to $2,500 per year (counting toward the $5,000 cap).
- Investments are restricted to low-cost, domestic index-tracking mutual funds or ETFs, like those tracking the S&P 500, with annual fees capped at 0.1%. No leverage. No money market funds as a permanent holding.
- No withdrawals permitted during the growth period, except for rollovers or in the event of the beneficiary's death.
At 18, the account rolls into a traditional IRA. Distributions at that point are taxable as ordinary income.
Time Matters More than the Dollar Amount
The S&P 500 has delivered an average annual total return of approximately 10% since 1926. Based on historical long-term averages, a child who receives a $1,000 seed contribution in 2026 and holds it in a low-cost index fund for 18 years, even without adding another dollar, could reasonably see that grow to roughly $5,500. Add consistent annual contributions, and the trajectory changes dramatically.
Buffett started investing at 11 years old, which is 18 years earlier than the average person begins saving for retirement. In his own words: "My wealth has come from a combination of living in America, some lucky genes, and compound interest."
The families who act now give their children the one thing money can’t buy later: time in the market.
529 Plans and Trump Accounts
Trump Accounts are meant to complement, not replace, 529 plans.
529 plans remain the stronger vehicle for education-specific savings, with tax-free growth for qualified education expenses and greater flexibility. The One Big Beautiful Bill Act expanded 529 usage, raising the K-12 annual cap to $20,000 and broadening eligible expenses to include qualifying tutoring, AP test fees, and educational therapies.
The Trump Account operates differently, with narrower investment options, distributions that are eventually taxed as ordinary income, and funds locked until the age of 18. For families who have already maximized other tax-advantaged accounts and are thinking about very long-term, retirement-style growth for a child, it can be a meaningful addition to a broader strategy.
For grandparents interested in contributing to a grandchild's financial future, Trump Accounts add another vehicle alongside 529s, UTMA/UGMA accounts, and trust structures.
The right combination depends on your family's overall financial picture.
Taking Action Today
The election to establish a Trump Account can be completed now, before contributions open. Many families are doing this alongside their 2025 tax filing.
To establish an account and elect the $1,000 federal pilot contribution (if your child is eligible), complete IRS Form 4547 here:
Eligible children are U.S. citizens born between January 1, 2025, and December 31, 2028, with a valid Social Security number. Each child may have only one Trump Account.
The form should only take a few minutes. Once complete, the account is ready to receive the $1,000 pilot deposit once contributions open on July 4, 2026.
Integrating the Trump Account into Your Full Financial Picture
Opening a Trump Account is easy, but ensuring it fits with your broader plan requires a bit more planning. At Apeiron, we work with families to:
- Evaluate whether a Trump Account makes sense given your existing tax-advantaged savings
- Coordinate with your 529 plan and any trust or custodial accounts already in place
- Consider the tax implications, particularly the ordinary income treatment at distribution
- Integrate the account into a broader multigenerational wealth strategy
If you have eligible children or grandchildren and want to talk through next steps, reach out. We're happy to help.