Trump Accounts: A Military Parent’s Practical Guide
Military parents already have enough to think about. Savings goals for the kids should not become another confusing system to manage, especially when it shows up as a question on your tax return.
Trump accounts are new, and they come with a headline benefit that gets attention: a potential $1,000 “seed” deposit for eligible kids. And while I am a fan of saving, too many options can lead to analysis paralysis. So, let’s start with the end in mind: what are you saving for? What is the purpose?
To help you understand the purpose of the new Trump accounts, here are a few details for you to consider. If you really want to nerd-out, you can read all about the most recent rules, forms, and account opening available at a number of IRS and other government sources; IRS Notice 2025-68 and elections to open an account run through IRS Form 4547 or trumpaccounts.gov.
Executive Summary
A Trump account might be worth considering if:
A child is in the eligible birth-year window for the $1,000 seed money
The family wants a long-term, untouchable (until age 18) investment account for the child
The family understands the account is tax-deferred with no Roth conversion options until the year the account beneficiary turns 18.
Bottom line, with other, more appropriate savings options for children, a Trump account is not the automatic go-to.
What Is a Trump Account?
A Trump account is a government-created savings account for a child that is legally set up as a traditional IRA. The child is the owner (the “beneficiary”), and an adult is the responsible party managing it until the child is old enough. It is designed for long-term growth, with strong guardrails.
The “Growth Period”: Why You Can’t Touch the Money for Years
The IRS calls the early phase the “growth period.” It lasts from birth until December 31 of the year before the child turns 18.
During that time, the rules are intentionally strict:
No withdrawals in most cases
Investments must be limited to certain low-cost options (more on that below)
The contribution limits are handled separately from the parent’s own IRAs
This is one of the biggest practical considerations for military families. If a family expects to need the funds for a car at the child’s age 16 or to fund any kind of education prior to 18at 13, this structure may feel too rigid.
The $1,000 Seed Money: Who Can Get It?
This is the big headline feature. Under IRS Notice 2025-68, the $1,000 “pilot program” deposit applies only if the child meets several requirements.
The easiest filter to understand is the birth-year window:
✅ The child must be born after December 31, 2024, and before January 1, 2029 (so, generally kids born in 2025–2028).
Other key requirements include:
The child must be a U.S. citizen
The child must have an SSN issued before the election
The election must be made through Form 4547 or the tool at trumpaccounts.gov
Practical takeaway: Even within one family, one child may qualify for the seed money while another does not, simply due to birth year.
Five Ways Money Can Go Into a Trump Account
The IRS describes five types of contributions during the growth period.
The $1,000 seed deposit (if the child qualifies)
“General” contributions funded by certain government entities or nonprofits (less common for most families, but think the Dell’s)
Employer contributions (high school job)
Rollovers from one Trump account trustee to another (rare for most families)
Regular contributions from parents/family
Trump Account Contribution Limits
Most families will care about this rule:
Parents/family contributions plus employer contributions are capped at $5,000 per year total during the growth period.
The IRS also explains that the $1,000 seed deposit does not count toward that $5,000 limit. Neither do certain other special contributions (like qualified general contributions). Keep in mind that no Trump account contributions can be made before July 4, 2026.
Investment Rules: Low-Cost Index Funds Only
During the growth period, Trump accounts can only be invested in certain eligible investments, generally low-cost index-tracking mutual funds or ETFs with tight restrictions. Think “plain vanilla investing.” No stock picking, themed funds, crypto ETF, or private equity.
For many families, this is a positive. It reduces the chances of making risky or high-fee choices.
What is a Trump Account Good For?
Again, I like saving. A Trump account helps to flex that muscle early. But, with so many restrictions in place, consider what the end state looks like. You’ve saved for 18 years, (17 really), and when your child turns 18, you are handing him or her a tax-deferred IRA under the IRA rules you know today.
They can continue to save. They can distribute the money, taxed, but without penalty for some very specific reasons within limits for a first home or higher education, for example. They can start Roth conversions while they are likely in a low tax bracket. Or they can distribute the money with tax and penalty, because… well, they’re 18. (What would you have done?)
What If Your Child Has a Job?
If your child has earned income, a Roth IRA may be a more flexible long-term account than a Trump account in many scenarios. Roth rules are different, and a working teen can benefit from decades of tax-free growth if handled correctly.
What If You Want Your Child to Have the Option for College
A 529 account will almost certainly be a more appropriate account for saving toward higher education. With so many newer allowances for private school, a 529 account can help pay for tuition, books, and many other educational expenses from kindergarten onward. There are often state tax benefits to parental contributions and rarely limits on annual contributions from any family member.
What Military Families Should Do Before Deciding to Open a Trump Account
Here’s a quick decision checklist:
What is the goal? Education, long-term wealth building, or both?
Does the child qualify for the $1,000 seed deposit? (Born 2025–2028, meets requirements)
Can the family commit to “hands off” money until near adulthood?
Would a 529 plan or Roth IRA create a better outcome for the same dollars?
Will this add complexity during tax season and recordkeeping?
For broader planning support and military-focused guidance, you can find Formynder Wealth Management resources live here:
Key Takeaways
Trump accounts are a new child-focused savings tool structured like a traditional IRA.
The $1,000 seed money is only for eligible kids, generally those born 2025–2028 (plus other requirements).
During the growth period (up to the year before age 18), the account is inflexible: limited investments, very limited withdrawals.
Regular family contributions (and employer contributions) are generally capped at $5,000 per year total.
For education-first planning, compare against a 529 plan. For working kids, compare against a Roth IRA.
Disclaimer: This article is provided for educational, general information, and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Read the full disclosure.