A Trump account is a U.S. tax-advantaged savings account created under Internal Revenue Code section 530A. It is designed exclusively for children under age 18 and combines features of a traditional IRA with child-specific rules during an initial “growth period.”
Trump Accounts occupy an unusual middle ground
NOT like Roth IRAs: Contributions aren’t deductible, but withdrawals aren’t tax-free either
NOT like traditional IRAs: You can’t deduct contributions during the growth period
NOT like 529 plans: No tax-free withdrawals for education
Growth is tax-deferred, avoiding annual capital gains taxes
Trump account funds grow tax-deferred until withdrawal. There’s no upfront tax break for after-tax contributions, but earnings are subject to taxes upon withdrawal. Meanwhile, pre-tax contributions are excluded from income, but you’ll owe future taxes on the contribution plus future growth.
Here’s a breakdown:
Direct parent contributions — after-tax
Pilot program $1,000 — pre-tax
Employer contributions — pre-tax
Other qualified contributions — pre-tax
Future contribution growth — pre-tax
If you don’t track after-tax funds, you could pay regular income taxes on full future Trump account withdrawals, experts say.