What the Hell Are "Trump Accounts" and Why Do You Need to Know About Them?

New tax law just dropped a brand-new savings vehicle into your lap, and it's already got a name that'll make Thanksgiving dinner awkward: Trump accounts.

Officially called Sec. 530A accounts (because of course it needs a tax code section), these are tax-advantaged investment accounts for kids under 18. Think of them as a weird hybrid between a 529 plan and a Roth IRA, but with way more rules and a federal government kicker.

Here's the hook: For children born between 2025 and 2028, Uncle Sam will toss in $1,000 to get the account started. That's free money, which means every client with a newborn is going to ask you about this by next week.

How They Actually Work

The AICPA just broke this down in a special joint podcast episode, and here's what practitioners need to know:

Contributions: Up to $5,000 per year from anyone — parents, grandparents, employers, friends, charitable organizations. This opens the door to coordinated gifting strategies, but also means you're now the contribution traffic cop making sure families don't blow past the annual limit.

The federal pilot contribution: That $1,000 government contribution gets triggered by filing Form 4547 with the 2025 tax return (or mailing it separately). The form can also be submitted at trumpaccounts.gov starting July 4, 2026. Miss the window, miss the money.

Investment restrictions during the "growth period": From account opening until December 31 of the year the kid turns 18, you can only invest in certain mutual funds or ETFs that track broad U.S. equity indexes. No leverage, no sector-specific funds, fees capped at 0.1%. This is way tighter than a 529 plan. It's a long-term growth vehicle, not a trading account.

What Happens at Age 18?

Here's where it gets interesting (and complicated):

In the year the kid turns 17, there's a one-time rollover option into an ABLE account if that's appropriate. Miss that window, it's gone forever.

Once the growth period ends, the account converts to a traditional IRA, with basis that must be tracked. That means CPAs should be planning beneficiary designations, distribution strategies, and whether Roth conversions make sense while the kid's income is still low (think: college years).

How Do These Compare to 529s and Custodial Accounts?

529 plans are laser-focused on education. Use the money for qualified expenses, and it's tax-free. Simple.

Custodial accounts (UTMA/UGMA) transfer assets to the kid at the age of majority, whether they're ready or not. No restrictions, no tax advantages, just a gift that becomes theirs.

Trump accounts sit in the middle: long-term wealth accumulation with IRA-like treatment at age 18. They're not replacing trusts or 529s — they're another tool in the stack.

What CPAs Need to Do Now

Get ready for the questions. You'll need to:

• Advise on eligibility and elections (who qualifies, when to file Form 4547)

• Track contributions from multiple sources over an 18-year period

• Monitor investment compliance during the growth period

• Coordinate with 529s, custodial accounts, and trusts

• Plan distributions and conversions at age 18

The IRS and Treasury are expected to release more guidance soon, but the clock is already ticking for 2025 births.

Bottom line: If you've got clients with kids or grandkids born in 2025 or later, they're going to ask you about this. Know the rules, know the timelines, and know how it fits into the bigger picture.