Families often look for meaningful ways to help children build a stronger financial future. Whether a contribution comes from a parent, grandparent, relative, friend, or employer, even modest annual savings can grow into a valuable resource over time. With the creation of Trump Accounts, families now have a new savings vehicle to consider for eligible children.
The IRS recently issued Revenue Procedure 2026-25, providing important gift tax reporting relief for certain contributions to Trump Accounts. Under the new guidance, qualifying contributions will be treated as completed gifts that are not future interests in property and may qualify for the annual gift tax exclusion. As a result, many individual donors will not be required to file a federal gift tax return solely because they contributed to a Trump Account.
What Are Trump Accounts?
Trump Accounts are a new type of individual retirement account created under Internal Revenue Code Section 530A for the benefit of eligible children. The account is established for the exclusive benefit of the child, and the child is treated as the account owner and beneficiary.
These accounts are subject to special rules during what is referred to as the child’s growth period. The growth period generally ends before January 1 of the calendar year in which the child turns age 18. During this period, distributions are generally restricted, meaning the child typically cannot access the funds while still a minor, except in limited circumstances.
Who Is an Eligible Child?
The age rules are important and can be confusing, so families should pay close attention to timing.
For purposes of opening a Trump Account, an eligible child generally is an individual who:
- Has not attained age 18 before the close of the calendar year in which the election to open the initial Trump Account is made;
- Has been issued a Social Security number before the date of the election; and
- Has an election made on the child’s behalf to open the initial Trump Account.
In practical terms, this means a Trump Account generally may be opened for a child if the child has not yet turned 18 before the end of the year in which the election is made. For example, if a child turns 18 during 2026, the age requirement should be reviewed carefully because eligibility depends on whether the child has attained age 18 before the close of that calendar year.
There is also a separate rule for the federal government’s one-time $1,000 pilot program contribution. That contribution may be available for eligible children who are U.S. citizens and are born on or after January 1, 2025, and before January 1, 2029, provided the required election is made.
When Can Contributions Begin?
Contributions to Trump Accounts can be made upon account opening. Eligible accounts may receive contributions from individuals, employers, nonprofit organizations, and governmental entities, subject to applicable limitations.
During the growth period, contributions are generally limited to $5,000 per year, with inflation adjustments beginning after 2027. The federal government’s one-time $1,000 pilot contribution does not count against this annual $5,000 limit.
Employers may also contribute to a Trump Account for an employee or an employee’s dependent under an employer contribution program. Employer contributions may be made up to $2,500 per year, and those amounts count toward the overall $5,000 annual contribution limit.
Why the Gift Tax Guidance Matters
Before the IRS issued Revenue Procedure 2026-25, there was uncertainty about whether contributions to Trump Accounts might be treated as gifts of a future interest. Under general gift tax rules, the annual gift tax exclusion usually applies only to gifts of a present interest. Because children generally cannot access funds in a Trump Account during the growth period, contributors had reason to question whether making even relatively small contributions could create a gift tax return filing obligation.
The IRS addressed that concern by creating a safe harbor. If the requirements are met, qualifying cash contributions to Trump Accounts will be treated as completed gifts that are not future interests and that qualify for the annual per-donee gift tax exclusion. For 2026, the annual gift tax exclusion is $19,000 per recipient.
This is meaningful relief for families. Parents, grandparents, and others may now have more confidence that routine contributions to Trump Accounts will not automatically result in additional federal gift tax reporting.
Safe Harbor Requirements
The safe harbor generally applies when all of the following requirements are satisfied:
- The taxpayer making the contribution is an individual;
- The only taxable gifts made by that individual during the calendar year to the account beneficiary are cash contributions to one or more Trump Accounts;
- The contributions are made before the calendar year in which the account beneficiary turns age 18;
- The taxpayer’s total gifts to that beneficiary for the year, including Trump Account contributions, do not exceed the annual gift tax exclusion amount;
- The contributions do not generate generation-skipping transfer tax liability or require the use of the taxpayer’s GST exemption; and
- The taxpayer is not otherwise required to file, and does not otherwise file, a federal gift tax return for that calendar year.
If these conditions are met, the donor generally should not be required to file Form 709, United States Gift Tax Return, solely to report the Trump Account contribution.
A Practical Example
Assume a grandparent contributes $5,000 in cash to a grandchild’s Trump Account in 2026. The grandchild is under age 18, has a Social Security number, and otherwise qualifies as an eligible child. The grandparent makes no other gifts to that grandchild during the year and is not otherwise required to file a gift tax return.
Under the IRS safe harbor, that $5,000 contribution may be treated as a completed gift that qualifies for the annual gift tax exclusion. Because the contribution is below the 2026 annual exclusion amount of $19,000, the grandparent generally would not be required to file a gift tax return solely for that contribution.
Planning Considerations for Families
Although the guidance is helpful, families should still coordinate contributions carefully. The Trump Account annual contribution limit and the gift tax annual exclusion are separate concepts. A contribution may be below the gift tax annual exclusion but still needs to be monitored for purposes of the account’s annual contribution limit.
Families should also keep good records of who contributed, how much was contributed, and when the contribution was made. This may be especially important when multiple family members, employers, nonprofit organizations, or government programs are involved.
In addition, families should understand that Trump Accounts are not the same as 529 plans, custodial accounts, or traditional investment accounts. During the child’s growth period, distribution restrictions apply. After that period, the account generally is treated similarly to a traditional IRA and may be subject to traditional IRA rules.
The Bottom Line
Revenue Procedure 2026-25 provides welcome clarity for families and individual donors who want to contribute to Trump Accounts. By confirming that qualifying contributions may be treated as completed gifts eligible for the annual exclusion, the IRS has reduced a potential administrative burden and made it easier for families to participate in this new savings opportunity.
As with any new tax-favored account, details matter. Families should review the eligibility rules, age requirements, annual contribution limits, and gift tax implications before making contributions.
National Tax Advisory | Prager Metis can help individuals, families, and employers evaluate how Trump Accounts may fit into broader tax, estate, retirement, and family wealth planning strategies.
Sources
IRS Revenue Procedure 2026-25, Transfer Tax Safe Harbor for Certain Contributions to Trump Accounts.
IRS News Release IR-2025-117, “Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts.”
Journal of Accountancy, “IRS offers gift tax safe harbor for contributions to Trump accounts,” June 29, 2026.
