Direct Answer
A Trump Account (formally "Money Account for Growth and Advancement" or MAGA Account) is a new tax-advantaged savings vehicle for American children created by the One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025). Children born after December 31, 2024 receive a $1,000 federal seed contribution Confirmed. Parents and others can contribute up to $5,000 per year Confirmed. Funds are invested in U.S. equity index funds only Confirmed. Growth is tax-deferred. Distributions begin at age 18. The tax treatment of distributions is subject to ongoing IRS implementation guidance Provisional.
Key Takeaways
- New account type created by the OBBBA, not a modification of an existing account (529, IRA, Coverdell). Confirmed
- $1,000 federal seed contribution for children born after December 31, 2024. Confirmed
- Annual contribution limit: $5,000 per year from all contributors combined. Confirmed
- Investments restricted to U.S. equity index funds only. No individual stocks, bonds, or foreign funds. Confirmed
- Contributions are after-tax (not deductible). Growth is tax-deferred. Confirmed
- Distributions available at age 18. Qualified distribution categories (education, home, business) and tax treatment are subject to IRS guidance. Provisional
- Penalty for non-qualified distributions: subject to IRS guidance. Provisional
- Eligibility details for the federal seed (including any income limits on parents) are subject to IRS implementation guidance. Provisional
- Growth projections in this calculator are derived from standard compound interest math, not statutory. Derived
Quick Facts: Trump Account (MAGA Account)
Quick Facts — OBBBA (P.L. 119-21)
| Item | Value | Status |
|---|
| Formal name | Money Account for Growth and Advancement (MAGA Account) | Confirmed |
| Federal seed amount | $1,000 per qualifying child born after December 31, 2024 | Confirmed |
| Seed eligibility conditions | Pending IRS guidance (income limits, citizenship requirements) | Provisional |
| Annual contribution limit | $5,000 per year (all contributors combined) | Confirmed |
| Contribution type | After-tax — not deductible | Confirmed |
| Eligible investments | U.S. equity index funds only | Confirmed |
| Minimum distribution age | 18 years | Confirmed |
| Qualified distribution tax treatment | Pending IRS guidance | Provisional |
| Effect on current-year taxes | None — does not reduce current-year tax liability | Confirmed |
| Contribution period | TY 2025–2028 (OBBBA window) | Confirmed |
| State conformity | Varies — no federal mandate | Provisional |
How the Projection Is Calculated Derived
This calculator projects the future value of a Trump Account from the child's current age to age 18. It uses standard compound interest with annual end-of-year contributions. For a complete explanation of account structure, contribution eligibility rules, investment restrictions, and current IRS guidance on distributions, see our Trump Account Guide.
Starting balance Confirmed
If the child was born after December 31, 2024, the account starts with a $1,000 federal seed. Children born before that date start at $0 (no federal seed). The $1,000 figure is confirmed in the OBBBA.
Annual contributions Confirmed
Up to $5,000 per year can be contributed from any source. This calculator assumes the same contribution amount every year. In practice, contributions may vary by year. The $5,000 annual limit is confirmed per the OBBBA.
Growth rate Derived
The assumed growth rate is user-selected and is not specified in the OBBBA. It is a planning assumption, not a statutory number. Broad U.S. equity index funds have historically returned approximately 7–10% per year over long periods before inflation adjustment. Actual returns will vary. Years with market downturns can produce negative returns, and years with strong markets can produce returns well above the long-term average.
Future value formula Derived
FV = PV × (1 + r)^n + PMT × [(1 + r)^n − 1] / r, where PV is the starting balance (seed or $0), PMT is the annual contribution, r is the annual return rate, and n is the years until age 18. Contributions are assumed at end of each year (standard annuity).
Provisional note on tax treatment of growth: The tax-deferred status of account growth is confirmed in the OBBBA. However, the specific tax treatment at distribution (whether qualified withdrawals are tax-free (Roth-like) or taxable at the child's ordinary income rate) is subject to IRS implementation guidance. This calculator does not project post-distribution tax costs or savings.
Nominal vs. Real Value: This calculator shows nominal (not inflation-adjusted) projected values. A 7% growth rate assumption includes approximately 3–4% inflation. In real purchasing power terms, a nominal value of $100,000 at age 18 may be worth significantly less in today's dollars. The projection is a planning tool, not a guaranteed outcome. Derived
Key Account Rules
Federal seed contribution Confirmed
Children born after December 31, 2024 receive a $1,000 federal seed contribution deposited into their Trump Account. This is a one-time contribution from the federal government, not from the parent or guardian. It counts toward the child's account balance and grows with the rest of the account from the date of deposit.
Provisional: seed eligibility details. Specific eligibility requirements for the $1,000 seed (including any income limits on parents, the application or claiming process, and whether children born before 2025 but below a certain age may qualify) are subject to IRS implementation guidance. Check irs.gov for current guidance before assuming eligibility.
Annual contribution limit Confirmed
Total contributions from all sources (parents, grandparents, other family members) cannot exceed $5,000 per year per account. Contributions are made with after-tax dollars (no deduction). There is no minimum contribution requirement.
Investment restriction Confirmed
Trump Account funds must be invested in U.S. equity index funds. This restriction is explicit in the OBBBA. The requirement means funds track a U.S. stock market index: the S&P 500, total market, or similar broad U.S. indexes. Individual stocks, bonds, money market funds, international equity funds, and actively managed funds are not permitted.
Distributions Provisional
Provisional: distribution rules. The OBBBA established that distributions from Trump Accounts may begin at age 18. The specific qualified distribution categories (education, first home, starting a business, and potentially others), the tax treatment of qualified distributions, the penalty for non-qualified distributions, and the custodianship transition rules are subject to IRS implementation guidance that is still being developed. Do not assume Roth-like tax-free distribution treatment until confirmed in IRS guidance.
Who controls the account Provisional
Before age 18, a parent or guardian acts as custodian. At age 18, control transfers to the account holder. The specific mechanics of this transition and any restrictions on withdrawal timing are subject to ongoing IRS guidance.
Confirmed vs. Pending Guidance
The OBBBA is law, but IRS implementation rules are still being issued. This table separates what is settled from what is pending.
Confirmed by Statute (Pub. L. 119-21)
Federal seed$1,000 for children born after December 31, 2024 Confirmed
Annual contribution cap$5,000 per year, all contributors combined Confirmed
Contribution typeAfter-tax only. Not deductible. Confirmed
Investment restrictionU.S. equity index funds only Confirmed
Minimum distribution ageAge 18 Confirmed
SunsetProvision expires December 31, 2028 absent extension Confirmed
Pending IRS guidance: Seed eligibility conditions (income limits, citizenship requirements, application process) · Distribution tax treatment (tax-free vs. ordinary income) · Qualified distribution categories (education, first home, business) · Rules for unused balances after age 18 · Excess contribution penalties. Check
irs.gov for current published guidance.
Provisional
Who Benefits Most
Likely Gets Meaningful Benefit
Parents of newborns born after Dec 31, 2024Eligible for $1,000 federal seed plus full 18-year compounding window
Families who can contribute $5,000/year consistentlyFull compounding effect over 18 years — see Growth Scenarios below
Moderate-income families with no existing child investment accountLow-cost U.S. index fund growth with tax-deferred treatment
Gets Little or No Benefit
Children born before January 1, 2025No federal seed. Shorter accumulation window. Eligibility rules still pending.
Families who need a current-year tax deductionContributions are after-tax and not deductible. No current-year tax reduction.
Families maximizing 529 with state income tax deductions529 may offer better after-tax value for education-specific goals in many states until Trump Account distribution tax treatment is confirmed.
Growth Scenarios
Scenario A: Newborn (2025), $3,000/yr, 7% Return — 18 years (Derived)
Federal seed (confirmed)$1,000
Annual contribution$3,000/year
Years to age 1818
Seed value at 18 (7% × 18yr)$3,380
Contribution value at 18$101,997
Total projected value at 18$105,377
Total contributed (seed + $3K×18)$55,000
Tax-deferred growth$50,377
Scenario B: Newborn (2025), Max $5,000/yr, 7% Return — 18 years (Derived)
Federal seed$1,000
Annual contribution (max)$5,000/year
Total projected value at 18$173,375
Total contributed$91,000
Tax-deferred growth$82,375
Scenario C: Age 5 (2021), $3,000/yr, 7% Return — 13 years (Derived, no seed)
Federal seed$0 (born before Jan 1, 2025)
Annual contribution$3,000/year
Years to age 1813
Total projected value at 18$60,423
Total contributed$39,000
Tax-deferred growth$21,423
All scenarios use end-of-year contribution assumption and 7% annual return. All growth figures are derived — not statutory. Actual returns will differ.
How Trump Accounts Compare to 529 Plans
Both accounts accumulate savings for children with tax-deferred or tax-advantaged growth. The key structural differences:
Comparison: Trump Account vs 529 Plan
Federal seedTrump: $1,000 (newborns after 2024) · 529: None
Annual limitTrump: $5,000 · 529: Gift tax limit ($18,000/yr in 2025)
Contribution deductible?Trump: No · 529: State deduction in many states
Investment optionsTrump: U.S. index funds only · 529: Broad options
Distribution ageTrump: 18+ · 529: Any age for qualified education
Qualified usesTrump: Provisional · 529: Education (K-12 + higher ed)
Distribution tax treatmentTrump: Provisional · 529: Tax-free for qualified education
Trump Account vs. Roth IRA
Trump Accounts and Roth IRAs share one key trait: both are funded with after-tax dollars and contributions are not deductible. Beyond that, they serve different purposes and have different rules.
Trump Account vs. Roth IRA — Key Differences
Who can contributeTrump: Any person for eligible child · Roth: Earner only (must have earned income)
Annual limitTrump: $5,000 all contributors · Roth: $7,000 ($8,000 age 50+) per earner
Contributions deductibleTrump: No · Roth: No
Tax on growthTrump: Provisional Provisional · Roth: Tax-free (qualified)
Distribution rulesTrump: Age 18+ Provisional · Roth: Age 59½ + 5-year rule (for tax-free)
Investment optionsTrump: U.S. index funds only · Roth: Broad (stocks, bonds, funds)
Qualified usesTrump: Provisional Provisional · Roth: Retirement (+ some exceptions)
Federal seedTrump: $1,000 for newborns after 2024 · Roth: None
Distribution tax treatment and qualified uses for Trump Accounts are pending IRS guidance. The Roth IRA comparison rows marked Provisional reflect this gap. Do not rely on this comparison for distribution planning until IRS issues final rules. Provisional
Trump Account vs. Custodial Account (UTMA/UGMA)
Custodial accounts (UTMA and UGMA) hold assets in a child's name with no IRS-defined contribution limits and no investment restrictions. The trade-off is annual taxation of growth.
Trump Account vs. UTMA/UGMA — Key Differences
Federal seedTrump: $1,000 (newborns after 2024) · UTMA/UGMA: None
Annual contribution limitTrump: $5,000 all contributors · UTMA/UGMA: No federal limit (gift tax rules apply above $18,000/yr per donor)
Tax on growthTrump: Tax-deferred Confirmed · UTMA/UGMA: Taxable annually (Kiddie Tax applies)
Investment optionsTrump: U.S. equity index funds only · UTMA/UGMA: Unlimited — stocks, bonds, real estate, funds
Access restrictionsTrump: Age 18 minimum · UTMA/UGMA: Child gains full control at state majority age (18 or 21)
Use restrictionsTrump: Qualified uses pending guidance · UTMA/UGMA: No restrictions — child can spend freely
Revocable by parent?Trump: Pending guidance · UTMA/UGMA: No — irrevocable once transferred
Impact on financial aidTrump: Pending guidance · UTMA/UGMA: Counted as student asset (reduces aid eligibility)
Practitioner Note
LMN Tax Inc. — Client Pattern
The immediate value proposition for parents of newborns is clear: a free $1,000 of government money invested in a U.S. index fund with 18 years of tax-deferred compounding. At a 7% return, that $1,000 grows to roughly $3,400 by the child's 18th birthday with no contribution from the parent required. The question of whether Trump Accounts should replace or supplement existing 529 plans depends on the provisional distribution rules IRS has not yet finalized. Until the distribution tax treatment is confirmed, families in states with 529 state deductions should not abandon their 529 strategy based on Trump Account planning alone.
The annual contribution limit of $5,000 is per account, not per contributor. A child with three sets of contributing grandparents plus parents can only receive $5,000 total in a given year across all contributors. We flag this for clients with large extended families who sometimes assume the $5,000 limit applies per contributor. Excess contributions may result in penalties pending IRS implementation guidance.
Trump Account contributions do not affect the current-year tax return. This surprises some clients who conflate the account with a deductible IRA. Contributions are after-tax. The only current-year tax event a Trump Account touches is through the Child Tax Credit: if the child who receives the $1,000 seed is also a qualifying child under Schedule 8812, the CTC applies independently and does reduce current-year tax. We review both simultaneously for newborn clients so no OBBBA benefit is missed in year one.
When This Account Does Not Apply
- Child born before January 1, 2025: no federal seed. Older children may still open a Trump Account, but the $1,000 government contribution is not available for births before that date.
- Annual contributions above $5,000: the $5,000 limit applies to all contributors combined. Excess contributions may be subject to penalties pending IRS guidance.
- Investment options outside U.S. equity index funds: individual stocks, bonds, international funds, and actively managed funds are not permitted.
- Distributions before age 18: the OBBBA sets a minimum distribution age of 18. Early withdrawal rules are pending IRS implementation guidance.
- Current-year tax reduction: Trump Account contributions are after-tax and not deductible. They do not reduce your federal income tax for the year of contribution.
- Qualified distribution details: the specific tax treatment at distribution (whether withdrawals for education, a first home, or starting a business are tax-free or taxable) is provisional and subject to IRS guidance.
Frequently Asked Questions
What is a Trump Account?
A Trump Account (formally "Money Account for Growth and Advancement" or MAGA Account) is a new tax-advantaged savings account for American children created by the One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025). Children born after December 31, 2024 receive a $1,000 federal seed. Annual contributions up to $5,000 are allowed from parents and others. Investments are restricted to U.S. equity index funds. Distributions begin at age 18.
Who receives the $1,000 federal seed?
Confirmed / Provisional details Children born after December 31, 2024 are eligible for the $1,000 federal seed. The seed amount is confirmed. Specific eligibility requirements including any income limits on parents and the claiming process are subject to IRS implementation guidance. Check irs.gov for current requirements before assuming your child qualifies.
What is the annual contribution limit?
Confirmed $5,000 per year from all contributors combined. Contributions are after-tax and not deductible on your federal return.
What investments are allowed?
Confirmed U.S. equity index funds only. Individual stocks, bonds, international funds, money market funds, and actively managed funds are not permitted.
When can distributions be taken?
Provisional Distributions may begin at age 18. Qualified distribution categories (education, first home, starting a business) and the tax treatment of qualified vs. non-qualified distributions are subject to IRS implementation guidance. Do not assume tax-free treatment until confirmed.
How does a Trump Account compare to a 529 plan?
A 529 plan offers broader investment options, state tax deductions for contributions in many states, and confirmed tax-free treatment for qualified education distributions. A Trump Account provides the $1,000 federal seed (for newborns after 2024), has a $5,000 annual limit, and is restricted to U.S. index funds. Distribution rules for Trump Accounts are provisional. Families already using 529 plans should not redirect contributions until IRS finalizes Trump Account distribution guidance.
Are Trump Account contributions tax-deductible?
Confirmed No. Contributions are after-tax and not deductible on your federal return.
Does the Trump Account affect my annual tax refund?
No. Contributions are after-tax and do not reduce your income tax liability for the current year. The tax benefit is deferred: it accumulates as tax-deferred growth inside the account over the years. If you are taking other OBBBA deductions (SALT, tips, overtime, auto loan interest), those affect your current-year return. Trump Account contributions do not.
Can a child born before 2025 open a Trump Account?
Provisional Eligibility for children born before January 1, 2025 is subject to IRS implementation guidance. These children generally do not receive the federal seed. Whether they can open the account at all and under what terms depends on IRS rules that are still being finalized.
What growth rate should I assume?
Derived The growth rate is not set in the OBBBA. It depends on market performance. Historical long-term U.S. index fund returns have averaged approximately 7–10% annually before inflation. The 7% default in this calculator is a moderate planning assumption, not a guarantee. Actual returns will vary significantly year to year.
Next Step
If your child was born after December 31, 2024, open a Trump Account to capture the $1,000 federal seed. Contributions must come from after-tax dollars, and the annual limit across all contributors is $5,000. Use the projection above to model different contribution amounts and time horizons.
For children born before 2025, the federal seed does not apply and eligibility rules are still pending IRS guidance. Run the calculator with zero seed to model a voluntary contribution scenario.
Trump Account contributions are after-tax and do not reduce your current-year return. To lower your tax bill now, use the OBBBA deduction calculators: SALT Deduction, No Tax on Tips, No Tax on Overtime, and Auto Loan Interest.
Parents of newborns should also run the Child Tax Credit Calculator. The OBBBA increased the Child Tax Credit from $2,000 to $2,200 per qualifying child for tax years 2025–2028.
For a complete reference across all six OBBBA provisions, see the OBBBA Tax Changes Guide.
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