Did you recently welcome a new child into your family? Or are you expecting one soon? If so, new tax rules could help you jumpstart their financial future from day one.
On July 4, 2025, the government passed the Working Families Tax Cuts. This major legislation created a brand new type of traditional individual retirement account for eligible minors. People often refer to these as “Trump Accounts.” To kick off this initiative, the Treasury Department announced a plan to deposit a one-time $1,000 contribution into the accounts of qualifying children.
Recently, the Treasury and IRS issued proposed rules explaining exactly how this will work. For the full technical details, you can read the original IRS release: Treasury, IRS issue proposed regulations for Trump Accounts contribution pilot program.
In short, this is an excellent opportunity to build a long-term financial foundation for your child. However, parents or guardians must take specific, timely steps to claim this money.
What the Trump Accounts Pilot Program Covers
Under the proposed regulations, the Treasury will make a single $1,000 pilot program contribution to the accounts of eligible children.
The most important thing to know is that this deposit does not happen automatically. The government will not simply mail a check or open an account for you when your child is born. Instead, parents or guardians must formally choose to join the program. They must also take the steps to legally establish the account.
Because you can make this election during the same tax year your child is born, parents who want to participate should prepare to act as soon as their baby arrives and receives their official documents.
Who Qualifies for the Trump Accounts Pilot Program?
The IRS has outlined strict criteria for this initial rollout. To receive the $1,000 contribution, your child must meet four specific requirements:
- Birth Year: The child must be born in calendar year 2025, 2026, 2027, or 2028.
- Citizenship: The child must be a United States citizen.
- Identification: The child must have been issued a valid Social Security Number.
- First-Time Applicant: The child must be someone for whom no prior pilot program election has been processed by the Treasury.
The Social Security Number requirement is a critical detail. Parents will need to ensure they apply for their newborn’s SSN right away, as you cannot file the required tax forms without one.
Who Can Make the Election for the Child?
Not just anyone can open one of these accounts. The IRS designates a specific person called the “pilot program-electing individual.” Generally, this must be an individual who anticipates the child will be their “qualifying child” for tax purposes during the year the election is made. Typically, this is a parent or legal guardian. If you plan to claim the child as a dependent on your tax return, you are likely the correct person to file the paperwork.
How the Election Process Works
To actually open the account and claim the $1,000 pilot program contribution, the electing individual must file a new IRS document. This document is known as Form 4547, Trump Account Election(s).
While the concept of receiving a $1,000 deposit sounds simple, navigating new IRS forms and dependent rules can quickly become complicated. If you make a simple mistake on Form 4547, or if your dependent status is unclear, the IRS might delay processing your request. Even worse, errors could result in missing out on the pilot program funds entirely.
The Long-Term Value of a Minor’s Traditional IRA
It is worth noting that Trump Accounts are classified as a new type of traditional individual retirement account (IRA) for minors.
Why does this matter? Because money placed into an IRA has the potential to grow tax-deferred over time. A $1,000 deposit made in the first year of a child’s life has decades to benefit from compound interest before they reach retirement age. While the pilot program provides the initial seed money, understanding how this account fits into your family’s broader financial and tax planning strategy is crucial.
How Torkelson & Associates CPAs Can Help
The Trump Accounts Pilot Program is an exciting new benefit for young families, but it introduces brand new reporting forms and complex eligibility rules that parents must navigate carefully.
At Torkelson & Associates CPAs, we can help you:
- Determine if your child meets all the eligibility requirements for the Trump Accounts Pilot Program
- Confirm that you meet the IRS definition of a qualifying “pilot program-electing individual”
- Properly prepare and file Form 4547 alongside your annual tax return
- Plan for the long-term tax implications of managing a traditional IRA for a minor
Did you welcome a child in 2025, or are you expecting one soon? If you are unsure how to claim this new benefit, do not wait until tax season sneaks up on you. Contact us today. We can help you navigate these new regulations and put your family in a strong financial position for the future.