One Big Beautiful Bill Act adds provision for new type of retirement account.
LEARN HOW YOUR PLANNED GIFT CAN HELP THE AMERICAN LEGION
The One Big Beautiful Bill Act (OBBBA) added a provision that allows children to have a new type of retirement account, similar to a traditional IRA for the child and called a "Trump Account.”
The new account may be funded on or after July 4, 2026, and created for a child under 18. There are multiple special provisions:
Contributions Contributions made after July 4 may include a one-time federal government addition of $1,000. There could be other additions provided by governmental entities or qualified nonprofits. Employers and parents may also make contributions. The contributions are permitted during the growth period, and there is no requirement for the child to have earned income to be eligible for contributions.
Eligible Investments Account investments are limited to mutual funds or exchange-traded funds that track an index of U.S. companies. For example, an approved fund would be the S&P 500 stock market index. The investment fund cannot have annual fees and expenses of more than 0.1%.
Distributions During the growth period, there may not be distributions to the child. However, there are provisions that allow rollovers to another Trump Account or to an Achieving a Better Life Experience (ABLE) account. Following the growth period, the account transitions to a traditional IRA.
Reporting The accounts will have their own reporting requirements. However, it is expected that these will be similar to the traditional IRA reporting rules.
Coordination with IRA Requirements Following the growth period, the accounts will follow traditional IRA rules. There are specific rules for IRA contributions, distributions, required minimum distributions and rollovers. The Trump Account is not permitted to be aggregated to other IRA accounts for specific purposes.
Employer Contribution Limit An employer is permitted to make contributions to the Trump Account of an employee’s child. The limit is $2,500 per year. This funding amount must meet similar fairness requirements that would apply to a dependent care assistance program.
Some individuals have indicated they will contribute billions of dollars to help fund Trump Accounts for children born outside the pilot funding program. The initial account beneficiaries may receive contributions from these funds.
The American Legion’s Fund Development program is a way of establishing your legacy of support for the organization while providing for your current financial needs. Learn more about the process, and the variety of charitable programs you can benefit, at legion.org/plannedgiving. Clicking on “Learn more” will bring up an “E-newsletter” button, where you can sign up for regular information from Planned Giving.
- Planned Giving