Trump Accounts officially went live on July 4. These savings accounts for children with a Social Security number are invested in low-cost index funds, and withdrawals are generally not allowed until the child turns 18 years old. Contributions from non-government sources are limited to $5,000 per child per year.
Anyone under 18 years old is eligible for an account, but only U.S. citizens born between 2025 and 2028 will get a $1,000 seed payment from the government. The account is owned by the child but administered by the parent until the child turns 18, at which point it converts into a traditional IRA.
Below is a comparison of a Trump account (TA) and an ABLE account (AA) (the Trump account information is from the IRS webpage about those accounts at Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations | Internal Revenue Service):
(TA) Additionally, the federal government will make a one-time $1,000 pilot program contribution to the Trump Account of each eligible child for whom an election is made, who is a U.S. citizen and who is born on or after Jan. 1, 2025, through Dec. 31, 2028.
(AA) Anyone can make a contribution to an ABLE account once established, but no government contribution.
(TA) Certain governmental entities and charities may also make qualified general contributions to Trump Accounts, if given to a qualified class of account beneficiaries. Other persons are also able to make contributions up to an aggregate limit of $5,000 per year. Furthermore, an employer may contribute to a Trump Account of the employee or the employee’s dependent up to $2,500 per year (which counts against the $5,000 annual limit) under an employer’s Trump Account contribution program, and the contribution will not count toward the employee’s taxable income. The annual contribution limits are indexed to inflation and will adjust starting after 2027.
(AA) Again, anyone can make a contribution to an ABLE account once established, but total contributions are limited to $20,000 during calendar year 2026. That limit is indexed for inflation and will rise over time. A Mississippi resident will get a state income tax deduction for a contribution to a Mississippi ABLE account.
(TA) The funds in Trump Accounts must be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily American equities.
(AA) An ABLE account may be held in a checking account, money market account, or invested in the high-quality mutual funds ranging from very conservative to aggressive.
(TA) Amounts generally cannot be withdrawn from Trump Accounts before January 1st of the calendar year in which the child turns 18 years old. After that point, the account generally is treated as a traditional IRA and generally is subject to the same rules as other traditional IRAs.
(AA) Funds may be withdrawn from an ABLE account at any time if needed to pay for things for the disabled owner’s benefit. While a Trump account will become a countable asset for SSI and Medicaid purposes when the owner reaches age 18 (IRAs are countable), an ABLE account will remain a non-countable asset by SSI if the balance remains below $100,000 and for Medicaid if the balance remains below $235,000.