Included in H.R.1 as enacted into law are provisions that would create new tax-favored savings accounts (Trump accounts) for children. It also includes creation of a pilot program under which there would be a one-time government contribution to Trump accounts.

Generally, individuals could contribute up to $5,000/year (cash only) to Trump accounts established for children younger than age 18. Distributions from Trump accounts would be banned prior to the child’s attaining the age of 18.

The Trump account pilot program would provide for a one-time credit of $1,000 to the Trump account of each qualifying child of the taxpayer. A qualifying child is one born after December 31, 2024 and before January 1, 2029 who is a United States citizen at birth.

There are strict withdrawal, trustee and rollover rules included in the Trump account provisions.

The Trump account provisions take effect for tax years beginning after December 31, 2024.

Prospects: Watch for the take-up rate on creation of Trump accounts. If the accounts prove popular, there could be modifying proposals aimed at making them easier for taxpayers and financial advisors alike.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org