Important Tax Considerations Before You Fund a Trump Account

Trump Accounts have attracted interest from parents seeking new savings options for their children. While these accounts offer long-term benefits, many families are unaware of the potential gift tax implications. Understanding these rules can help you avoid unexpected reporting requirements and better integrate Trump Accounts into your overall estate plan.

What Is a Trump Account?

Trump Accounts are tax-deferred, IRA-style savings accounts investing in a narrow set of low-cost U.S. equity index funds.  They encourage long-term savings for children by allowing contributions that grow over time and can later be used for specified purposes. Eligible children may receive an initial government contribution of $1,000 or $250.

It’s important to note, however, that these initial government-provided amounts are not treated as taxable gifts. As such, planning complexity may arise when parents, grandparents, or other individuals make additional contributions to the account.

Why Trump Account Contributions Don’t Qualify for the Annual Gift Tax Exclusion

The annual gift tax exclusion allows individuals to gift up to a certain amount each year per recipient without triggering gift tax reporting ($19,000 for 2026).  Under current law, Trump Account contributions do not fall under this exclusion. This treatment is based on how contributions are classified for tax purposes. Since the child cannot access the funds until age 18, contributions are considered gifts of future interests, not present interests. Only present-interest gifts qualify for the annual exclusion.

Since current law does not extend annual exclusion treatment to these contributions, any change would require new legislative or regulatory guidance.

As a result, since the contributions don’t currently qualify for the exclusion:

• They would be considered a taxable gift, and
• They must be reported for gift tax purposes (i.e. an additional return to file)

The Compliance Cost of Trump Account Contributions

In addition to tax classification, compliance is a key consideration. Trump Account contributions are capped at $5,000, every dollar contributed, whether $25 or $5,000, requires gift tax reporting.

Form 709 is not included in many consumer tax softwares and typically requires professional preparation, often at a cost that exceeds the contribution. These reported gifts also permanently reduce the taxpayer’s lifetime gift and estate tax exemption making lifetime tracking paramount.

 What This Means for You

While contributions to Trump Accounts may be treated as taxable gifts, that does not mean necessarily mean you will owe gift tax. Instead:

• Contributions apply against your lifetime gift and estate tax exemption

No gift tax is due unless you exceed that lifetime limit (approximately $15 million in 2026)

However, the reporting requirement still matters. Failing to properly account for it can create problems later for your broader estate plan.

Are Trump Accounts “Worth It”?

When used thoughtfully, Trump Accounts can still play a role in a family’s financial strategy. They may offer value by:

• Allowing eligible children to receive the initial government contribution

• Accepting employer contributions, when applicable
• Serving as a supplemental savings vehicle alongside other savings tools

Families should weigh these benefits against the administrative and reporting requirements before contributing. In many cases, Trump Accounts are most effective when coordinated with a broader estate and education savings strategy.

Where Do You Go From Here?

Trump Accounts can be a useful addition to your tax planning, but they come with gift tax rules that may surprise many taxpayers. Because these accounts affect both tax and estate planning, careful evaluation is important before funding them.

If you’d like help navigating Trump Accounts, gift tax reporting, or alternative savings strategies for your children, reach out to a CRI advisor to discuss what works best for you. A proactive conversation today can help align your savings strategy with your long-term tax and estate planning goals.