Trump Accounts

The U.S. Congress, in 2025, created a new type of investment account, the Trump account, with many unique features. A Trump account is a variation on the individual retirement account (IRA). However, whereas a traditional IRA is a vehicle for individuals to save for retirement during their working lives, a Trump account must be created and funded before the beneficiary reaches the age of 18. Also, while a traditional IRA is created and funded privately in accordance with federal statutes and regulations, a Trump account must initially be created by the Treasury Department and may receive its first funding from the Treasury. Moreover, while a traditional IRA may be invested in a broad range of assets, the funds of a Trump account must be invested in  mutual or  exchange traded funds that track equity indexes. Distributions from a Trump account are prohibited before year of the beneficiary's eighteenth birthday; the scheme's objective is to make a significant nest egg available to the beneficiary on reaching adulthood. This nest egg may be used for the beneficiary's higher education costs or to finance the purchase of a personal residence, but other uses before the beneficiary reaches age 59 1/2 trigger a penalty tax.