A Trump Account is a tax-free savings account for children under 18
A Trump Account (officially called an ABLE Account under the ABLE Act) is a special savings account where money grows without being taxed. The account is set up in a child's name, and the money inside belongs to the child. Parents, grandparents, or other family members can put money in, and that money can be used for the child's education, health care, housing, or other living expenses.
The main difference between a Trump Account and a regular savings account is that the money you earn from interest or investments in a Trump Account is not taxed by the federal government. In a regular savings account, you pay taxes on the interest you earn. In a Trump Account, you do not. This means the money grows faster because more of it stays in the account instead of going to taxes.
Trump Accounts are named after the legislation that created them, though the official name is an ABLE Account. They were designed to help families save money for children's future needs without losing government benefits the child might receive, such as Supplemental Security Income (SSI) or Medicaid.
Key Takeaways
- A Trump Account is a tax-free savings account owned by a child under 18, where money grows without federal income tax.
- Family members can contribute up to a set annual limit (which varies by year), and the money can be used for education, health care, housing, and other expenses.
- The account is held in the child's name, so the money belongs to the child and does not count against certain government benefits in the same way regular savings would.
- You must open the account through a state program, not through a regular bank, and each state runs its own Trump Account program.
Who can open a Trump Account
A Trump Account must be opened for a child who is under 18 years old. The account is set up in the child's name, which means the child is the owner. However, a parent, grandparent, or legal guardian can open the account on the child's behalf and manage it while the child is young.
There are no income limits or credit checks to open a Trump Account. Any family member can contribute money to the account, regardless of how much money they earn. This makes Trump Accounts different from some other savings programs that have income restrictions.
The child does not need to have a job or income of their own to have a Trump Account. The account exists solely to hold money that family members want to save for the child's future.
How much money you can put in each year
There is an annual contribution limit, which means there is a maximum amount of money that can be added to a Trump Account in a single calendar year. This limit changes from year to year based on inflation. For example, the limit might be $18,000 in one year and $19,000 in the next year. You should check your state's program website to find the current year's limit.
If multiple family members want to contribute, their contributions add together toward this annual limit. For example, if a grandparent puts in $5,000 and a parent puts in $8,000, that is $13,000 toward the limit for that year. Once the limit is reached, no more money can be added until the next calendar year begins.
There is also a lifetime account balance limit — a maximum total amount that can be held in the account at any time. This limit also varies by state and changes yearly. Once the account reaches this limit, you cannot add more money even if you have not used up the annual contribution limit.
What the money can be used for
Money in a Trump Account can be used for a wide range of expenses related to the child's life and development. Common uses include tuition and school fees, books and supplies for education, computers and technology for learning, and housing costs like rent or mortgage payments.
The money can also cover health care expenses, including doctor visits, prescriptions, mental health treatment, and dental or vision care. Other approved uses include transportation costs, job training and vocational programs, and assistive technology or services for children with disabilities.
When money is withdrawn for these approved purposes, it is not taxed. If money is withdrawn for something not on the approved list, the withdrawal is taxed and may include a penalty. Your state's Trump Account program provides a full list of what counts as an approved expense.
How Trump Accounts work with government benefits
One of the main reasons families open Trump Accounts is that the money inside does not count against certain government benefit programs in the same way regular savings does. If a child receives Supplemental Security Income (SSI) or Medicaid, having money in a regular savings account can reduce or end those benefits. A Trump Account is treated differently.
The first $100,000 in a Trump Account does not count toward the resource limits that determine whether a child stays may be able to access for SSI. This means a family can save a substantial amount without the child losing benefits. Once the account reaches $100,000, additional money may start to count against benefits, depending on the specific program rules.
However, the rules vary by state and by the specific benefit program. Before opening a Trump Account, it is worth checking with your state's Medicaid office or the Social Security Administration to understand how it will affect any benefits the child currently receives.
How to open a Trump Account
Trump Accounts are not offered by regular banks. Instead, each state runs its own Trump Account program, and you must open an account through your state. You cannot open a Trump Account in another state — you must use the program in the state where you or the child lives.
To open an account, you will need the child's Social Security number, proof of the child's age and identity (such as a birth certificate), and proof of your own identity if you are the parent or guardian opening the account. Some states may ask for additional information.
You can find your state's Trump Account program by searching online for "[Your State] ABLE Account" or by visiting the official ABLE National Resource Center website, which lists all state programs and provides links to each one. Once you find your state's program, you can open an account online, by mail, or in person, depending on what your state offers.
What happens when the child turns 18
When the child reaches 18 years old, the account does not close automatically. Instead, control of the account transfers to the child. The child becomes the legal owner and can decide how to manage the money and what to use it for.
Parents or guardians can no longer make decisions about the account without the child's permission once the child turns 18. However, the child can choose to let a parent or trusted adult continue to help manage it if they wish.
The account can continue to exist for the child's entire life. There is no age limit for how long a Trump Account can stay open. The money continues to grow tax-free as long as the account is open and the balance stays within the account limits.
Frequently Asked Questions
Can I open a Trump Account if my child receives SSI or Medicaid?
Yes. In fact, Trump Accounts are often opened specifically because the child receives these benefits. The first $100,000 in the account does not count against the resource limits for SSI, so the child can keep the benefits while the family saves money. Check with your state's Medicaid office or Social Security to confirm how it affects your child's specific situation.
What happens if I withdraw money for something not on the approved list?
The withdrawal will be taxed as income, and you may owe a 10 percent penalty on top of the taxes. For example, if you withdraw $1,000 for an unapproved expense, you would owe federal income tax plus the penalty. Your state's Trump Account program provides the full list of approved expenses before you withdraw.
Can I move money from a Trump Account to another account?
You can withdraw money and move it to another account, but the withdrawal must be for an approved expense or you will owe taxes and penalties. You cannot straightforward transfer the money to a regular savings account without consequences. The account is designed to keep the money in place until it is needed for approved purposes.
What if my state does not have a Trump Account program?
All 50 states and Washington, D.C., now have Trump Account programs. If you cannot find your state's program online, contact your state's disability services office or call 211 to be directed to the right program.
Can I contribute to a Trump Account if I do not live in the same state as the child?
The account must be opened in the state where the child lives. Family members in other states can contribute money to the account, but the account itself must be through the child's home state program.