The $1,000 federal deposit, family and employer contributions, and tax at withdrawal
Updated October 2026
The account is a series of yearly deposits that compound until the growth period ends on January 1 of the year the child turns 18. The calculator adds each year’s contribution at the start of the year (capped at $5,000 from family and employer combined), adds the $1,000 pilot deposit in 2026 for children born 2025 through 2028, and then grows the balance by the assumed return for the year.
Worked example. Child born in 2026, family deposits $1,000 every January from 2026 through 2043 (18 deposits), return 7%. The pilot $1,000 joins the first deposit. Balance at the end of 2043: about $39,759. Of that, $18,000 is the family’s money (tax basis), $1,000 is the federal deposit, and about $20,759 is growth. Left invested to age 30 at the same return, with no further deposits, it would be about $89,545.
Birth year decides two things: whether the child gets the pilot deposit (2025-2028 births) and how many contribution years remain before 18; contributions could start July 4, 2026, so an older child has fewer years. Family contributions are after-tax dollars from parents, relatives or friends. Employer contributions are what a parent’s employer adds under a Trump Account program, up to $2,500. The return is your assumption for an index fund of U.S. stocks; try a lower figure to see a cautious case. Withdrawal age is 18 or later. The tax rate is the rate the account owner expects to pay when the money comes out, and the exception question removes the 10% additional tax for uses such as college costs or a first home.
Child born in 2026, contributions at the start of each year from 2026 through 2043, plus the $1,000 federal pilot deposit. Returns are held constant; real markets are not.
| Family contribution per year | At 5% | At 7% | At 9% |
|---|---|---|---|
| $0 | $2,407 | $3,380 | $4,717 |
| $500 | $17,176 | $21,569 | $27,226 |
| $1,000 | $31,946 | $39,759 | $49,736 |
| $2,500 | $76,254 | $94,327 | $117,263 |
| $5,000 | $150,102 | $185,275 | $229,809 |
| Case | Family deposits | Employer | Federal pilot | Growth | Balance at 18 |
|---|---|---|---|---|---|
| Born 2026, family $1,000 a year | $18,000 | $0 | $1,000 | $20,759 | $39,759 |
| Born 2020, family $1,000 a year (no pilot, 12 years) | $12,000 | $0 | $0 | $7,141 | $19,141 |
| Born 2026, family $2,500 + employer $2,500 | $45,000 | $45,000 | $1,000 | $94,275 | $185,275 |
Trump Accounts are a type of individual retirement account for children, created by section 530A of the Internal Revenue Code (Public Law 119-21) and explained in IRS Notice 2025-68 (December 2, 2025).
Opening. A parent or guardian elects an account on Form 4547 (online through an IRS account, or with a tax return) for a child with a Social Security number who has not turned 18 by the end of that year. Pilot deposit. Treasury deposits $1,000 once for a U.S.-citizen child born January 1, 2025 through December 31, 2028. Annual limit. $5,000 a year from all individuals and employers combined, adjusted for inflation after 2027 in $100 steps; an employer may put in up to $2,500 per employee, which counts toward the $5,000 and is excluded from the employee’s income. The pilot deposit, rollovers and “qualified general contributions” from governments or charities to a defined group of children are outside the limit. Investments. Only mutual funds or ETFs that track the S&P 500 or another index of mostly U.S. stocks, with no leverage and annual fees of 0.1% or less. Access. No withdrawals before January 1 of the year the child turns 18, except rollovers (including to an ABLE account at 17) and removal of excess contributions.
Contributions are not deductible, so the family’s own deposits are tax basis and come back tax-free. The pilot deposit, employer contributions and all investment growth are taxed as ordinary income when withdrawn, and withdrawals before age 59½ add a 10% tax unless an IRA exception applies, such as qualified higher education expenses or up to $10,000 toward a first home. In the worked example, withdrawing everything at 18 makes about $21,759 taxable; at a 10% tax rate that costs about $2,176 if an exception applies and $4,352 if it does not.
For college savings with your own money, a 529 plan usually comes out ahead because qualified withdrawals are completely tax-free, while a Trump Account taxes the growth. The Trump Account’s advantages are the free federal deposit, possible employer contributions and money that is not limited to education. Many families can use both: claim the $1,000 deposit, then direct extra education savings to a 529.
Not electing. The $1,000 is not automatic; someone has to file Form 4547 for the child. Going over $5,000. Grandparents and parents share one limit per child; an excess has to be taken out, and an additional tax equal to 100% of the earnings on the excess applies. Counting employer money twice. An employer’s $2,500 leaves only $2,500 of room for the family. Expecting a deduction. Family contributions are made after federal tax. Older children. A child born before 2025 can have an account but gets no pilot deposit and has fewer years to grow. Treating 7% as guaranteed. Stock index returns vary widely from year to year, and an 18-year window can end in a down market.
It holds the $5,000 limit flat even though it will be indexed after 2027, ignores fund fees (capped at 0.1% a year), and does not model state income tax, the effect on college financial aid, or contributions from charities or governments. Rules for distributions and reporting may still be refined by final regulations. For a large balance, or a choice between a Trump Account, a 529 and a custodial account, a tax professional can model your family’s actual brackets.