If your child qualifies for the $1,000 federal deposit, I’d claim it. Deciding whether to add your own money is a separate question. A Trump Account can help a child start investing before they earn a paycheck. If your teen already works, a custodial Roth IRA may be a better home for the money you want to put toward their retirement.
Who qualifies for the account and the $1,000?
A Trump Account is an individual retirement account in the child’s name. To open one in 2026, the child generally needs a valid Social Security number and must still be under 18 at the end of the year. The one-time $1,000 federal deposit has narrower rules. The child must also be a U.S. citizen born from January 1, 2025, through December 31, 2028.
Use the IRS Trump Accounts page for current setup instructions. Request the $1,000 on Form 4547 if your child qualifies. The deposit goes into the child’s account, where it can be invested. You can claim it without making a contribution of your own.
Who can add money and how is it invested?
Parents, grandparents, and others can contribute even if the child has no earned income. For 2026, family contributions and qualifying employer contributions generally share a $5,000 annual limit. Qualifying employer contributions can account for up to $2,500 of that total. The federal $1,000 and certain qualified group contributions are outside the $5,000 limit.
During the growth period, investments are limited to eligible low-cost mutual funds and ETFs that track broad U.S. stock indexes. The provider’s eligible choices determine what you can select. The balance can go down as well as up.
When can my child use the money?
Ordinary withdrawals generally begin no earlier than January 1 of the year your child turns 18. A few special transactions are allowed earlier, including certain transfers and the return of excess contributions. Once that year begins, traditional IRA rules generally apply. The taxable part of an early withdrawal may also face a 10% additional tax unless an exception applies. An exception for qualified education expenses may remove the additional tax while leaving ordinary income tax due.
Will we pay tax twice on family contributions?
Family contributions during the growth period are made with after-tax dollars. They generally create tax basis, which means that amount can be recovered without paying federal income tax on it again. A withdrawal can include both taxable and nontaxable dollars under IRA rules. Keep records of family contributions. Investment gains and amounts that didn’t create basis, such as the federal deposit and qualifying employer contributions, are generally taxable when withdrawn.
When I’d choose a custodial Roth IRA
Say your 16-year-old earns $2,000 at a summer job and wants to invest $500 for retirement. If they’re eligible, I’d generally put that $500 in a custodial Roth IRA first. Qualified Roth withdrawals, including the growth, are federally tax-free. Regular Roth contributions can generally come out tax- and penalty-free. The child needs eligible compensation, and total IRA contributions are subject to IRS limits. A parent can supply the money, but the child’s eligible earnings still set a ceiling.
If your teen already contributes to a Roth IRA and has no federal deposit or employer contribution available, you may have little reason to add a Trump Account for the same retirement goal. For a younger child with no earned income, the account gives you a way to invest for their future. If the money is for a car or another expense coming up soon, decide how much you need to keep accessible before putting dollars in a retirement account.
IRS Trump Account setup and eligibility
IRS instructions for Form 4547
IRS Roth IRA contribution and withdrawal rules
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