Trump Accounts are here: what parents and grandparents need to know about gift tax

Seven million accounts opened in one month. About $1.5 billion invested. Trump Accounts are officially off the ground — and the IRS just answered the question most families were actually worried about.

Here’s the plain-English version.

First, what is a Trump Account?

A Trump Account is a new kind of retirement account for kids, created by the One Big Beautiful Bill Act. Think of it as a traditional IRA, except the owner is a child instead of a working adult.

The basics:

• A parent or guardian opens the account for a U.S. citizen child under 18 who has a Social Security number.
• One account per child.
• Accounts started accepting money on July 4, 2026.
• Children born between 2025 and 2028 can receive a $1,000 starter deposit from the Treasury.
• The money has to be invested in broad U.S. stock index funds — not individual stocks.
• Anyone can chip in: parents, grandparents, aunts, uncles, even employers.

That last point is where the tax question came in.

The problem: a surprise tax form

When you give someone money, the IRS lets you give a certain amount each year without any paperwork. For 2026, that amount is $19,000 per person. Stay under it, and normally you don’t file anything.

But there’s an old rule with a catch. If your gift is something the person can’t touch until later — the tax law calls this a “future interest” — the free pass disappears. You’d have to file a gift tax return (Form 709) no matter how small the gift was. Even $100.

And a Trump Account is exactly that kind of gift. The child can’t get to the money until they turn 18.

So technically, Grandma putting $500 into her grandson’s account could have owed the IRS a tax return. Multiply that by millions of accounts, and you can see the problem. The IRS normally receives about 300,000 gift tax returns a year. Without a fix, that number could have jumped into the millions.

The fix: Revenue Procedure 2026-25

On June 29, 2026, the IRS and Treasury released official guidance solving this. It’s called a “safe harbor” — meaning if you follow the rules, you’re protected.

Under the safe harbor, your contribution counts as a normal gift that qualifies for the annual exclusion. No gift tax return required.

To qualify, all of these have to be true:

1. You’re a person, not a trust, company, or estate.
2. You gave cash — cash, check, money order, or electronic transfer. Not stock, not property.
3. The child hasn’t turned 18 in the year you made the contribution.
4. Your total gifts to that child for the year stay under $19,000 — including the Trump Account money and anything else you gave them.
5. Trump Account contributions are your only taxable gifts that year.

This is genuinely good news for most families. Fund a grandchild’s account, stay under the limit, skip the paperwork.

The trap to watch out for

Number 5 above is where people will get tripped up.

The safe harbor only protects you if you weren’t already required to file a gift tax return for other reasons. Say you put $2,000 into your granddaughter’s Trump Account and also helped your son with a $40,000 down payment on a house. That down payment blows past the annual limit, so you have to file a Form 709 anyway — and once you’re filing, the Trump Account contribution has to go on the return too.

The safe harbor isn’t a shield. It’s a shortcut for simple situations. If you’re doing any significant gifting in the same year, talk to us before you assume you’re in the clear.

And then there’s the stock story

Around the same time, Treasury announced it would start accepting donations of publicly traded stock from large philanthropic donors, who could direct that stock toward children’s accounts. This got a lot of headlines, especially among people holding stock that’s grown a lot in value. Giving away appreciated shares instead of selling them means the capital gains tax never gets triggered.

Here’s the important distinction: that announcement was a press release, not guidance.

A press release tells you what an agency plans to do. It isn’t the law, and you can’t rely on it if the IRS later disagrees with how you handled it. A lot of real questions are still unanswered — whether a charitable deduction is even allowed, how the donation has to be routed, what appraisal and documentation rules apply.

If you’re holding appreciated stock and thinking about this, our advice is simple: wait. Let the actual rules come out, then decide. Moving a large block of stock before the rules exist means guessing at the tax treatment, and that’s not a good place to be.

What to do now

• Funding a kid’s or grandkid’s account with cash? Stay under $19,000 per child for the year and you’re almost certainly fine.
• Doing other big gifting this year? Let’s look at the whole picture together before year-end.
• Thinking about donating stock? Hold off and let’s watch for the real guidance.
• Not sure whether an account makes sense for your family at all? Happy to walk through it with you. It’s a retirement account, which means the money is locked up for a very long time — that fits some families’ goals and not others.

Questions about how any of this applies to your situation? Reach out and we’ll sort it out.

Schedule a planning conversation