Understanding Draft Form 4547 and the New Trump Account Election

Trump Accounts are a new type of traditional IRA created for children under the One Big Beautiful Bill Act. IRS Notice 2025-68 explains how these accounts work, who qualifies, and how government seed money and other contributions can grow tax deferred for a child future. Draft Form 4547 will be the primary way families make the Trump Account election beginning in 2026.

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What Is a Trump Account

A Trump Account is a traditional IRA under the tax law, but with special rules that apply while the child is young. The account is opened for an eligible child who:

• Has not turned age 18 in the year the election is made, and
• Has a Social Security Number at the time of the election.

The period from the opening of the Trump Account until December 31 of the year before the child turns 18 is called the growth period. During this time, investments, contributions, and withdrawals are subject to special rules designed to keep the focus on long term saving.

Draft Form 4547 and How the Election Works

Families will make the Trump Account election on Draft Form 4547 or through the online system at trumpaccounts.gov, as described in IRS Notice 2025-68. Once the election is filed and processed, the Treasury Department creates the account with a selected financial institution and sends activation instructions to the adult who made the election. That adult becomes the responsible party for the account and is allowed to choose investments and manage the account during the growth period, subject to the Trump Account rules.

Government Seed Money and Other Contributions

$1,000 Federal Pilot Program Seed Contribution

One of the most valuable features is a federal pilot program contribution of $1,000 for eligible children. Under the law and IRS Notice 2025-68, this contribution is available when:

• The child is a qualifying child,
• Is born after December 31, 2024 and before January 1, 2029,
• Is a United States citizen,
• No prior pilot contribution election has been made for that child, and
• The child Social Security Number is provided with the election.

When these conditions are met and the election is filed, $1,000 is deposited by the Treasury Department into the child Trump Account. This payment is not reduced for federal debts and begins no earlier than July 4, 2026 according to IRS Notice 2025-68.

Qualified General Contributions from States and Charities

In addition to the federal seed money, Trump Accounts can receive Qualified General Contributions. These are funded by:

• States or certain local governments,
• The United States,
• Indian tribal governments, or
• Section 501(c)(3) charitable organizations.

These funders can choose a class of children, such as all Trump Account beneficiaries in a particular state or all beneficiaries born in certain years. The Treasury Department then allocates the general funding across all Trump Accounts in that class, automatically increasing each account balance. For families, this can mean additional dollars contributed by government or charity without any out of pocket cost.

Employer Trump Account Contributions

Employers may adopt a Trump Account contribution program under section 128. Through this program, an employer can contribute up to $2,500 per year (indexed after 2027) to Trump Accounts for an employee or the employee dependents. These employer contributions:

• Are excluded from the employee taxable income up to the annual limit,
• Do not count against the $5,000 annual contribution cap for personal and family contributions during the growth period, and
• Must be identified by the employer as Trump Account contributions so that the trustee can report them correctly.

Family Contributions and Annual Limits

During the growth period, there are several ways money can flow into the Trump Account:

• The $1,000 federal pilot program contribution,
• Qualified General Contributions,
• Employer contributions under section 128,
• Rollovers from another Trump Account, and
• Contributions from the child, parents, or any other person.

Personal and family contributions plus employer contributions are subject to a combined annual limit of $5,000 during the growth period, indexed for inflation after 2027. Importantly, the child does not need to have earned income in order to receive contributions during the growth period. This is a key difference from standard IRA rules.

Investment Rules During the Growth Period

During the growth period, the money in a Trump Account must be invested only in eligible investments. IRS Notice 2025-68 describes these as mutual funds and ETFs that:

• Track a broad equity index of primarily United States companies,
• Do not use leverage, and
• Have annual fees and expenses of no more than 0.1% of assets.

Trustees must offer only eligible investments and must move cash into an eligible default investment within a reasonable time. These rules are designed to keep costs very low and focus on broad, diversified stock market exposure for long term growth.

Distribution Rules and the Transition at Age 18

During the growth period, distributions are very limited. In general, money cannot be withdrawn except for:

• Trustee to trustee transfers to another Trump Account,
• Certain rollovers to an ABLE account in the year the child turns 17,
• Distributions of excess contributions, and
• Distributions upon the death of the child.

Starting on January 1 of the year the child turns 18, most of the special Trump Account rules stop applying. From that point forward, the account is treated like a traditional IRA:

• New contributions follow the normal IRA rules and limits,
• Distributions are taxed under the general IRA rules in section 408 and section 72, and
• The 10% early distribution tax in section 72(t) can apply to withdrawals before age 59½ unless an exception applies.

However, for tax calculation purposes, Trump Accounts remain a separate category from other IRAs when tracking basis and allocating taxable amounts from distributions, as described in IRS Notice 2025-68.

Is a Trump Account Right for Your Family

For many families, a Trump Account offers a rare combination of benefits: federal seed money, potential additional funding from states and charities, optional employer contributions, and structured low cost investments with tax deferred growth. The earlier an account is opened, the more time that contributions and earnings have to grow. A careful review of your income, family situation, and long term goals can help determine whether making the Trump Account election on Form 4547 fits into your overall financial plan for your child.

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