Trump Accounts Under Section 530A: What CPAs Tell Clients and Employers About Form 4547, the $1,000 Pilot and Contribution Rules

A Trump account is a new kind of individual retirement account for a child, created by section 70204 of Public Law 119-21 and codified at section 530A. Families open one by election on Form 4547. A child born from 2025 through 2028 who is a U.S. citizen can also draw a one-time $1,000 federal pilot contribution. Individuals other than the government can add up to $5,000 per year, and an employer can put up to $2,500 per year into an account without the employee reporting it as income. Contributions were not allowed before July 4, 2026, so the accounts are now open for funding.

Clients will ask three things: how to open the account, who may put money in, and what the tax treatment is. The statute and IRS materials answer each one.

What is a Trump account?

Under section 530A(a), a Trump account is treated like an IRA under section 408(a) unless the section or Treasury guidance says otherwise. Section 530A(b)(1) makes it an IRA that is not designated as a Roth IRA. It is either created by the Secretary for an eligible individual or organized in the United States for a beneficiary under 18 and funded by a qualified rollover contribution, and it must be designated as a Trump account when established.

An eligible individual has not reached age 18 by the close of the election year and has a Social Security number issued before the election. The IRS FAQ describes the account as a new type of IRA for eligible children.

How is an account opened on Form 4547?

Form 4547, Trump Account Election(s), does two jobs: it opens an initial account, and it requests the $1,000 pilot contribution. The instructions set these rules:

• Opening the account only: the election can be made by a legal guardian, a parent, an adult sibling or a grandparent, in that order of priority.
• Account plus pilot contribution: the filer must anticipate that the child will be the filer's qualifying child for the tax year of the election. For a 2025 return, the child does not need to have been claimed as a dependent.
• Child's age and number: for a 2026 election the child must be born after December 31, 2008 and have a valid Social Security number issued before the election.
• Pilot eligibility: born after December 31, 2024 and before January 1, 2029, a U.S. citizen, with a valid Social Security number and no prior pilot election processed.

The instructions set no fixed deadline. The form can be filed with the income tax return or later online. The IRS says to e-file it with a current-year return where possible, and not to attach it to an amended return or to Form 1040-X. A paper form needs a handwritten signature.

The IRS FAQ also states that Treasury began automatically enrolling eligible children on October 1, 2026. A parent of an auto-enrolled child does not need Form 4547 to open the account, but must claim and activate it, and must still elect the $1,000 contribution if the child qualifies. A notice numbered CP318 means more action is needed to complete or correct an election; the response is to resubmit Form 4547, not to file Form 1040-X.

Who can contribute, and how much?

Under section 530A(c)(2)(A), aggregate contributions, excluding exempt contributions, cannot exceed $5,000 per calendar year before the beneficiary turns 18. Starting in taxable years after 2027 the amount is indexed using the section 1(f)(3) adjustment with 2026 as the base year, rounded down to the next multiple of $100.

Exempt contributions under section 530A(c)(2)(B) are qualified rollover contributions, qualified general contributions, and the pilot contribution under section 6434. Qualified general contributions come from a government or charity that funds a class of beneficiaries, such as all children in a state, and the funding entity must be a section 170(c)(1) entity (other than a U.S. possession), an Indian tribal government, or a section 501(c)(3) organization.

No section 219 deduction is allowed for contributions. The investment in the contract excludes qualified general contributions, pilot contributions and amounts excluded under section 128, which is how basis is tracked for later distributions.

What can an employer contribute?

Section 128 excludes from an employee's gross income employer contributions to the employee's Trump account or to a dependent's account, if they are made under a program that meets subsection (c). The excludable amount cannot exceed $2,500 per employee. For taxable years beginning after 2027 the figure is indexed with 2026 as the base year, rounded down to a multiple of $100. The program must be a separate written plan of the employer for the exclusive benefit of its employees and must meet requirements similar to paragraphs (2), (3), (6), (7) and (8) of section 129(d). The section applies to taxable years beginning after December 31, 2025.

Employer money also counts toward the family's annual limit. Notice 2025-68 says the employer's $2,500 counts against the $5,000 aggregate limit, and the Form 4547 instructions describe the $5,000 as the combined cap for contributions from sources other than pilot, qualified general and rollover contributions.

A worked case: an employer program contributes $2,500 to an employee's child's account in 2026. The employee's household adds $2,500. The total is $5,000, which is the cap. A further $200 from a grandparent in the same calendar year is an excess contribution. Section 530A(d)(5) allows the excess to be distributed with the excess itself excluded from income, and a 100 percent tax applies to the net income attributable to the excess. The employer-side exclusion is separate: it covers only the first $2,500 of the employer's contribution.

How may the money be invested, and when can it be withdrawn?

Before the beneficiary turns 18, funds may be held only in eligible investments (section 530A(b)(3)). An eligible investment is a mutual fund or exchange-traded fund that tracks a qualified index, uses no leverage, and charges annual fees and expenses of no more than 0.1 percent. A qualified index is the S&P 500 or another index of primarily U.S. equities with regulated futures traded on a qualified board or exchange. It cannot be industry- or sector-specific.

Section 530A(d)(1) bars distributions before the first day of the calendar year in which the beneficiary turns 18. Exceptions include qualified rollover contributions, a direct trustee-to-trustee transfer of the whole balance to an ABLE account in the year the beneficiary turns 17, and the return of excess contributions. If the beneficiary dies before 18, the account stops being a Trump account and the fair market value minus the investment in the contract is included in income.

What should the practice do?

1. Intake question. Add a line to the engagement questionnaire for children born from 2025 through 2028 and ask whether Form 4547 or an auto-enrollment notice has been received.
2. E-file with the return. Where the client has an eligible child, include Form 4547 with the electronically filed return, as the instructions suggest.
3. Employer clients. Confirm whether the plan document exists, is written, and covers employees on a basis consistent with the section 129(d) cross-references. Payroll should track each employee's contributions against the $2,500 exclusion.
4. Contribution log. For families, keep a running total by source against the $5,000 cap, with pilot and rollover amounts shown separately.
5. Records for later years. Retain proof of contributions so that the investment in the contract can be supported at distribution.

See the 2026 client meeting checklist for the other 2025 legislation items to raise at the same meeting, and the estate and gift planning checklist for the gifting side of grandparent contributions.

CORAA prepares ready-to-review audit files for US CPA firms; see /us.

Sources

• Internal Revenue Service, Trump Accounts frequently asked questions: https://www.irs.gov/faqs/trump-accounts-frequently-asked-questions
• Internal Revenue Service, Instructions for Form 4547: https://www.irs.gov/instructions/i4547
• Internal Revenue Service, Treasury and IRS issue guidance on Trump Accounts (Notice 2025-68): https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
• Cornell Law School Legal Information Institute, 26 U.S.C. 530A: https://www.law.cornell.edu/uscode/text/26/530A
• Cornell Law School Legal Information Institute, 26 U.S.C. 128: https://www.law.cornell.edu/uscode/text/26/128

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error