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Informational - Legislation Change and the New "Trump Accounts"

By Capital Investment Counsel - August 17, 2026

As part of our ongoing commitment to keeping you informed about planning opportunities that may affect your family, we wanted to share an overview of a new type of tax-advantaged savings vehicle commonly referred to as a “Trump Account.” This communication is for general informational purposes only and does not constitute investment advice, a solicitation, or a tax recommendation. Regulatory guidance from the Treasury Department and IRS remains pending, and key details are subject to change.
How These Accounts May Fit Into a Family Plan
For families thinking about how to support children or grandchildren over the long term, these new accounts may become one additional tool to consider within a broader savings and wealth planning strategy. They are designed primarily for long-term investing and future retirement-oriented savings, rather than near-term spending needs. For many families, they may complement—but not necessarily replace—other planning tools such as 529 education savings plans, custodial accounts, Roth IRAs for children with earned income, or taxable investment accounts.
Because every family’s circumstances are different, the best approach will depend on your goals, time horizon, tax situation, education funding plans, estate planning objectives, and need for flexibility. We also expect additional implementation details to emerge over time as the Treasury Department and IRS issue further guidance.
Key Features
  • Who may be eligible: Generally, these accounts may be established for a child under age 18 who has a valid Social Security number. The account is held for the child, with an authorized adult such as a parent, grandparent or legal guardian acting on the child’s behalf until adulthood.
  • Federal seed contribution: Children who are U.S. citizens and born between January 1, 2025, and December 31, 2028 may be eligible for a one-time $1,000 federal contribution once the required election is made.
  • Additional contributions: Parents, family members, and others may generally contribute to the account, subject to an aggregate annual contribution limit of $5,000. Employer contributions may also be allowed within that overall limit.
  • Tax treatment: Contributions are generally not tax-deductible, but investment growth is tax-deferred. After the child reaches adulthood, the account is generally treated similarly to a traditional IRA.
  • Investment restrictions: During the child’s minor years, investments are expected to be limited to certain low-cost, broad-based U.S. equity index mutual funds or exchange-traded funds.
  • Withdrawals: Funds generally cannot be withdrawn before the calendar year in which the child turns 18. After that point, traditional IRA rules generally apply.
Brief Comparison to 529 Plans and Custodial Accounts
At a high level, 529 plans are primarily education-focused accounts that may offer tax-free growth and tax-free withdrawals when used for qualified education expenses. Custodial accounts, such as UGMA or UTMA accounts, generally offer more flexibility because funds can be used for a broader range of expenses that benefit the child, but the assets legally belong to the child, and the child typically gains control at the applicable age of majority. These new accounts appear to sit somewhere between these approaches: they are intended for long-term investing for a child, with retirement-oriented tax treatment after adulthood, but with more restrictions on early access and investment options during the child’s minor years.
Potential Examples and Outcomes
If a child born in 2026 claims the one-time federal contribution of $1,000 and leaves the account untouched until the standard retirement age of 65,  a hypothetical illustration assuming an 8% annualized gross return would result in an ending balance of approximately $148,779. This figure is for illustrative purposes only, assumes a constant gross return, and does not reflect advisory fees, fund expenses, taxes, or inflation. Actual results will vary. Investing involves risk, including the possible loss of principal, and past performance is not indicative of future results.
If a child born in 2026 claims the one-time federal contribution of $1,000 and the maximum total amount of $5,000/year is contributed until the child turns 18,  a hypothetical illustration assuming an 8% annualized gross return would result in an ending balance of approximately $191,247 in the year the child turns 18. This figure is for illustrative purposes only, assumes a constant gross return, and does not reflect advisory fees, fund expenses, taxes, or inflation. Actual results will vary. Investing involves risk, including the possible loss of principal, and past performance is not indicative of future results.
What Families Can Do Now
  • Review whether any children or grandchildren may be eligible for an account and/or the one-time federal seed contribution.
  • Consider how this new vehicle compares with existing savings vehicles already being used for education, retirement, or general wealth transfer goals.
  • Coordinate with your advisor, tax, and legal professionals before making contributions or adjusting an existing plan.
We will continue to monitor future guidance and share updates as more details become available. In the meantime, if you have children, grandchildren, or other young family members who may be eligible, we would be glad to talk through how these accounts might fit into your broader plan.
Sincerely,
The CIC Team
Capital Investment Counsel, LLC is an SEC-registered investment adviser (CRD #328472). This communication is provided for general informational purposes only and does not constitute investment advice, a recommendation to purchase or sell any security, or a solicitation of any kind. All information is based on currently available guidance and is subject to change as the Treasury Department and IRS issue further rules and regulations. Hypothetical illustrations assume an 8% annualized gross return and do not reflect advisory fees, fund expenses, inflation, or taxes; actual results will vary. Investing involves risk, including the possible loss of principal. Tax treatment depends on each investor’s individual circumstances; please consult a qualified tax professional. Past performance is not indicative of future results. Capital Investment Counsel, LLC does not provide tax or legal advice.
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