What are some of the best ways to invest in your family’s future? This may be a question credit union members are asking themselves. Many Americans feel the need to make certain their children are as financially well off as they could be. Whether that is teaching them financial literacy or investing in their future directly.

There are many options available to start contributing to the next generation, and one of the best options might be a new option from the federal government. For the average American citizen, Trump Accounts may be a fantastic choice for their children’s economic growth, and soon, credit union members could be inquiring about their availability. So what should your credit union know before they start offering these accounts?

What is a Trump Account?

Through the One, Big, Beautiful Bill Act, the federal government announced the creation of Trump Accounts. Trump Accounts are a tax-deferred, long-term savings account that can be established on behalf of a child under the age of 18. This is wonderful for getting a jump start on savings for the next generation!

There is also a major benefit for children who have recently been born. Within this pilot program, a contribution of $1,000 for children born between Jan. 1, 2025, and Dec. 31, 2028, who are U.S. citizens with a valid Social Security number, will be made from the federal government. To take advantage of this opportunity, parents or legal guardians can open and manage accounts on behalf of their children. And while no contributions are necessary, an individual can deposit up to $5,000 per year to maximize growth in these accounts.

These accounts will effectively serve as a custodial trust account until the beneficiary, the child, turns 18. After which, the account will operate similarly to an individual retirement account. The “growth period” is classified as the time between when the account is initially funded and January 1st of the year the beneficiary turns 18.

After the growth period, Trump accounts generally will be subject to standard rules that apply to other traditional individual retirement accounts (IRAs). These standard rules relate to contributions, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting. Essentially, a Trump Account is a type of IRA that is established for the exclusive benefit of an eligible individual who is designated at its establishment as a Trump account.

As a result, funds can be accessed without penalty when the child turns 18 for qualified expenses like education, a first home purchase, or starting a business. Withdrawals may be subject to restrictions and would be taxed at ordinary income rates. After age 18, the account functions like a traditional IRA, with full access permitted at age 30.

Who can issue a Trump Account?

Most recently, the U.S. Department of the Treasury announced that the Bank of New York Mellon Corporation will be the designated financial agent of the federal government to implement the Trump Accounts program. The Bank then announced its partnership with financial services company Robinhood to help develop an app and facilitate the user experience.

What this means is that the bank will manage the initial accounts, and Robinhood will serve as the service provider. Here, the U.S. Department of Treasury will create or organize the initial Trump account for each eligible individual, which is lawfully required by the One, Big, Beautiful Bill Act.

Although the specific details from the federal government have not been set out, there is language in the One, Big, Beautiful Bill Act (“OBBBA”) that credit unions will be a qualified trustee for future rollovers. America’s Credit Unions (“ACU”) has published comments on Trump Accounts, and they have voiced their support for credit unions to participate in these offerings.

As outlined by IRS guidance, established Trump Accounts can be moved to another financial institution or nonbank trustee through the establishment of a rollover account, ACU explained. They further state that the rollover account must be funded by the full amount of the existing Trump account, which must be closed within a reasonable time after establishment of the rollover account.

Once the initial account is established, there is a legal framework within the OBBBA that states an individual who originally elected to open the account, such as a parent or legal guardian, may move the funds to a different trustee.

Credit union responsibilities

For credit unions and their financial service providers, they must make sure they adhere to strict operational and compliance parameters. Some of these requirements include a qualified rollover contribution requirement, the establishment of one singular account per child, and confirming the closure of the previously opened Trump Account. The qualified rollover contribution is a direct trustee-to-trustee transfer of the entire account balance from the existing Trump account.

Some noteworthy requirements that credit unions should discuss with their financial service provider are proper transfer trustee reporting and the submission of an electronic report of receiving a qualified rollover contribution. When moving the funds, the transferring trustee must provide a report directly to the receiving trustee confirming that the transferring account is a Trump Account. Additionally, the receiving trustee must then submit an electronic report to the U.S. Department of the Treasury containing all critical account information within 30 days. Failure to report is subject to penalty.

A noteworthy distinction, the funds in Trump accounts may be invested only in eligible investments. Generally, these are mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily U.S. companies that do not use leverage, do not have annual fees and expenses of more than 0.1 percent of the balance of the investment in the fund, and meet other criteria that the Treasury Secretary determines appropriate.

Given these reporting requirements, credit unions must have procedures in place to monitor and enforce the contribution. A hard cap on the contribution must be noted and adhered to. It can be understandable if these requirements seem difficult and nebulous, but there is no need to fret just yet. Forms and instructions regarding such annual reports will be issued in the future by the federal government.

The future at a glance

As more news circulates about Trump Accounts, credit union members may seek out their institutions, wondering how they can best invest in their children’s future. And although the details are murky, there is a pathway to follow.

The official launch for Trump Accounts is expected on our nation’s Independence Day, July 4, 2026! From there, individuals can start taking advantage of these accounts, with an eye towards rolling them over to credit unions when the time is appropriate. In the meantime, credit unions should stay up-to-date on news and rules around these accounts so they can be prepared when the time comes!