If you have a child born on or after January 1, 2025, a new federal savings program under IRC §530A, created by the One Big Beautiful Bill Act (P.L. 119-21), is about to affect your family’s financial future. Young families across Illinois, including my neighbors in Oak Brook, Lisle, Downers Grove, Naperville, and across DuPage County are asking the same question right now: what exactly is a Trump Account, how can I benefit from it, and what do we need to do before July 4, 2026?
The answer matters more than most people realize — and it matters sooner than most people expect.
What Is a Trump Account? (IRC §530A Explained)
A Trump Account — formally called a Money Account for Growth and Advancement (MAGA Account) under IRC §530A, is a new type of custodial savings vehicle created for American children. Congress established it through the One Big Beautiful Bill Act (P.L. 119-21), signed into law on July 4, 2025.
Think of it as a traditional IRA for your child, with its own set of rules that govern contributions, investments, and when, and how, your child can eventually access the money.
Here’s the reality: contributions cannot be made until July 4, 2026. But the steps you take before that date determine whether your family captures the full benefit of this program.
Who Qualifies and What DuPage County Families Need to Do Right Now
Not every family in Oakbrook Terrace or Wheaton will qualify for the same benefits, so it’s worth understanding exactly where your child stands.
The $1,000 Federal Seed Deposit
Children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security number are eligible for a one-time $1,000 federal deposit into their Trump Account. There are no income requirements — it doesn’t matter whether you earn $80,000 or $800,000 a year in Hinsdale or Downers Grove.
Accounts for Children Already Born
Any U.S. citizen under age 18 with a valid Social Security number can have a Trump Account opened on their behalf, even children born before 2025. The $1,000 free federal seed deposit, however, is reserved for the 2025–2028 birth window.
How to Open the Account
The IRS has released Form 4547, which parents or legal guardians can file with their 2026 federal tax return to elect a Trump Account for their child. An online portal has also been created to open an account through the IRS. Each child may have only one Trump Account, regardless if multiple family members may wish to contribute.
How Does a Trump Account Work in Illinois?
The Contribution Rules
Parents, relatives, employers, and others can contribute up to a combined $5,000 per year into a child’s Trump Account (this limit will be indexed for inflation after 2027). Employers may contribute up to $2,500 of that amount as a fringe benefit under Section 128, which is excluded from the employee’s federal taxable income. Contributions are made with after-tax dollars — meaning there is no upfront federal income tax deduction for individuals. After some research, I think the jury is still out on whether this will be a valid deduction for an employer (small-business owner) and/or the employee.
Congress has said that anyone can contribute, including “parents, grandparents, the beneficiary themselves, other relatives, and friends. Contributors may also include employers, the federal government, state and local governments, and nonprofit organizations.” So, more or less, anyone can contribute on behalf of a child into their individual account.
Be careful, the limit is $5,000 per year in total, per child, regardless of who contributes. “Excess contributions will be subject to an annual 6% penalty on the overcontributed amount until removed.” So, whatever you do, don’t contribute more than the $5,000 limit in any given tax year. The example given by Congress states, “consider if a child’s parents open an account for the child and contribute $3,000. A grandparent could then contribute up to $2,000 in the same year to the child’s Trump Account. If the grandparent contributed $3,000 instead, the account would surpass the $5,000 limit by $1,000, and the account would pay a penalty tax of 6% on that $1,000 ($60) every year until the excess $1,000 is removed.”
Investment Restrictions
Unlike a standard brokerage account, Trump Account funds can only be invested in U.S. equity index funds with a maximum expense ratio of 0.10% (10 basis points). This is an important constraint for Illinois’ families who are accustomed to more flexible investment portfolios.
The Lock-Up Period
No distributions are permitted until the calendar year in which the child turns 18. That means the account grows, untouched, for up to 18 years. For a newborn whose family contributes the maximum $5,000 annually at a hypothetical 7% average annual return, the account could be worth approximately $160,000 by the time the child reaches adulthood.
What Are the Tax Implications of a Trump Account for Illinois Families?
Far too often, families hear “tax-advantaged” and assume “tax-free.” Those are not the same thing, and with Trump Accounts, the distinction matters.
During the Growth Period
Investment earnings grow tax-deferred. You will not owe taxes on gains while the account is building.
At Distribution
Once a child turns 18, the Trump Account converts to a standard traditional IRA. Distributions are generally taxed as ordinary income — not at the typically lower long-term capital gains rate. A 10% early withdrawal penalty applies to distributions taken before age 59½, unless an exception applies.
Exceptions to the Early Withdrawal Penalty
Under the statute and per the IRS, the 10% penalty is waived for qualified purposes, including:
- Qualified higher education expenses
- A first-time home purchase (up to $10,000)
- Starting a small business (conditions pending final IRS guidance)
- The birth or adoption of a child (subject to a $5,000 limit; expenses must be incurred within a year of the event);
- Personal emergency expenses (subject to an annual $1,000 limit);
- Medical expenses that qualify for the medical expense deduction; or
- Health insurance premiums during a period of unemployment.
- Also, for ABLE account rollovers.
| Important: Some aspects of the tax treatment at distribution, particularly around qualified withdrawals, are still subject to final IRS implementation guidance. Families should not assume tax-free treatment without confirming current IRS rules at the time of withdrawal. |
Wondering how a Trump Account fits into your family’s broader wealth protection strategy? Book a call with our Illinois estate planning attorney to help you think through before July 4.
Trump Accounts vs. 529 Plans: What Naperville and Oak Brook Families Should Consider
Whether you realize it or not, choosing between a Trump Account, a custodial Roth IRA, or a 529 plan is not really an either/or decision, but understanding what each does, and doesn’t do, matters a great deal.
| Feature | Trump Account | Illinois 529 Plan |
| Main purpose | Long-term child investment account with IRA-style rules | Education savings |
| Federal starter money | $1,000 for qualifying children born 2025–2028 | No federal Trump Account-style starter deposit |
| Annual contribution limit | $5,000 (indexed after 2027) | No federal limit |
| Tax deduction | None | IL deduction up to $10,000/yr (single); $20,000 (joint) |
| Investment options | U.S. index funds only (0.10% expense cap) | Broader fund options |
| Qualifying uses | Education, first home, business (conditions apply) | Primarily qualified education expenses |
| Access before age 18 | Not permitted | Permitted (with penalties for non-qualified use) |
| Tax on growth | Tax-deferred; distributions taxed as ordinary income | Tax-free for qualified education withdrawals |
| Best use | Long-term tax-deferred child wealth building | College, technical school, apprenticeship, and other qualified education expenses |
Illinois families should also know that Illinois offers a state income tax deduction of up to $10,000 per year (single filers) or $20,000 per year (joint filers) for contributions to Illinois 529 plans. A Trump Account carries no equivalent Illinois state tax deduction.
Both accounts can coexist. Most families in Naperville and Oak Brook who are already contributing to a 529 plan for college costs would likely benefit from keeping both — using the 529 for near-term education costs and the Trump Account as a long-term retirement head-start for their child.
That said, coordination rules between these accounts are still evolving, and a conversation with your financial advisor and estate planning attorney is worth having before committing significant dollars to either.
The best option to consider: If you own a business and have excess cash that can be invested in your child’s retirement, we would highly recommend consulting with a CPA and tax professional to discuss the possibility of putting your child on your payroll and paying them up to $16,000 per year tax-free. With those funds, you can then use up to $7,500 per year to contribute to a Roth IRA, and with any excess, you can invest in a 529 Plan, or place the money in savings and use it to pay for your child’s expenses that you would pay for anyway. With this best-of-both-worlds option, you can potentially get the business deduction, tax-free income for your child, and tax-free withdrawals on the growth over six (or more) decades, which can be exponentially more valuable to create lasting generational wealth for future generations of your family.
| Determining how to balance these two tools requires looking at your comprehensive financial picture. An experienced estate planning attorney in Oak Brook can help you structure a cohesive plan that maximizes both tax-deferred growth and asset protection. |
The Estate Planning Angle: What DuPage County Families Should Understand
Here’s what most articles about Trump Accounts don’t tell you.
A Trump Account is held in your child’s name. A parent or guardian serves as custodian, the “responsible party” who controls investment decisions and manages the account, but the account belongs to the child. On your child’s 18th birthday, full control transfers to them, without any trust protections or conditions you might otherwise put in place.
For families in Lisle, Downers Grove or Hinsdale who have built meaningful assets and have thoughtful estate plans, that’s a planning consideration worth taking seriously. What happens if your child at 18, lacking full financial maturity, makes decisions about this account that you wouldn’t have sanctioned? The statute, as currently written, does not allow a trust to serve as custodian during the growth period and after a child turns 18.
Far too often, families focus on accumulating assets for their children without thinking about how those assets are structured, protected, and controlled over time. A Trump Account is a genuine opportunity and has a 3 year window where the government is offering you free money for children born between 2025 – 2027. It is also a new asset that fits into your family’s larger financial and estate plan, and it should be coordinated accordingly.
| If you don’t already have a comprehensive estate plan in place, now is the time. Our estate planning team serves families across DuPage County, Cook County, Lake County, and Kane County, primarily out of our Oak Brook office. |
The Gift Tax Issue Most Families Miss
This is the detail that catches many families off guard, and it’s important enough to address directly.
When you contribute personal funds to a child’s Trump Account, current law may require you to file a federal Gift Tax Return (Form 709) each year — even if your contribution is below the annual gift tax exclusion amount. This is because Congress, in drafting the One Big Beautiful Bill Act, appears to have omitted language that would treat Trump Account contributions as “present-interest” gifts (the standard that allows the annual exclusion to apply without a filing requirement).
The American College of Trust and Estate Counsel (ACTEC) has formally submitted comments to the IRS requesting a technical correction. As of this writing, that correction has not been enacted.
What does this mean for you? For each year you make a personal contribution to your child’s Trump Account, you may need to file Form 709 — even if no gift tax is ultimately owed. This isn’t a reason not to contribute. It is a reason to loop your tax advisor or estate planning attorney in before you start.
If I were looking to place a bet, I would assume this correction would be made before our tax filings are due for 2026, but we’ll have to wait and see.
How to Open a Trump Account in Illinois: A Practical Checklist
Follow this step-by-step guide to secure your child’s $1,000 federal seed deposit and set up their tax-advantaged savings account before the July 4, 2026 contribution deadline.
- File IRS Form 4547 with your 2025 or 2026 federal tax return — this is the primary way to establish the account and trigger the $1,000 federal seed deposit for eligible children.
- Wait for Treasury activation instructions. Beginning in May 2026, the Treasury Department has been sending account activation instructions to families who opted in during tax season.
- Complete setup online at trumpaccounts.gov or via the official Trump Account mobile app, launched by the Treasury on May 28, 2026.
- Begin contributing after July 4, 2026. Contributions cannot be made before that date.
- Coordinate with your estate plan, financial advisor, and tax professional. If you have a trust, an existing 529 plan, or a broader estate planning strategy, speak with your attorney and accountant before allocating significant dollars.
Frequently Asked Questions About Trump Accounts in Illinois
A: Yes. Parents, grandparents, relatives, and other permitted contributors can all contribute, subject to the combined $5,000 annual limit per child.
A: No. Both accounts can be held simultaneously. They serve somewhat different purposes, and the coordination rules are still being finalized by the IRS.
A: Trump Accounts are federal accounts, not state-administered. Moving does not affect the account’s status.
A: No. Each child may have only one Trump Account.
A: After age 18, the account follows traditional IRA rules. Distributions for any purpose are taxed as ordinary income, and a 10% early withdrawal penalty applies before age 59½ unless an exception is met.
A: Not directly — but since the account is in your child’s name and control passes to them at 18, it’s worth discussing how this new asset interacts with any guardianship provisions, trust structure, or legacy plan you already have in place.
A: Trump Accounts are governed entirely by federal law (IRC §530A and P.L. 119-21). Illinois does not offer a state income tax deduction for Trump Account contributions, unlike contributions to Illinois-sponsored 529 plans. Illinois families in DuPage County, Oak Brook, and Naperville should factor this into their planning.
About Oak Brook Estate Planning Attorney Michael Biederstadt
Michael Biederstadt founded Family, Wealth & Legacy Legal Solutions with one mission: to keep DuPage County families out of court and out of conflict—and to protect them from life’s most common legal problems: death, disability, and divorce.
Michael’s approach is unique because he addresses the intersection of estate planning and family law, ensuring that a client’s legal strategy protects both their assets and their family dynamics. For nearly two decades of practice in the Chicagoland area—beginning in 2007 and expanding through his firm FWLLS, founded in 2023—he has seen firsthand how a lack of integrated planning can unravel even the best intentions.
At FWLLS, Michael leads a comprehensive four-meeting planning process that puts education first. This ensures clients make informed decisions today while benefiting from ongoing three-year review meetings to keep their plans current as their lives evolve. FWLLS works alongside each client’s financial and tax advisors to build a coordinated strategy, not just a set of documents.
FWLLS is located at 17W635 Butterfield Road, Suite 318, in Oakbrook Terrace, serving families throughout Oak Brook, Naperville, Downers Grove, and all of DuPage County. To start the conversation, book a free 15-minute introductory call at fwlls.com/book-a-call or call (630) 233-4223.
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This article is a service of Family, Wealth & Legacy Legal Solutions (FWLLS). At FWLLS, we do not just draft documents — we ensure you make educated, informed, and empowered decisions for yourself and the people you love.