What you need to know about Trump IRAs and Trump accounts 🏛️

Lately, President Donald Trump has had a thing for creating new types of investment programs (and putting his name on them). 

We’re less than two months from the launch of Trump accounts. These will be tax-advantaged accounts that parents can open on behalf of their kids for certain future expenses, such as educational costs or first-time home purchases. 

On April 30, the trend continued as he signed an executive order to set up “TrumpIRA.gov, a new Federal platform designed to connect American workers who do not have access to employer‑sponsored retirement plans with high-quality, low-cost IRAs offered by private-sector financial institutions.” 

The executive order gives some details about how the new “Trump IRA” program might work, and teases the idea of a $1,000 annual contribution match from the government for qualifying retirement savers. But there’s a lot we don’t know yet: At the moment, the web address in question doesn’t lead anywhere.

We asked financial advisors about how to use Trump accounts in a savvy way, dug into what we know about the Trump IRA program so far, and looked at how White House initiatives to promote tax-advantaged investment have fared in the recent past.

Trump accounts are set to launch on America’s 250th birthday, and parents can already sign their kids up for the accounts via the new IRS Form 4547.

These accounts will have some unique advantages, such as a $1,000 government seed contribution for U.S. citizen children with valid Social Security numbers who are born between Jan. 1, 2025 and Dec. 31, 2028. 

But they’ll also have some unique disadvantages. Withdrawals for educational expenses or home purchases will be at least partially taxable at ordinary income rates, and there will be restrictions on what types of investments can be held in the accounts while the beneficiary is under age 18.

During that period, Trump accounts can only be invested in low-cost ETFs and mutual funds that track a broad-market index of U.S. stocks, like the S&P 500. There will be no way to invest them in bonds or international stocks until the beneficiary turns 18, at which point the account converts to a traditional IRA and the investment restrictions come off.

If you’re a parent, these investment restrictions present you with a conundrum. When investing for major future expenses, like a child’s college tuition, financial advisors generally recommend building a diversified portfolio made up of high-risk, high-growth investments (like stocks) and more conservative investments (like bonds). 

The best practice, broadly speaking, is to invest the portfolio heavily in stocks early on to maximize growth, and then gradually make it more bond-heavy to minimize risk as you approach the year when you’ll start withdrawing money from it. But Trump accounts are stock-only. So how do you diversify them? 

“You basically can't, and that's the point,” AJ Ayers, a Brooklyn-based certified financial planner, said in an email interview. Ayers noted that the investment restrictions on Trump accounts aren’t a big problem during the beneficiary’s infancy and early childhood.

“A newborn has an 18-year minimum lockup and a 40-plus-year horizon if it rolls into an IRA. That's exactly the runway you want fully invested in stocks. Total U.S. market fund is my preference over S&P 500 because you pick up small and mid-caps,” she said.

But things get more complicated as your child approaches adulthood. If your plan is to use the Trump account to pay for their college expenses, conventional wisdom says that you should make your investment mix more conservative over time. Given the investment restrictions on Trump accounts, that will require some creative thinking.

“Though an investor can't properly diversify this specific account, they can offset it if they have other investments,” Acie Clayborne, an Ohio-based accredited financial counselor, said in an email interview. “Families can somewhat mitigate the limitations of Trump accounts by pairing them with 529s if they happen to have enough savings,” Clayborne said.

In other words, you can diversify your child’s overall college savings portfolio across multiple accounts if you have them. 529 college savings plans don’t have the same investment restrictions as Trump accounts, so one workaround is to shift their allocation heavily toward bonds as your child approaches college age.

But what if the Trump account is your family’s only college savings vehicle? Clayborne pointed out that different types of stock indexes have different levels of volatility, and moving between these might be one way to invest a Trump account a little more conservatively over time.

“The best most people can realistically do is to shift between market caps over time, moving between large cap, mid cap, etc or even between growth versus value strategies,” he said. Small-cap stocks tend to be higher-volatility than large-cap stocks, and growth stocks tend to be higher-volatility than value stocks. 

Another option is to think long-term (that is, beyond college). Your child will also need to start saving for retirement at some point in their life. Ayers said that another potential use case for Trump accounts is as a “starter retirement account,” rather than as a college savings vehicle. In that case, the stocks-only-until-age-18 restriction isn’t really a problem.

“Once it flips to a traditional IRA at 18, all the investment handcuffs come off. Bonds, international, REITs, target-date funds, whatever you want,” she said. 

“In the year the kid turns 18, while they're still in a near-zero tax bracket, do a Roth conversion. You pay almost nothing in tax now and lock in decades of tax-free growth. From there, it's a standard glide path. Heavy equities through their 30s, start layering in bonds and international through their 40s and 50s, land somewhere around 60/40 by retirement,” Ayers said.

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Unlike Trump accounts, the new “Trump IRA” program does not appear to be a government-run investment account. Instead, the Trump IRA executive order describes the forthcoming TrumpIRA.gov website, due to launch by next January, as more of a web portal or shopping tool for existing IRAs.

The excerpt below contains the meat of the order:

This may be the first government website to let investors shop for IRAs, but there are already several similar tools out there. I’d be remiss if I didn’t mention NerdWallet’s roundups of the best IRAs and best Roth IRAs here, which are available now and make it easy to compare IRAs based on fees, account minimums and promotions such as opening bonuses and contribution matches. They also feature reviews and analysis from our writers (including yours truly) who have thoroughly researched these IRA providers and tested their investment platforms.

Anyway, back to TrumpIRA.gov. One feature of the executive order that has caught some media attention is the “easy and transparent way for eligible workers to obtain up to a $1,000 match for their savings” mentioned in the first section. 

But a little more digging reveals that this $1,000 match isn’t a new program — and it has some pretty tight income limits to boot. It refers to the Saver’s Match program, a refundable tax credit that was authorized by the SECURE 2.0 Act of 2022. The Saver’s Match will become available in 2027 and will replace the older, nonrefundable Saver’s Credit. 

Under the Saver’s Match program, taxpayers whose modified adjusted gross income (MAGI) is below $20,500 (single) or $41,000 (married filing jointly) can get a 50% match from the federal government on their first $2,000 of retirement plan contributions. Above that income, taxpayers will get a reduced match, and the match phases out entirely for single taxpayers with MAGIs above $35,500 or married taxpayers with MAGIs above $71,000.

So the $1,000 federal government match is limited to lower-income investors. But even if you don’t qualify, there are other ways to get some “free money” in your IRA, and this is where existing shopping tools come in handy. 

Many IRA custodians offer account-opening bonuses for investors who meet certain minimum deposit requirements. 

On top of that, several have started offering small contribution matches, usually as retention programs (i.e., you can keep the matching dollars only if you keep your funds in the IRA for a certain number of years). NerdWallet has a roundup of the best brokers for IRA matching to help you compare these options.

Trump is not the first president to try to create a new type of retirement account. His predecessor, Barack Obama, established the “MyRA” in 2015 as an effort to promote Roth IRA usage among lower-income Americans. 

But the MyRA program never caught on and was quietly shuttered by the first Trump administration in 2017 due to high administrative costs and low participation.

MyRAs differed from Trump accounts and the new Trump IRA program in several ways. For starters, MyRAs closely resembled Roth IRAs in that they shared the same income and contribution limits. However, they could only be funded up to a maximum balance of $15,000. 

Another important distinction: MyRAs could only be invested in Treasury securities. They were designed to provide a sort of risk-free starter account that participants could later roll into a standard Roth IRA (with more investment choices).

Ultimately, the idea just didn’t stick. Fewer than 40,000 MyRA accounts were ever opened during the program’s lifetime, and about 10,000 were never funded. Among those that did have money in them, the median balance was just $500. 

The first Trump administration cited the program’s high costs — $70 million in its first two years, with a projected cost of $10 million for every future year — in its decision to shut it down in 2017. The MyRA phaseout process was completed in 2018, whereupon all remaining funded accounts were automatically rolled into private-sector Roth IRAs.

It’s worth repeating that Trump’s new investment accounts are very different from MyRAs. They’re explicitly designed to be invested in stocks, which provide more long-term growth potential than Treasury securities, and the government seed contributions could make them more popular than MyRAs were. IRS data shows that more than 4 million children had been signed up for Trump accounts by the end of March, and that more than 1 million of them qualify for the $1,000 seed contribution. 

However, the threat of low participation still remains for Trump accounts. According to a NerdWallet-Harris Poll survey conducted in March, only 12% of parents with a child under 18 plan to open one.

What killed the MyRA program was a combination of low participation and high costs. Trump accounts have already attracted more interest than MyRAs ever did, but the $1,000 seed contribution may be a double-edged sword. One million children who qualify for the contribution have already been registered for Trump accounts, which means that the program is already on the hook for at least $1 billion in its first year of operation.

It’s too early to speculate about how popular the proposed Trump IRA program will be or how much it will cost taxpayers, as its details could change between now and its implementation. 

But whenever the government floats the idea of a new type of investment account, it’s worth thinking back to the MyRA program. Account holders probably won’t lose any money if the new programs shutter as MyRA did, but they may have to deal with a compulsory IRA rollover or something similar, as MyRA account holders did in 2018.

More broadly, new types of investment accounts mean new decisions to make and greater complexity in financial planning. If you’re feeling overwhelmed by all the choices and want professional help with these decisions, a financial advisor may be worth looking into. NerdWallet’s roundup of the best financial advisor firms is a good place to start.

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