Child IRA Accounts Open July 4, 2026

Published March 6, 2026

The One Big Beautiful Bill Act (OBBBA) added a provision that allows children to have a new type of retirement account. The new account is similar to a traditional IRA for the child and is called a "Trump Account.”

The new account may be funded on or after July 4, 2026. There are specific rules that apply to the Trump Account. It is a new type of IRA that permits only certain types of investments and has its own contribution rules and limits. The Trump account may be created for a child under age 18. Those born during 2025 through 2028 may benefit from a government addition.

There are multiple special provisions that apply to the Trump Accounts.

1. Contributions – Contributions made after July 4, 2026, may include a one-time Federal Government addition of $1,000. There could be other additions provided by governmental entities or qualified nonprofits. Employers and parents may also make contributions. The contributions are permitted during the growth period and there is no requirement for the child to have earned income to be eligible for contributions.
2. Eligible Investments – The account investments are limited to mutual funds or exchange-traded funds that track an index of U.S. companies. For example, an approved fund would be the S&P 500 stock market index. The investment fund cannot have annual fees and expenses of more than 0.1%.
3. Distributions – During the growth period, there may not be distributions to the child. However, there are provisions that allow rollovers to another Trump Account or to an Achieving a Better Life Experience (ABLE) account. Following the growth period, the account transitions to a traditional IRA.
4. Reporting – The accounts will have their own reporting requirements. However, it is expected that these will be similar to the traditional IRA reporting rules.
5. Coordination with IRA Requirements – Following the growth period, the accounts will follow traditional IRA rules. There are specific rules for IRA contributions, distributions, required minimum distributions and rollovers. The Trump Account is not permitted to be aggregated to other IRA accounts for specific purposes.
6. Employer Contribution Limit – An employer is permitted to make contributions to the Trump Account for a child of an employee. The limit is $2,500 per year. This funding amount must meet similar fairness requirements that would also apply to a dependent care assistance program.

Editor's Note: There are generous individuals who have indicated they will contribute billions of dollars to help fund Trump Accounts for children born outside the pilot funding program. The initial account beneficiaries may receive contributions from these funds.

Personal Estate Tax Liability for Executor

In United States v. Monty Karst; No. 5:24-cv-04090, the Internal Revenue Service (IRS) brought suit against two sons who were co-trustees for their father’s trust. The United States District Court determined the two sons were personally liable for the estate tax.

Donald D. Karst was a resident of Kansas and owned oil and gas businesses. Donald passed away on September 15, 2007. His sons, Monty Karst and Todd Alan Templeton, served as co-trustees of the Donald D. Karst Revocable Trust. Monty Karst also served as executor of the Donald D. Karst estate (the Estate).

The Estate filed Form 706 and reported a gross estate value just under $4 million. The Estate was assessed an estate tax liability of $792,790.75 and elected to pay the tax in installments under Section 6166.

After making several installment payments, the Estate stopped making payments on June 16, 2015. Karst and Templeton were the Estate beneficiaries and distributed the Estate’s assets to themselves. On June 30, 2025, the Estate liability, including interest and penalties, was $1,105,111.34. The United States sought a judgment against the Estate, and personal judgments against Monty Karst and Todd Alan Templeton.

Estate tax is authorized under Chapter 26 of the U.S. Code. If a tax has been assessed, there is typically a 10-year period for the IRS to collect through a court proceeding.

In the court proceeding, the government must show the amount owed by the Estate and the calculation that determines that amount. The District Court determined that the government had correctly demonstrated a liability of $1,105,111.34 as of June 30, 2025.

Karst and Templeton claimed the statute of limitations had run and therefore the government did not have a right to collect the remaining tax. However, when an estate elects payments over a period of years, the limitations period is suspended until the IRS terminates the election for nonpayment. The termination occurred on May 10, 2018, and therefore the deadline for the statute of limitations is May 8, 2028.

Karst and Templeton entered into stipulations as a part of the election to make installment payments on the tax due. They held legal title as co-trustees of the Karst Trust. The Estate distributions to Karst and Templeton included approximately $2.7 million in oil and gas leases.

The District Court determined that Karst and Templeton were jointly and severally liable. They did not contest their personal liability, their roles as executor and co-trustees or their receipt of estate property.

Karst and Templeton claimed the government action failed because it provided only "minimal information" because the government did not "state the debt with a distinct breakdown of interest and penalties.” However, the District Court determined the stipulations were sufficient to support the government claim. There was not a requirement for a further breakdown of the debt amount, including interest and penalties. Therefore, the government was entitled to judgment as a matter of law.

Proposed IRA to DAF Rollover

A bipartisan group of five U.S. Senators have introduced the IRA Charitable Rollover Facilitation and Enhancement Act.

In 2006, the Pension Protection Act included a provision that allowed taxpayers age 70½ or older to make a Qualified Charitable Distribution (QCD) from an IRA to an exempt charity. The QCD is not included in taxable income. However, the 2006 Chair of the Senate Finance Committee and the Chair of the House Ways & Means Committee agreed that the QCDs would not be permitted for a supporting organization or to a donor advised fund (DAF).

The five Senators note that excluding the IRA charitable rollover to DAF option creates "an obstacle for donors who want to simplify and coordinate their charitable giving by supporting multiple charities with a single gift." Therefore, they propose eliminating the prohibition against an IRA charitable rollover to a DAF.

The Senators explained in detail their reasons for supporting this bill.

Senator Todd Young (R-IN) stated, "Charitable giving has long been a way for Americans to support their local communities and causes they believe in. Our bill will make a small fix to the tax code to enable more flexibility for older Americans to generously give to the people, places, and organizations they care about."

Senator Michael Bennet (D-CO) continued, "The IRA Charitable Rollover Facilitation and Enhancement Act will streamline the charitable donation process, empower Coloradans to do more with their giving, and direct larger amounts back to Colorado communities."

Senator James Lankford (R-OK) has long supported the IRA to DAF concept. Senator Lankford stated, "If we want stronger communities, we should make it easier for Americans to give and make a difference close to home."

Senator Catherine Cortez Masto (D-NV) suggested, "This simple, commonsense fix will make it easier for Americans to give donations to the causes that they value and will spur more people to invest in their communities."

Senator Maria Cantwell (D-WA) noted, "This bill will make it easier for donors who want to use some of their retirement assets to help these smaller, local nonprofits that often get overlooked when gifting becomes complicated."

Editor's Note: In 2006, the leaders of the House and Senate tax-writing committees did not include provisions to allow the IRA QCD to a DAF in the Pension Protection Act. There have been multiple efforts to expand the IRA charitable rollover to include DAFs since that time. This bipartisan effort may advance this process and eventually expand the IRA charitable rollover to include DAFs.

Applicable Federal Rate of 4.8% for March: Rev. Rul. 2026-6; 2026-11 IRB 1 (17 February 2026)

The IRS has announced the Applicable Federal Rate (AFR) for March of 2026. The AFR under Sec. 7520 for the month of March is 4.8%. The rates for February of 4.6% or January of 4.6% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2026, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”