Watchout if you contribute to
Trump Account &
Educational Plan (Edvest/529 Plan)
in same year!
In simple terms, the IRS says that qualifying contributions will be treated as completed gifts and not future-interest gifts. This is important because many donors will not need to file a gift tax return just because they made these contributions.
What Is a Trump Account?
A Trump account is a special type of traditional IRA created for an eligible child. The account is generally for a child under age 18.
The child usually cannot access the money during the account’s growth period.
When the Safe Harbor Applies
The IRS safe harbor applies when an individual makes qualifying cash contributions and the total gifts to each child do not exceed the annual gift tax exclusion.
For 2026, the annual gift tax exclusion is $19,000 per recipient.
Key Points
- The safe harbor applies only to individual donors.
- Contributions must be made in cash, check, money order, or electronic funds transfer.
- The contribution must be made before the year the child turns 18.
- The donor’s total gifts to each child, including Trump account contributions, must not exceed the annual gift tax exclusion.
- For 2026, the annual exclusion amount is $19,000 per child.
- If the safe harbor applies, the donor does not need to file a gift tax return for those Trump account contributions.
- If the donor already needs to file a gift tax return for another reason, this safe harbor may not apply.
- Donors should keep records showing they met the safe harbor rules.
Example 1: No Gift Tax Return Required
Paul contributes $5,000 to a Trump account for each of three grandchildren: Alex, Ben, and Cara.
He also gives Cara an additional $13,000 cash gift during the year.
His total gifts are:
| Recipient | Trump Account Gift | Other Gifts & 529 Plan contributions (Edvest) | Total Gift |
|---|---|---|---|
| Alex | $5,000 | $0 | $5,000 |
| Ben | $5,000 | $0 | $5,000 |
| Cara | $5,000 | $13,000 | $18,000 |
Because Paul’s total gifts to each child are under the $19,000 annual exclusion, and he made no other reportable gifts, he does not need to file a gift tax return for these contributions.
Example 2: Gift Tax Return Required
Now assume Paul gives Cara an additional $7,500 cash gift and $7,000 contribution to Cara's 529 plan ($14,500) instead of $13,000.
Cara’s total gifts are:
| Recipient | Trump Account Gift | Other Gift & 529 Plan Contributions (Edvest) | Total Gift |
|---|---|---|---|
| Cara | $5,000 | $14,500 | $19,500 |
Because Paul’s total gifts to Cara are $19,500, he exceeded the 2026 annual exclusion by $500.
In Eample 2, Paul must file a gift tax return and report ALL the gifts to Alex, Ben, and Cara, including the Trump account contributions.
Bottom Line
The IRS safe harbor is helpful because it prevents many small Trump account contributors from having to file unnecessary gift tax returns.
The main rule is simple: keep total gifts to each child at or below the annual exclusion amount, and make sure no other gift tax filing requirement applies.