Trump Accounts are giving every child born between 2025 and 2028 a $1,000 head start from the federal government. For most families, this is a great deal, no strings attached.
But if your child has a disability, there's a trap hiding inside this program — one you need to understand before you open the account.
The Problem: A Trump Account Becomes an IRA at 18
Here's the catch. Once the beneficiary turns 18, a Trump Account automatically converts into a regular IRA, held in the child's name. And an IRA counts as an asset.
Typically, to qualify for Medicaid and SSI, a disabled individual needs to keep their countable assets below $2,000. If a Trump Account has been growing since birth with $1,000 in seed money, there's a good chance its value is over that threshold by the time your child turns 18 — which means their SSI benefit could be reduced or eliminated entirely, along with their Medicaid coverage.
The good news: there's a completely legal way around this. You can keep the $1,000 in seed money and its growth, and keep your child's SSI and Medicaid benefits intact. Here's how.
Trump Account Basics
- Every eligible child born 2025–2028 receives $1,000 in seed money (eligibility requirements apply).
- No withdrawals are allowed until the beneficiary turns 18.
- At 18, the account converts into a regular IRA in the child's name, and the beneficiary gains control of it.
- Parents can contribute up to $5,000 per year; employers can contribute up to $2,500 per year.
ABLE Account Basics
- Like Trump Accounts, ABLE accounts are tax-advantaged — no taxes on capital gains held inside the account.
- Funds up to a certain limit aren't counted as assets for SSI or Medicaid purposes. You can generally save up to $100,000 in an ABLE account without jeopardizing benefits.
- ABLE accounts are only available to eligible individuals — meaning those with a qualifying disability, including an inability to maintain substantial gainful employment.
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The Workaround: Rolling a Trump Account Into an ABLE Account
The law allows a beneficiary to move money from a Trump Account into an ABLE account. Done correctly, this rollover lets you keep the $1,000 seed money and its growth, avoid it ever counting as an asset, and preserve SSI and Medicaid eligibility.
But this is a thin line to walk, and the rules are strict. Miss any one of them, and the money stays in the Trump Account — where it will eventually convert to an IRA and count against your child's benefits.
The Three Rules You Must Follow
1. Timing is everything. The rollover must happen within the 12-month window starting January 1st of the calendar year the beneficiary turns 17. This is the only window that exists — you can't do it earlier, and if you miss it, the money stays in the account until it converts to an IRA at 18.
2. It must be a direct rollover. The custodian (Robin Hood, in this case, since they manage these accounts) handles the transfer directly from the Trump Account into the ABLE account. You cannot take the cash out yourself and act as the middleman.
3. It must be the entire account. No partial transfers are allowed — this is a strict requirement under the Internal Revenue Code. Every dollar in the Trump Account has to move over, or the rollover doesn't qualify.
Done correctly, the transfer isn't counted as income in the year it happens, so there's no tax bill, and the funds move into the ABLE account without ever being counted as an asset for benefits purposes.
My Take
I think this is a good program, and if there's $1,000 in free money available, families should take advantage of it.
For families without a disabled beneficiary, this really can be a set-it-and-forget-it account — open it, take the $1,000, and let it become a nice gift on the child's 18th birthday.
But if your child has a disability, you can't treat it that way. You have to stay on top of the calendar, especially that 12-month window starting January 1st of the year your child turns 17. Miss it, and right around the time your child is starting to look at SSI and Medicaid benefits, this account could end up reducing or eliminating them.
As always, this isn't personalized advice — talk with a qualified professional about your specific situation. But if you have a disabled child and you're considering opening a Trump Account for them, this is exactly the kind of detail worth getting right the first time.
If you'd like help thinking through the timing or the rollover process for your family, visit Hamilton Financial Planning's website and schedule a quick call.
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