A grandparent looking for a way to help a newborn or young grandchild start saving now has a federal option to weigh alongside a 529 plan or a custodial account. Under proposed regulations from the Treasury Department and the IRS, a child born between January 1, 2025 and December 31, 2028 can qualify for a one-time $1,000 deposit from the federal government into a new Trump Account, and a grandparent is permitted to be the one who opens that account and claims the money on the child’s behalf.
How the Treasury’s $1,000 Pilot Deposit Works
Trump Accounts are a new type of tax-advantaged account for children, created under the Working Families Tax Cuts law and opened for enrollment during 2026. Under the proposed rules Treasury and the IRS issued for the contribution pilot program, an eligible child born in the 2025-2028 window receives a single $1,000 deposit from the federal government once an authorized adult opens the account and files the required pilot-program election. The deposit isn’t a tax credit and doesn’t arrive as a check mailed to the household; it lands directly inside the child’s new account and stays invested from that point forward.
Families don’t need to contribute anything of their own to trigger the $1,000 deposit — opening the account and making the election is enough to secure it. Additional contributions from parents, grandparents, or other relatives are allowed on top of that seed money, subject to an annual cap set under the law, but the pilot deposit itself is a one-time federal contribution tied to the child’s birth year rather than a recurring benefit families can expect every year.
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Who Can Open the Account — And Why a Grandparent Might Have To
The IRS built a strict ordering rule into the process rather than opening it up to whichever relative acts first. A legal guardian has the first right to open the account, followed by a parent, then an adult sibling, and only after that a grandparent. In practice, a grandparent becomes the one who can file Form 4547 — the new IRS form for establishing a Trump Account and electing the pilot deposit — when no one higher on that list has done it yet for the child.
A grandparent opening the account this way doesn’t need to be the child’s legal guardian or custodian to trigger the deposit. The ordering rule exists specifically so the $1,000 doesn’t go unclaimed simply because a parent hasn’t gotten around to the paperwork, and it gives extended family a path to secure the money even when they aren’t the ones raising the child day to day. The election requires the child’s Social Security number, so families without one on file for a newborn will need to apply for it before the paperwork can be completed.
What Happens to the Money Once the Account Is Funded
Once opened and funded, a Trump Account behaves differently from a savings account or a 529 plan. Contributions beyond the government’s $1,000 deposit are invested rather than held as cash, tracking a stock index fund under separate proposed rules Treasury has issued governing eligible investments inside the accounts. The child generally cannot access the money until adulthood, and early withdrawals follow IRA-style restrictions rather than the on-demand access of a typical savings account.
That structure sets it apart from a 529 plan, which is built around education spending and often comes with a state tax deduction, and from a custodial UTMA or UGMA account, which hands the child full, unrestricted control of the balance at the age of majority. A Trump Account keeps the money locked up longer and ties its growth to the child’s own retirement-style timeline rather than a specific use like tuition.
Why the Timing Still Matters for Families
For a grandparent weighing whether to file the paperwork, the appeal isn’t a payout today — it’s locking in the federal seed deposit while the pilot program is active and letting the balance compound, untouched, over the next two decades of the child’s life. Because the accounts are still governed by proposed rather than final regulations, families opening one now are acting under interim IRS guidance, and details of the investment menu and contribution limits could still be refined before the rules are finalized.
The decision is less about a long-term commitment and more about timing. The pilot deposit is tied to the child’s 2025-2028 birth window, and a family that waits to see whether a parent eventually files the paperwork risks running past that window without the account ever being opened. A grandparent acting under the IRS’s ordering rule removes that risk without requiring anyone to change who is actually raising the child day to day.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
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David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
