Retirement Accounts in 2026: Understanding Your Options—and the New Trump Accounts for Children
Retirement planning is not limited to choosing a single account. Individuals, families, employees, and business owners may have several options, each with different contribution, deduction, investment, and withdrawal rules.
Traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs remain among the most common retirement-planning tools. Beginning in 2026, families should also become familiar with Trump Accounts, a new type of retirement account established for eligible children. You can learn more directly at TrumpAccounts.gov.
Traditional IRAs
A traditional Individual Retirement Account allows individuals to save and invest money for retirement. Contributions may be deductible depending on the taxpayer’s income, filing status, and participation in an employer-sponsored retirement plan.
Investment earnings generally grow tax-deferred. Instead of paying tax each year as the investments increase in value, the account owner generally pays income tax when money is withdrawn.
For 2026, the combined contribution limit for traditional and Roth IRAs is generally $7,500, or $8,600 for individuals age 50 or older. The amount a taxpayer can deduct may be limited based on income and workplace retirement-plan coverage.
Traditional IRAs are also subject to required minimum distribution rules later in life. Withdrawals made before age 59½ may be subject to income tax and an additional 10% tax unless an exception applies.
Roth IRAs
A Roth IRA is funded with after-tax dollars. Contributions are not deductible, but qualified withdrawals—including investment earnings—can generally be received tax-free.
Roth IRAs may be especially attractive to individuals who expect to be in a higher tax bracket in retirement or who want to create a source of tax-free retirement income. Unlike a traditional IRA, the original Roth IRA owner generally is not required to take minimum distributions during their lifetime.
However, Roth IRA eligibility and contribution amounts may be reduced for taxpayers whose income exceeds annual limits.
SEP IRAs
A Simplified Employee Pension, or SEP IRA, allows employers to make retirement contributions for eligible employees. SEP IRAs are commonly used by self-employed individuals, independent contractors, and small-business owners because they are generally easier to establish and administer than many traditional employer retirement plans.
The employer decides how much to contribute each year, providing flexibility when business income changes. Once deposited, the funds belong to the employee, and distributions generally follow the rules applicable to traditional IRAs.
For 2026, an employer’s SEP contribution generally cannot exceed the lesser of 25% of eligible compensation or $72,000.
SIMPLE IRAs
A Savings Incentive Match Plan for Employees, or SIMPLE IRA, is another retirement option designed primarily for smaller employers.
Employees can elect to have part of their compensation contributed to the plan, while the employer generally provides either a matching contribution or a nonelective contribution. For 2026, the standard employee salary-reduction contribution limit is $17,000, although certain plans and participants may qualify for higher limits.
The attached 2026 retirement-account guide provides additional information about traditional, Roth, SEP, SIMPLE, deemed, and employer-association IRAs. It also explains several transactions that may jeopardize an IRA’s tax-advantaged status.
Introducing Trump Accounts for Children
Trump Accounts are a new type of traditional IRA established for the exclusive benefit of an eligible child. Although the child owns the account, an authorized adult manages it while the child is a minor. For official program details, see the IRS Trump Accounts page.
During the account’s “growth period,” Trump Accounts operate under special rules that differ from those applicable to an ordinary traditional IRA. The growth period ends on December 31 of the year before the child turns 18.
Who Is Eligible?
An initial Trump Account may generally be established for a child who:
- Is under age 18 at the end of the year in which the election is made;
- Has a valid Social Security number issued before the election; and
- Has not already had a Trump Account election filed on their behalf.
The account may be established by an authorized individual, generally following an order of priority that begins with a legal guardian, parent, adult sibling, and then grandparent.
The $1,000 Pilot Program Contribution
Certain children may qualify for a one-time $1,000 contribution from the U.S. Treasury.
To qualify, the child must generally:
- Have been born after December 31, 2024, and before January 1, 2029;
- Be a U.S. citizen;
- Have a valid Social Security number; and
- Meet the qualifying-child requirements associated with the person making the election.
The $1,000 pilot contribution is separate from the standard annual contribution limit.
Who Can Contribute?
During the growth period, Trump Accounts may receive five general types of contributions:
- The $1,000 federal pilot-program contribution;
- Qualified contributions from government entities or qualifying tax-exempt organizations;
- Employer contributions;
- Qualified rollover contributions from another Trump Account; and
- Contributions from parents, grandparents, relatives, friends, the child, or other individuals.
Parents and grandparents may therefore use the account to begin building long-term savings for a child, even when the child does not have earned income.
Most private and employer contributions are subject to a combined annual limit of $5,000 during the growth period. Employer contributions are limited to $2,500 and are included within that overall $5,000 limit. The federal pilot contribution, qualified general contributions, and qualified rollovers generally do not count against the $5,000 limit.
Contributions generally are not deductible, and contributions to Trump Accounts could not begin before July 4, 2026.
Investment and Withdrawal Restrictions
During the growth period, investments are generally limited to qualifying mutual funds or exchange-traded funds that track indexes consisting primarily of U.S. companies.
Withdrawals are also heavily restricted while the child is a minor. Permitted transactions are generally limited to qualified rollovers, certain transfers to an ABLE account at age 17, corrections of excess contributions, and distributions following the child’s death.
Beginning January 1 of the year in which the child turns 18, most traditional IRA rules apply. At that point, withdrawals may be available for purposes such as higher education or a first-time home purchase, although income tax and early-withdrawal rules must still be considered.
How Is the Account Established?
Form 4547, Trump Account Election(s), is used to request the establishment of an initial account and, when applicable, elect the $1,000 pilot-program contribution. Details on the form are available on the IRS’s About Form 4547 page. The election may be made with a tax return or through the IRS’s online process.
Avoid Prohibited IRA Transactions
Regardless of the type of IRA selected, account owners must avoid prohibited transactions. Examples may include:
- Borrowing money from an IRA;
- Using the account as collateral for a loan;
- Selling personal property to the IRA;
- Purchasing property for the account owner’s personal use; or
- Improperly conducting transactions with certain family members or other disqualified persons.
A prohibited transaction can cause an account to lose its IRA status. In serious cases, the entire account may be treated as distributed as of the first day of the year, potentially creating taxable income, penalties, and other consequences.
Start Planning Early
The best retirement account depends on several factors, including age, income, employment status, business ownership, expected future tax rates, and long-term financial goals.
Trump Accounts provide families with an additional opportunity to begin saving and investing for children at an early age. However, contribution limits, investment restrictions, tax basis, withdrawal rules, and eligibility requirements should be reviewed carefully before establishing or funding an account.
JD Tax & Accounting Advisors can help individuals, families, and business owners evaluate retirement-account options and understand how contributions may affect their overall tax strategy. Contact our office before making significant retirement contributions, rollovers, conversions, or withdrawals.
This article provides general educational information and should not be relied upon as individualized tax, legal, or investment advice.