What Happens to a Trump Account if the Child Dies?

No parent wants to think about this. But knowing how a Trump Account is handled in this situation can provide a small measure of peace of mind. IRS Notice 2025-68 addresses this topic directly, and we want to make sure you have clear, factual information.

How the Rules Work

The death of the beneficiary child is one of only three exceptions that allow funds to leave a Trump Account before age 18. The other two are rollovers and return of excess contributions. You can read about all three in our early withdrawal guide.

When a child who holds a Trump Account passes away, the account funds can be distributed. The money does not disappear or revert to the government. It goes to the people the child's family has designated.

Where the Funds Go

The distribution depends on whether a beneficiary has been named on the account:

• If a beneficiary is designated: The funds go directly to that person. This avoids probate and is typically the fastest and simplest path.
• If no beneficiary is designated: The funds go to the child's estate. This may require probate proceedings, which can take time and involve legal costs.

Tax Treatment

Death distributions from a Trump Account are handled as follows:

• No 10% early withdrawal penalty. The penalty that normally applies to IRA withdrawals before age 59 1/2 does not apply to distributions caused by death. This is true regardless of the child's age.
• Taxed as ordinary income. The distributed funds are generally included as ordinary income on the applicable tax return. Depending on the circumstances, this may be the child's final tax return or the beneficiary's return.

Practical Steps for Parents

While no one expects to need this information, here are steps you can take now to make sure the account is handled properly if the worst were to happen:

• Name a beneficiary. Do this when you open the account. You can usually update it later if your wishes change.
• Keep the designation current. Review the beneficiary designation if family circumstances change — for example, after a divorce, remarriage, or the birth of other children.
• Inform your family. Make sure your spouse, partner, or other family members know the account exists and who the designated beneficiary is.
• Keep account documents accessible. Store Trump Account paperwork with other important financial documents so that a family member or executor can find it if needed.

Getting Help

If you are dealing with this situation now, we are sorry for your loss. Here are resources that may help:

• Contact the account custodian. The brokerage or institution holding the Trump Account can walk you through the distribution process.
• Work with a tax professional. They can help with the tax return and ensure distributions are reported correctly.
• Consult an estate attorney. If no beneficiary was designated and probate is needed, an attorney can guide you through the process.

For more information on how Trump Accounts are managed and who controls them, visit our guide on who controls a Trump Account.