Trump Accounts, the president’s foray into free cash for American children, will officially launch on July 4, the nation’s 250th birthday.
The accounts are designed to help families grow a savings for children from the time they’re born, capitalizing on the 20 years or so they presumably have before entering the workforce. Babies born between the start of 2025 and the end of 2028 get $1,000 in seed money from the government for their accounts, which can grow with additional contributions from family, friends and parents’ employers.
“We’ll ensure that Americans don’t just end their lives with a nest egg, but instead, all Americans will begin their lives with a beautiful nest egg,” Trump said in January. “There’s never been anything quite like this.”
Treasury Secretary Scott Bessent called it the “most important government benefit for young people since the GI Bill.”
But exactly how far-reaching the policy will be in practice remains an open question. Families need to sign up for the accounts. They are not automatically opted into them, which means information on how to enroll needs to reach those who need it most. And to have the highest returns, families would need to continue contributing to the accounts past the $1,000 seed money, meaning higher-income families stand to gain the most.
There’s evidence the Trump administration is working to reach some vulnerable populations. State child welfare agencies will be able to open accounts for foster children in their care, an effort led by First Lady Melania Trump called “Fostering the Future.” States would be allowed to contribute funds they receive to assist foster children, such as disability benefits, into Trump Accounts. About half of states have signed up to participate so far.
So far, more than 5.5 million families have made moves to establish a Trump Account. About 1.4 million of those are eligible for the $1,000 seed money. In all, 86 percent of those applicants are families that have incomes below $200,000.
If you’re considering opening an account for your child, here’s what you need to know:
What are Trump Accounts?
Trump Accounts are investment accounts designed to help children begin accruing wealth. All eligible American children can open one, but babies born between January 1, 2025, and December 31, 2028, get a $1,000 contribution from the federal government into their accounts.
Parents, family, friends and others can contribute up to $5,000 combined a year into the accounts, though they are not required to. That contribution limit will be indexed to inflation after 2027. Up to $2,500 a year can also come from parents’ employers, with some restrictions.
Beneficiaries generally cannot withdraw money before age 18 — or around 2043 for babies born in 2025, which is when the account becomes more like a traditional Individual Retirement Account (IRA).
Who is eligible?
American children with a valid Social Security number are eligible to open a Trump Account. Children whose immigration status has changed can apply for a Trump Account once they receive a new Social Security card that reflects the change.
Legal guardians, parents, adult siblings or grandparents, in that order of priority, can open accounts for a child, according to the IRS. Authorized individuals do not need to be American citizens or have a Social Security number to open an account for an American citizen child. They may use their IRS individual taxpayer identification number (ITIN) in the application.
Who gets the $1,000 investment?
Only children born between January 1, 2025, and December 31, 2028, get a $1,000 contribution from the federal government into their accounts. For all other kids, parents and guardians can open an account before a child turns 18; they just won’t get the seed money.
The $1,000 government contribution does not count against the $5,000 annual contribution limit.
Is there any other money available?
Yes. Nonprofits and governments can contribute to Trump Accounts with no limits. However, those contributions need to be made in equal amounts to all the Trump Accounts for all beneficiaries living in a specific geographic area or born in a specific year, according to an analysis of the policy by the Bipartisan Policy Center. The requirement was designed to bar donations that would benefit only a certain group or demographic.
The Michael and Susan Dell Foundation has already committed $6.25 billion to add $250 to every account for children ages 10 and under — an estimated 25 million kids. Micron, the semiconductor manufacturer, is investing $250 million into Trump Accounts, depositing $250 for children under 18 in the states where it operates: Idaho, New York, Virginia, California, Colorado, Minnesota and Texas. Dalio Philanthropies, from the billionaire founder of asset management firm Bridgewater Associates, is adding another $250 for 300,000 children in Connecticut, targeting those under 10 in certain low-income ZIP codes.
Dozens of employers, including Bank of America, Chipotle and Steak ‘n Shake, have also committed to contributing to Trump Accounts on behalf of their employees.
How much could this make?
In his State of the Union address earlier this year, Trump claimed the accounts could accrue $100,000 or more by the time kids are 18, but experts have pointed out that those estimates fail to account for a number of factors, including inflation, the future of U.S. stock returns and taxes once the funds are withdrawn. The $1,000 in seed money, if left untouched, is more likely to grow to $35,000 over 55 years, or about $8,000 after adjusting for inflation and taxes, according to one estimate from the American Enterprise Institute, a center-right think tank.
Still, those are real earnings that could support wealth accumulation in childhood, which has been found to increase children’s chances of pursuing higher education and, ultimately, secure better-paying jobs.
“When we have a national policy like a Trump Account that says, ‘We are trying to prepare children so when they become adults they have some bit of savings,’ I think that’s directionally correct,” said Elaine Maag, co-director of the Urban-Brookings Tax Policy Center at the Urban Institute. But the true potential in the policy will depend on how well it can reach those who need it the most, she said.
How do I sign up?
Parents or guardians must enroll children either by filing a Form 4547 with their taxes or online through the IRS at irs.gov/trumpaccounts. Accounts can be managed online at trumpaccounts.gov or on the Trump Accounts app.
Is there a deadline?
No. Children can be enrolled anytime before they turn 18.
What should I expect if I have already filled out a Form 4547?
You should have received an email from no-reply@TrumpAccounts.Treasury.gov prompting you to complete your child’s Trump Account activation.
You should follow those instructions to set up the account through the Trump Accounts app or on the TrumpAccounts.gov website.
When will the money come in?
Beginning July 4, the Treasury Department will deposit the $1,000 seed funds into accounts and families and other contributors are free to begin adding funds.
What are the benefits of a Trump account?
The key benefit that sets Trump Accounts apart is that contributions can be made before a child earns an income, unlike other traditional IRAs. That allows the money to accrue much earlier and potentially grow through compounding investment returns.
“Very few savings products give families $1,000 immediately, and investing that money over nearly two decades can provide a meaningful financial head start,” Stephen Roll, an assistant professor at the Brown School at Washington University and research director of the Center for Social Development, where he’s been involved in research on cash transfers and child savings.
Children who receive extra funds through governments, philanthropies or their parents’ employers also stand to benefit from the free cash, especially babies who get the seed funding.
“If you have a child born between 2025 and 2028, Trump Accounts are likely going to be one of the best options for opening a savings fund simply because there’s a substantial financial incentive attached to it,” Roll said. “Most child savings plans will not hand you $1,000 simply for opening an account.”
Are there other savings accounts that could be better to use than a Trump Account?
In many cases, yes, but it depends on the goal of the account.
If parents or caregivers intend to save money for a child’s education, a 529 college savings plan is likely better suited because it benefits from state tax breaks and the contribution limits are higher.
A brokerage account could also be a better option. Families can contribute money with no limits and the account may outperform a Trump Account after taxes, according to the Bipartisan Policy Center’s analysis. Investment gains in brokerage accounts are generally taxed at lower long-term capital gains rates instead of ordinary income tax rates, like with Trump Accounts.
Critically, however, the Trump Accounts also won’t address some of the affordability challenges that are squeezing families right now and that are likely to be key to the upcoming midterm election. The earliest kids will generally be able to withdraw the funds is in 2043.
“Any kind of savings account that you cannot access until you’re 18 will not meet any of your today’s needs,” Maag said, adding that families that are struggling to pay their rent or childcare will have less to contribute to grow their kids’ Trump Accounts. “It’s hard to imagine if you’re struggling to meet your day-to-day needs, you’re gonna have a lot of ability to contribute to these accounts.”
Low-income families who face a host of financial emergencies over the course of their kids’ lives due to housing or work instability could benefit from a fund they could tap into for those expenses, rather than one that locks them out until their children become adults, said Stephen Roll, an assistant professor at the Brown School at Washington University and research director of the Center for Social Development, where he’s been involved in research on cash transfers and child savings.
“A dollar that keeps a family housed or puts food on the table today may do more for a child than a dollar the family cannot reach for years,” he said.
Is the money taxed?
Yes. Contributions from family or friends are made with after-tax dollars and any investment returns on those contributions are taxed upon withdrawal. When a child turns 18, their Trump Account becomes more like a traditional IRA and operates under those rules. Withdrawals made before a beneficiary is 59 and a half years old are typically subject to a 10 percent tax with only a couple of exceptions, including withdrawals made for higher education, a first home purchase or birth or adoption costs.
Contributions from employers, governments or nonprofits are not counted as taxable income for the employee, but they will be taxed when withdrawn, according to the Congressional Research Service’s overview of the policy.
Are there limitations to the policy?
Advocates have argued that certain groups will face additional barriers when applying for Trump Accounts. Immigrant families, for example, who are usually less likely to fill out government forms for fear of retribution, may be even less likely to apply now due to the increase in Immigration and Customs Enforcement actions, Maag said.
“Given the climate, there is evidence that people, even when they are eligible for benefits, may opt to not take up those benefits,” she said. “It certainly seems reasonable that this sort of effect would apply to these accounts as well. If people are nervous about giving their data to the government, then they might choose not to take the benefit up.”
Low-income families who are less likely to have a savings account could also be left out because each part of the enrollment process will create barriers for them: Families must know this option exists, trust it, enroll and activate their accounts.
“Each of those steps creates greater barriers for low-income families, families with limited English proficiency and families disconnected from the tax or financial systems,” Roll said. Targeting messaging to those families and helping them go through the process may help substantially.
Roll and others have also argued that because the program is opt-in — meaning families need to apply, they won’t receive the funds automatically — that will leave thousands of eligible families out of the benefit. He cited a similar child savings account program in Maine that was also opt-in. Higher-income, high-education families were more likely to enroll, until the structure switched to automatic enrollment, raising participation rates from 40 percent to 100 percent and lifting low-income families along the way.
“Higher-income families generally have more time, financial knowledge and disposable income to navigate and contribute to a new investment account,” Roll said. “Without automatic enrollment and more progressive contributions, Trump Accounts risk concentrating the largest benefits among families that already have the greatest capacity to save.”
