New ‘Trump Accounts’ Aim to Build Long-Term Savings for Children

Beginning this year, parents and guardians across the country will be able to begin saving and investing on behalf of their children through new federally created savings vehicles known as “Trump accounts.”

The accounts, established under the One Big Beautiful Bill Act, are designed to give children a financial foundation for adulthood, allowing funds to grow through long-term investments until the beneficiary turns 18.

According to the U.S. Treasury Department, even modest contributions could grow into thousands of dollars by the time a child reaches adulthood, depending on investment performance and contribution levels.

What are Trump accounts?

Trump accounts function similarly to long-term investment accounts. Funds are managed by private banks and brokerages and invested in select mutual funds or exchange-traded funds that track the S&P 500 or other indexes focused primarily on American equities, according to guidance from the Internal Revenue Service.

Funds placed in the accounts cannot be withdrawn until the child turns 18. After that point, the money is intended for major life expenses such as higher education, purchasing a home, or starting a business. Early withdrawals may be subject to additional taxes, though the IRS notes there may be exceptions for qualified education expenses or first-time home purchases.

Who qualifies for seed funding?

Children born between Jan. 1, 2025, and Dec. 31, 2028, will automatically receive a one-time $1,000 deposit from the U.S. Department of the Treasury. Additional seed funding is also being distributed through philanthropic efforts:

• Certain children in Connecticut will receive an extra $250 through donations made by Ray and Barbara Dalio.
• Children age 10 or younger who do not qualify for the $1,000 deposit may be eligible for a one-time $250 contribution funded by a donation from Michael and Susan Dell, provided they live in zip codes with a median household income below $150,000.

Treasury officials have said a nationwide effort is underway to encourage similar philanthropic contributions in other states.

How can families contribute?

In addition to federal and philanthropic seed funding, families and others may add money to Trump accounts annually:

• Individuals may contribute up to $5,000 per year.
• Employers may contribute up to $2,500 per year to the account of an employee’s child, counting toward the overall annual limit.
• Contributions from state governments and charitable organizations do not count toward the annual cap.

All contribution limits will adjust annually for inflation.

How much could the accounts grow?

Account balances will vary based on investment returns and contribution levels.

Treasury officials estimate that if no additional contributions are made, the initial $1,000 federal deposit could grow to approximately $5,800 by age 18 and $18,100 by age 28, based on historical market performance.

With modest annual contributions of $250, the account could reach about $20,700 by age 18. Under higher contribution and investment scenarios, balances could be significantly larger.

Officials cautioned that all projections depend on future market conditions and are not guaranteed.

When can families enroll?

Parents of eligible children will begin receiving information in May on how to complete account enrollment. A federal website allowing families to register for Trump accounts is expected to launch in July, after July 4.

The first contributions may be made after that date, using Form 4547, according to IRS guidance. As the program rolls out nationwide, Treasury officials say Trump accounts are intended to encourage long-term saving, expand investment access, and give children a financial head start as they enter adulthood.