The Trump administration is set to introduce a groundbreaking federal investment account for children, aimed at empowering future generations of Americans to build wealth from an early age. The initiative, known as Trump Accounts, will feature heavily in a 30-second advertisement aired during the Super Bowl, showcasing the program’s goals to a wide audience. With a launch date set for July 4, the program promises significant advantages, including government-funded accounts for eligible children.
In the commercial, eager children discuss how these accounts can assist them in achieving aspirations like homeownership, entrepreneurship, and higher education. Treasury Secretary Scott Bessent labeled Trump Accounts as “the defining policy” of Trump’s presidency, emphasizing its potential to transform the economic landscape for families across the nation.
So what exactly are Trump Accounts? Established under the One Big Beautiful Bill Act, these free, tax-deferred investment accounts function similarly to custodial brokerage accounts and individual retirement accounts (IRAs). The U.S. Department of the Treasury will oversee the program while private banks manage the accounts. Parents can open an account for any child with a Social Security number, and for newborns between January 1, 2025, and December 31, 2028, a one-time deposit of $1,000 will be made by the federal government, though not every child will qualify for this incentive.
The accounts operate initially as custodial accounts, allowing parents to manage them until their child turns 18. During this growth phase, contributions from parents, family, and friends can accumulate, totaling up to $5,000 per year. This limit may be adjusted for inflation. Additionally, funds must be invested in low-cost index or exchange-traded funds, aimed at capitalizing on market growth and compounding interest over time.
Once the child turns 18, ownership of the account transfers to them, turning it into an IRA with specific withdrawal rules. Money can be used without penalty for education, as a down payment on a home, or to start a business, while any non-qualified withdrawals face taxation and a 10% penalty until the account holder reaches age 59 and a half.
Eligibility for the Trump Accounts extends to any child with a Social Security number as long as a parent or guardian claims the account. President Trump has voiced the aim to provide every child with a real asset, branded as a pathway to financial freedom.
Projected returns for these accounts could be substantial thanks to compound interest. According to estimates, an initial deposit of $1,000 could grow into hundreds of thousands of dollars by retirement age, depending on investment performance, making the accounts particularly appealing for families looking to foster long-term financial growth.
The new program has been compared to existing savings plans like 529 college savings plans and custodial IRAs, which allow adults to open accounts for minors. While those options offer flexibility in contributions and investment choices, Trump Accounts notably include the unique benefit of a government-funded initial deposit to eligible newborns.
Parents can begin signing up for Trump Accounts during tax season using IRS form 4547 and will also be able to apply online through trumpaccounts.gov starting on July 4. In anticipation of the official launch, interested parties can opt into email updates through the dedicated website.
The introduction of Trump Accounts represents a forward-looking approach to financial literacy, aiming to invigorate economic stability among future generations by equipping them with the tools they need to build wealth. By fostering an environment where young Americans can learn the value of investment and financial planning, this initiative aspires to lay a foundation for lasting financial empowerment.