Trump Accounts: Getting Your Child off to a Fast Start

Trump Accounts are a new type of tax-advantaged savings vehicle introduced under the Working Families Tax Cuts (part of the One Big Beautiful Bill Act). They operate as IRA-style accounts specifically for children, designed to give young Americans an early start on building wealth through long-term, tax-deferred investment growth. The program launched in 2026 (with accounts becoming available around July 5, 2026), and focuses on investing in low-cost U.S. stock index funds (e.g., those tracking the S&P 500) with fees capped at 0.10% annually.

Who's Eligible

• General eligibility: Any U.S. child under age 18 (at the end of the calendar year the account is opened) who has a valid Social Security number. Parents, guardians, or authorized individuals can open one account per child.
• $1,000 government seed contribution (pilot program): Limited to U.S. citizens born between January 1, 2025, and December 31, 2028. The child must qualify as a dependent (e.g., the "qualifying child" for tax purposes of the person making the election), and the account must be established before the year the child turns 18. No income restrictions apply for the family.
• Children born before 2025 (but under 18) can have accounts opened, but they do not receive the $1,000 federal seed. Each child is limited to one Trump Account.

How They Work: To open a Trump Account, parents or guardians typically file IRS Form 4547 (Trump Account Election) with their tax return or through an upcoming online portal. This election triggers the setup:

• For eligible newborns (2025–2028 births), the U.S. Treasury deposits a one-time $1,000 seed directly into the account (this does not count toward contribution limits).
• Additional contributions: Up to $5,000 per year (indexed for inflation after 2027), from parents, family, employers (up to $2,500 per parent can be employer-sponsored and tax-exempt), or others.
• Investments: Funds must be invested in broad U.S. stock index funds or ETFs (e.g., mirroring the S&P 500).
• Tax treatment: Growth is tax-deferred (like a traditional IRA). Contributions are after-tax (not deductible).
• Withdrawals: No access before age 18. After age 18, the account converts to a standard traditional IRA with typical rules (e.g., penalties for early withdrawal before age 59½ and required distributions after age 59½). The child becomes the owner at 18, with the custodian (usually a parent) managing it until then.

Potential Impact and Growth: The program aims to "jumpstart the American Dream" by leveraging compound growth in the stock market. Estimates from the Council of Economic Advisers and Treasury (based on historical S&P 500 returns) vary by assumptions:

• With only the $1,000 seed and no further contributions: Could grow to around $5,800–$18,100 by age 18–28 (or potentially $500,000+ by retirement with long-term compounding).
• With maximum annual contributions ($5,000/year): Projections range from $143,000–$300,000+ by age 18, and up to $1 million+ by age 28 under average returns (some optimistic estimates reach $1.9 million by age 28 with full funding).

These figures assume historical market performance, such as 6–10% average annual returns, but actual results vary depending on market conditions, fees, and contribution consistency. Extra gains can come from private initiatives, like philanthropic gifts such as those announced by Michael Dell. Overall, Trump Accounts offer a strong tool for building wealth across generations, especially for newborns in the pilot program, by combining government seed money with family or employer contributions and tax-advantaged stock market growth. For the latest details, visit IRS.gov or trumpaccounts.gov.