Should You Start a Trump Account for Your Child?
Trump Accounts will launch on July 4, 2026. Here, we look at whether you should sign your kid up.
Karee Venema
The One Big, Beautiful Bill Act, the legislative package formalizing most of President Donald Trump's second-term agenda, became law with the president's signature on July 4, 2025.
The bill is not without its controversies, of course. But one provision should be of interest to all current or expecting parents: The establishment of "Trump Accounts," a new type of tax-deferred retirement account for American kids.
The Trump Accounts share some similarities with traditional IRAs and others with 529 college savings accounts. But they also have some quirks that make them unique.
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So, should you consider a Trump Account for your children? Let's take a look and compare them to some of the existing options out there.
Only a fool turns down free money
Let's cut to the most important part first. All children born between January 1, 2025, and December 31, 2028, will be eligible for a $1,000 seed payment directly from the U.S. Treasury.
There are no income limitations. The only requirements are that the child is a U.S. citizen with a valid Social Security number and that at least one parent must also have a valid Social Security number.
That's it.
So, if your child was born this year or last or if you have any new children born through 2028, yes, you should open a Trump Account for them. It costs you nothing to claim the $1,000, and there is no downside.
Even if you have no intention of ever adding another nickel to the account, you should open one to claim the payment. Assuming the account grows at the S&P 500's average compound return of around 10%, that $1,000 deposit would be worth over $490,000 by the time your kid hits retirement age.
All children born between January 1, 2025, and December 31, 2028, will be eligible for a $1,000 seed payment directly from the U.S. Treasury.
And parents can contribute up to $5,000 per kid per year into a Trump Account. This figure will be indexed to inflation and will start adjusting in 2028. You can contribute annually up until the year they turn 18. And outside of a few extenuating circumstances, such as death or disability, the IRS stipulates that no withdrawals can be made until your child turns 18.
Once your child is 18, they are eligible to take money out of their Trump Accounts for a handful of qualified withdrawals that include higher education expenses and a first-time home purchase. Other withdrawals made prior to the beneficiary reaching the age 59 ½ will be subject to a 10% early distribution penalty.
As the bill is written now, the proceeds must be invested in certain mutual funds or exchange-traded funds (ETFs) tracking a major index such as the S&P 500. The index funds must have an expense ratio that's less than 0.1%.
It's unclear if Trump Accounts will allow more conservative blended investments in the future, but kids under 18 have the benefit of a longer timeline for investing, which means short-term fluctuations in the stock market will be less impactful on total returns.
As an added quirk, a parent's employer can contribute up to $2,500 of the $5,000 allowed annually, and it will not be counted as income for either the parent or the child. So, we could see Trump Accounts offered on the standard menu of employer benefits alongside 401(k) plans or HSAs in the years ahead.
As for whether the accounts make sense for your children born prior to 2025, that's a more complex answer. Let's dig into that now.
What is a Trump Account for a child born before 2025?
Parents with children born prior to 2025 might want to consider opening a Trump Account for their kids as well. While not eligible for the $1,000 seed payments, a $6.25 billion donation from Michael and Susan Dell will seed Trump Accounts for some kids 10 and under who were born prior to January 1, 2025.
The donation will provide an initial investment of $250 for 25 million children who live in zip codes with a median income of $150,000 or less. You can check your child's eligibility at TrumpAccountInfo.com.
Several other private donors, including Ray and Barbara Dalio, are making donations for seed money for children in certain areas. The Dalios, for instance, have pledged $250 to each eligible child under the age of 10 in Connecticut.
Though Trump Accounts are expected to look and feel like a traditional IRA account, there are a couple of important differences.
Trump Accounts vs traditional IRAs
To start, unlike IRAs, Trump Accounts have no earned income requirement. That's a key distinction. In order to invest in an IRA, your child would have to have earned income from work, even if it is something informal like mowing lawns or babysitting. A newborn infant obviously can't work, so your ability to fund an IRA for a young child is limited.
Unlike IRAs, contributions to a Trump Account are not tax-deductible. You get no tax break for contributing, though if your employer contributes, that is not counted as taxable income. And earnings from your child's investment account grow tax-free.
And similar to IRA distributions, it's expected that distributions from Trump Accounts will be taxed as ordinary income.
Trump Accounts vs other savings accounts
There are a few things to note.
Trump Accounts are not college savings accounts. If you're looking to specifically save for college, then a 529 plan is going to be better tailored to that purpose.
Maxing out your own 401(k) or IRA should also take precedence. It's great to give your kid a head start in life if you have the financial flexibility to do it. But it doesn't make sense to set your son or daughter on the path to early retirement until you've adequately provided for your own golden years.
If your child has earned income, then contributing to a Roth IRA is going to be a better option. The Roth IRA contribution limits are higher ($7,500 in 2026) and withdrawals in retirement are completely tax-free.
Finally, the core benefit of the Trump Account — tax-free compounding of returns — is already available in a regular everyday brokerage account. Simply buying and holding an S&P 500 index fund will allow your investment to compound without any taxable gains other than minuscule taxes on dividends paid, and you maintain the flexibility to take the funds out early if you need them.
Should you get a Trump Account for your child?
So, let's return to our original question: Should you consider a Trump Account for your child?
Under the right circumstances, absolutely.
If your child qualifies for the financial gift from Uncle Sam, you should at a bare minimum open an account to take advantage of it.
Beyond that, you should take care of your own retirement planning and your kid's college education planning first. But if you have those largely covered, then adding a Trump Account to the mix can't hurt.
Your son or daughter will thank you when they turn 18.
How can I sign my child up for a Trump Account?
To sign your child up for a Trump Account, you'll need to sign into your IRS account and fill out Form 4547. You'll need your ID.me account, your social security number and your child's social security number.
You can then download the recently launched Trump Accounts app to create an account on the Apple App Store and Google Play.
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