President Trump officially launched "Trump Accounts," a new initiative aimed at fostering long-term wealth-building for children, with the program becoming available on July 4.
The initiative provides a $1,000 tax-advantaged investment to every U.S. child born between January 1, 2025, and December 31, 2028. These funds will be placed in a "diversified investment vehicle designed to maximize long-term growth," according to the program's website. Parents or guardians will administer the accounts, with the ability to contribute up to $5,000 annually per child. Withdrawals are restricted until age 18 and are subject to income taxes.
During an event marking the launch, President Trump stated, "This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation. And they’ll really be getting a big jump on life."
Eligibility and Administration
All U.S. children under 18 with a valid Social Security Number are eligible to receive the $1,000 seed money from the Treasury Department. Families, friends, and employers can contribute additional funds, with a yearly limit of $5,000 per child from non-employer sources and $2,500 per child from employers for their employees or dependents. Over 50 companies have committed to offering contributions for their employees' children.
The Treasury Department is overseeing the program, while financial institutions such as The Bank of New York Mellon and Robinhood Markets are administering the initial accounts. These may eventually be transferred to other providers like Vanguard.
To open an account, parents must complete IRS Form 4547, which can be submitted directly through the Trump Accounts app, the IRS website, or with a tax return filing. Checking a specific box on the form is required to receive the $1,000 seed money.
Investment Options and Comparison to 529 Plans
Each Trump Account is initially invested in the State Street SPDR Portfolio S&P 500 ETF, a low-cost exchange-traded fund tracking the S&P 500 Index. Other low-cost index ETFs, including those from iShares and Vanguard, are also available as investment options.
Unlike 529 plans, which are state- or educational institution-operated plans designed for qualified education expenses and offer tax-free growth on those earnings, Trump Accounts operate under traditional IRA rules. This means earnings are tax-deferred, but withdrawals are taxed as income. While 529 plans have no annual contribution limit and allow for larger tax-free gift contributions, Trump Accounts are capped at $5,000 annually per child. The Treasury Department projects that a Trump Account could grow to approximately $15,000 by age 27 and nearly $243,000 by age 55, suggesting a focus on long-term wealth accumulation similar to retirement savings.