Trump Accounts, a new tax-advantaged savings initiative for children, officially launched on July 4. The program is designed to help families build wealth for younger generations, particularly for long-term goals such as retirement.
Eligible children born between 2025 and 2028 can receive an initial $1,000 contribution from the U.S. Treasury Department once an account is opened. Families can then contribute up to $5,000 annually, with these funds invested in U.S. stock funds and allowed to grow on a tax-deferred basis. The accounts are intended for long-term savings rather than immediate spending.
These accounts are available for children aged 18 or younger who are U.S. citizens with a work-authorized Social Security number. Parents, legal guardians, grandparents, adult siblings, and other authorized individuals can open an account. Funds are generally restricted from withdrawal until the child reaches age 18, at which point the account converts to a traditional Individual Retirement Account (IRA) with standard rules.
Beyond parental contributions, employers can contribute up to $2,500 per worker annually, which counts towards the $5,000 limit. Charities, philanthropists, and state and local governments can also contribute under specific circumstances, with these contributions not counting toward the $5,000 limit. This structure is intended to create a national wealth-building platform supported by families, businesses, and community organizations.
Proponents suggest that consistent contributions over time can lead to substantial growth. For example, an account with the maximum $5,000 annual contribution for 18 years, earning an average annual return of 7 percent, could grow to approximately $170,000 by the time the child reaches adulthood. This initial sum could potentially be used for expenses such as college or a down payment on a home. The program's proponents highlight the power of compound growth, suggesting that such an account could grow to more than $4 million by retirement if the individual contributes an additional $1,000 annually from adulthood until age 65.
The initiative is presented as an alternative to expanded government programs, focusing instead on empowering families and civil society to help children build assets. The aim is to connect children with the success of American companies and markets, fostering a sense of ownership and participation in wealth creation.