Should Parents Open a Trump Account for Their Child? Who Qualifies and What Families Need to Know

Trump Accounts are a new federal investment plan for children created under the administration’s 2025 tax and spending law. Every eligible newborn receives $1,000 from the federal government, placed into an investment account managed under retirement-style rules.

Congress approved the program as part of a broader strategy to increase long-term household savings and encourage families to invest early in U.S. financial markets.

Who qualifies for the $1,000

A child is eligible for the government-funded $1,000 if:

• The child is a U.S. citizen

• The child is born from January 1, 2025 to December 31, 2028

Families can also open accounts for children who were born before 2025 or after 2028, as long as they are under 18 — but those accounts do not receive the federal starter deposit.

There is no income limit. Families at any earning level may open one account per child.

When accounts can be created

• Account creation opens early 2026

• Families may start adding their own contributions July 4, 2026

• Treasury will send activation instructions for government-funded accounts May 2026

Parents or legal guardians control the account until the child reaches age 18.

Contribution limits

• Up to $5,000 per year per child

• Employers may add up to $2,500 tax-free, included in the $5,000 total

• Donations from governments and nonprofits do not count toward the limit

The cap will adjust annually beginning in 2028 to reflect inflation.

How the money is invested

Funds must be placed in Treasury-approved investment products, including:

• Broad-market U.S. equity index mutual funds

• U.S. equities-focused exchange-traded funds

Annual fees are capped at 0.1%, below typical retail investment charges.

The structure is designed to:

• Keep costs low
• Maintain market exposure
• Reduce high-risk investment choices for minors

Withdrawal rules

Funds are locked until age 18, except for:

• Full transfer to another Trump Account

• Approved transfer to an ABLE account at age 17

• If the child dies

After 18, the account adopts standard IRA withdrawal rules, meaning early withdrawals can trigger taxes depending on the purpose.

Where Trump Accounts offer value

• The federal $1,000 is guaranteed if eligibility rules are met
• Low fees help long-term returns
• Automatic market exposure encourages investing from birth
• Can later support multiple adult needs: housing, retirement, business capital

Where the program falls short

• Less tax benefit than 529 plans
• Contribution limits may be restrictive for higher-saving families
• No access if money is needed for major expenses before adulthood

The financial bottom line for parents

This program works best for a specific group:

Families who want to accept the $1,000 and then save modestly over time without needing the funds early.

Parents who plan to save aggressively for education or want full spending flexibility may prefer:

• A 529 plan for tuition goals

• A custodial brokerage if money may be needed sooner

• A Roth IRA once a child has income from work

Some Rules Are Still Unclear

Although Trump Accounts are set to open in 2026, several operational rules are not yet published. Financial institutions that plan to offer the accounts say they are still waiting on instructions from the Treasury Department regarding eligibility verification, fee monitoring, and how custodians should report contributions over an 18-year span.

States are reviewing how the federal program will interact with existing college savings incentives, particularly in places where 529 tax benefits are linked to local investment plans. State treasurers have asked for coordination to avoid conflicting requirements once enrollment begins.

Record-keeping is another unresolved aspect. Once beneficiaries turn 18, the federal rules shift to standard retirement-style taxation, meaning income reporting will depend on accurate files kept since the child’s birth. Providers say implementation decisions made next year will determine how straightforward that transition will be.

Families with children born in 2025 will be among the first to see how these rules take shape when applications open. The Treasury’s remaining guidance is expected to define how easy — or complicated — participation becomes.

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