Understanding Trump Accounts: Building Wealth for Kids

A new government-backed savings program, Trump Accounts, is designed to give American children a financial head start—especially for families new to investing.

Think of a Trump Account as a long-term, tax-smart “piggy bank” that grows over time through the power of the stock market. The goal is simple: help children build wealth early, using time and compounding to their advantage.

According to IRS guidance, Trump Accounts can be opened for children under age 18 who have a Social Security number. Parents or legal guardians set up and manage the account through participating banks or brokerages, including firms such as Charles Schwab.

How the program works

For U.S. citizen children born between January 1, 2025, and December 31, 2028, the federal government provides a one-time $1,000 “seed” deposit. This funding is part of a four-year pilot program aimed at encouraging long-term saving and investment.

After the account is opened, anyone—parents, grandparents, or others—can contribute up to $5,000 per year. There are no income limits, and contributions are made with after-tax dollars.

The money in a Trump Account must be invested in broad U.S. stock market index funds, such as those that track the S&P 500. These funds are designed to spread risk across many companies and historically have grown over long periods through compound growth, where earnings generate additional earnings.

Tax advantages and access

One key benefit is tax-deferred growth. That means the account does not owe taxes on gains as it grows. Withdrawals may be tax-free if used for qualified purposes, such as retirement after age 59½.

Parents or guardians control the account until the child turns 18, at which point ownership transfers to the child. Withdrawals before that age are limited to discourage early spending and keep the focus on long-term growth.

Why time matters

Even small amounts can grow significantly when invested early. For example, if the government’s $1,000 seed deposit is left untouched from birth until retirement age—about 65 years—the potential growth could look like this, based on historical averages (not guarantees):

• 6% annual return (conservative): $44,145
• 7% return: $81,273
• 8% return (long-term average): $148,780
• 10% return (historical S&P average): $490,371
• 11% return (optimistic): $883,067

These estimates show how time and compounding, not large contributions, do most of the work.

Some children may also receive additional boosts. For example, philanthropic efforts such as the Dell Foundation’s $250 contribution for many children born before 2025 can further enhance early balances.

When accounts open

Trump Accounts are expected to open in 2026, with the first deposits available after July 4. Families interested in participating should monitor IRS.gov and announcements from participating financial institutions.

For parents looking for a straightforward way to invest in their child’s future without Wall Street expertise, Trump Accounts offer a simple, long-term approach built on discipline, patience, and the power of American markets.