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There’s a lot to unwrap in President Donald Trump’s One Big Beautiful Bill Act.
But within the nearly 900 pages of legislation lies a nugget for your kids.
It’s called the Trump Account.
What Is the Trump Account for Kids?
The Trump Account is a new savings account for kids established by the federal government.
It will provide $1,000 in starting or seed money to American children born from the beginning of 2025 through the end of 2028.
Parents, friends, and family can contribute up to $5,000 per year to these accounts before the year the child turns 18.
Investment options within these accounts include exchange-traded funds (ETFs) and mutual funds with annual fees and expenses that don’t exceed 0.1 percent.
Moreover, companies can contribute up to $2,500 a year to the account of an employee’s child.
However, the total contribution limit would remain at $5,000. Contribution limits will be adjusted for inflation beginning after 2027.
To be eligible for the Trump Account, kids must be U.S. citizens with Social Security numbers.
American kids born after 2028 are also eligible for a Trump Account. However, they won’t receive the $1,000 in seed money from the government.
How Does the Trump Account Work?
Trump accounts work similarly to nondeductible traditional individual retirement accounts (IRAs).
This means you can’t deduct contributions made to these accounts. But earnings grow tax-deferred until the child reaches age 18.
When the child reaches age 18, they can make withdrawals. At that point, the account essentially becomes a traditional IRA.
And it would follow contribution rules for IRAs. The 2025 contribution limit for IRAs is $7,000. These limits are adjusted annually for inflation.
But keep in mind that there’s generally a 10 percent tax penalty for withdrawing money from an IRA before reaching age 59 1/2.
These accounts are essentially designed to give children a head start in retirement savings.
“If you have a 401(k), you understand the power of investing early for the future,” House Speaker Mike Johnson (R-La.) said in a statement. “Trump accounts take that same principle and they apply it from the very beginning of Americans’ lives. ... It’s a bold, transformative policy that gives every eligible American child a financial head start from day one. ... Trump accounts are all about setting up the next generation for success.”
How Much Can a Trump Account Earn?
Trump accounts are essentially investment accounts for children.
Those eligible as described above will start out with $1,000. And the initial contribution limit is $5,000.
The stock market on average returns 10 percent annually.
So if a Trump Account were to be maxed out every year, it could grow to about $255,000 by year 18.
And what if the account isn’t touched until retirement at age 67? You could be looking at $29,617,428.
This assumes you keep contributing $5,000 a year each year until age 67 and receive a 10 percent annual return compounded annually.
How to Open a Trump Account?
Children born between 2025 and 2028 will be automatically enrolled in the Trump Account program.
However, parents need to claim the one-time deposit of $1,000 through a bank or other qualified financial institution.
Parents of eligible children born after 2028 would likely be able to open an account though a participating bank or financial institution.
“We see ... the establishment of these Trump accounts as a simple yet powerful way to transform lives,” Dell CEO Michael Dell said in a statement. “Decades of research has shown that giving children a financial head start profoundly impacts their long-term success. With these accounts, children will be much more likely to graduate from college, to start a business, to buy a home, and achieve lifelong financial stability.”
Under Construction
The Trump Account officially takes effect beginning tax year 2026. So until then, you can expect the White House to announce more details surrounding these savings accounts.
A Trump Account is a savings and investing account designed to help children get a kickstart to reaching financial wellness. American children born between 2025 and 2028 will get a one-time deposit of $1,000 to start off. The account will function much like a nondeductible IRA and be invested in index funds. After the child reaches age 18, the account will work much like a traditional IRA.
Javier Simon is a freelance personal finance writer for The Epoch Times. He specializes in retirement planning, investing, taxes, fintech, financial products and more. His work has been featured by major publications including Fox Business, The Motley Fool, NerdWallet, and Money Magazine.
