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The Trump administration on Wednesday introduced “Trump Accounts,” a provision of the new tax legislation which will dole out $1,000 to every newborn U.S. citizen whose parents enroll them in the program.
No contributions are necessary, but parents can deposit up to $5,000 per year, which will be invested in American companies in the stock market.
At age 18, without any additional contributions, it is estimated a child’s account will be worth $5,800.
By age 55, a child’s account without any additional contributions will reach roughly $200,000.
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With a $5,000 contribution each year, an account will be worth nearly $304,000 by the time the child turns 18, or $2.7M by the time the child reaches 55.
“For the first time ever, we’re going to give every newborn American child a financial stake in the future,” President Donald Trump said during an event announcing the program on Wednesday. “Head start life and a fair shot at the American dream, something people have talked about so much … When you see what’s going on with our economy, the tremendous investments that [have] been made in our country.”
“Over the next 15 years, we’re going to put $3 to $4 trillion of wealth into the hands of young Americans who otherwise would have really started out with nothing,” he added. “… Decades from now, I believe that Trump Accounts will be remembered as one of the most transformative policy innovations of all time.”
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Every American child born between Jan. 1, 2025, and Dec. 31, 2028, will be eligible. Children can be enrolled when parents file their taxes.
The account will be in the child’s name and parents will act as the sole custodian until they turn 18.
The program will launch July 5, one day after America’s 250th anniversary.
Who is eligible?
All American children under 18 with a valid Social Security Number are eligible to establish a Trump Account.
How much can be contributed to an account?
Families, friends and employers can contribute up to $5,000 per year, per child, to a Trump Account.
Where will funds be invested?
Funds will be invested in “a diversified portfolio of low-cost index funds designed to maximize long-term growth while minimizing risk,” according to the Trump Account site.
The specific stocks have not yet been released.
When can funds be used?
Funds can be pulled out, without penalty, when a child turns 18 for qualified expenses like education, a first home purchase, or starting a business.
Withdrawals “may be subject to restrictions” and would be taxed at ordinary income rates, according to the administration.
How to open an account
Parents can open a Trump Account for eligible children using the newly-created IRS Form 4547.
They can sign up when filing their taxes, or through an online portal that will be available by summer 2026.
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Can corporations and philanthropists participate?
Employers can contribute up to $2,500 to Trump Accounts for their workers or their workers’ children, which will be tax-deductible, or offer employees a salary reduction program that would allow them to make pre-tax contributions to Trump Accounts.
Nonprofit organizations and local governments can also contribute to Trump Accounts in a state or qualified geographic area.
