Imagine your child turning 18 with a six-figure investment account waiting for them—money they can use to buy a first home, start a business, or pay for college. That’s the vision behind Trump Accounts, a new government-backed savings program launched under the One Big Beautiful Bill Act signed into law in July 2025.
Whether you’re a new parent, grandparent, or just financially curious, here’s a closer look at how this works—and whether it’s right for your family.
What Exactly Are Trump Accounts?
Trump Accounts are tax-deferred investment accounts automatically available to every child born in the U.S. between January 1, 2025 and December 31, 2028. Here’s what makes them unique:
- $1,000 from the federal government is automatically deposited for eligible babies at birth1
- Families and employers can contribute up to $5,000 per year, with up to $2,500 of that from an employer2
- Money grows in a low-cost U.S. stock index fund (like an S&P 500 ETF), with fees capped at around 0.1%3
- Accounts are tax-deferred—meaning gains are not taxed while they grow. Withdrawals are taxed at favorable rates, or taxed normally with penalties if misused.
These accounts are not just for education like 529 plans. Instead, the funds can be used for:
- College or vocational training
- First-time home purchases
- Starting a business
- Job retraining
- Or kept for retirement after age 31
That flexibility is what’s turning heads—this is more than just a “college fund.”
What’s Great About Trump Accounts?
1. Everyone Gets a Head Start
Whether you earn $30,000 or $300,000, your child is eligible for that $1,000 government deposit. You don’t even have to sign up—the money is deposited automatically if you’re enrolled in a participating hospital or file through an approved financial institution1.
2. Tax Benefits Without the Complexity
Unlike some tax-favored accounts that require income tests or specific uses, this one’s simple: contribute, let it grow, and use it for one of the approved life events. You avoid capital gains tax while the account grows3.
3. Builds Serious Wealth Over Time
Let’s say you invest $2,500 a year from birth through age 18. According to U.S. Treasury modeling, the average Trump Account could grow to $190,000–$676,000 by age 28—and in strong markets, possibly over $1.9 million4.
4. Financial Literacy and Inclusion
By giving every child a financial asset tied to the U.S. economy, this program aims to close wealth gaps and bring more Americans into the investment world early in life5.
What You Should Watch Out For
1. You Still Have to Contribute for Big Growth
The $1,000 gift is a nice start—but real compounding comes from continued contributions. If your family is stretched thin financially, you may not be able to add much beyond that.
2. Strict Withdrawal Rules
Only half the money becomes accessible between ages 18–25. The rest remains locked until age 31. And if your child wants to use it for something unqualified (like a car), they’ll pay taxes plus a 10% penalty3.
3. Other Accounts Might Offer More Flexibility
Compared to 529 college plans, custodial Roth IRAs, or even regular investment accounts, the Trump Account has stricter guardrails. For families focused solely on education, 529s still offer tax-free withdrawals for tuition6.
4. Could Affect Benefits Eligibility
While the law aims to protect these accounts from affecting Medicaid or food stamp eligibility, experts warn that some states haven’t yet clarified their rules, which could impact low-income families7.
So, Should You Use One?
If you have a baby born in 2025 or later, there’s no downside to accepting the $1,000 deposit—it’s free money for your child’s future. From there, whether you make additional contributions depends on your situation. If you already fund a 529 or Roth IRA for your child, Trump Accounts may complement those. If you’ve never had access to investment tools before, this could be a simple and powerful place to start.
Bottom line: This account won’t magically make your kid a millionaire, but it might give them a real financial edge when they need it most. To discuss your financial situation, contact one of our Advisors at in**@***********es.com.
Sources (Annotations)
Investopedia – “New Parents: How to Get Paid Under the Big Beautiful Bill’s Baby Bonus Program” https://www.investopedia.com/new-parents-how-to-get-paid-under-the-big-beautiful-bill-s-baby-bonus-program-11770693 
2
Littler – “Employers May Offer New Benefit Through Trump Accounts” https://www.littler.com/news-analysis/asap/employers-may-offer-new-benefit-through-trump-accounts
The Week – “What Are the Trump Accounts for Kids?” https://theweek.com/personal-finance/trump-accounts-for-kids 2 3
Fox Business – “Trump Accounts Could Grow to $1.9 Million, Treasury Says” https://www.foxbusiness.com/politics/bbbs-trump-accounts-kids-could-grow-1-9-million-treasury-says
Aspen Institute – “Trump Accounts Are Here. Now Let’s Make Them Work.” https://www.aspeninstitute.org/blog-posts/trump-accounts-are-here-now-lets-make-them-work
Saving for College – “MAGA Accounts vs. 529 Plans” https://www.savingforcollege.com/article/maga-account-money-accounts-growth-advancement
Barron’s – “Trump Accounts May Give New Parents Free Money. There’s More Than One Catch.” https://www.barrons.com/advisor/articles/trump-savings-accounts-pros-cons-bd6db60e
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
