The program is scheduled to begin on July 4, 2026, for children born between 2025 and 2028 with a valid Social Security number.
“Trump accounts” for children are expanding significantly
Michael and Susan Dell have contributed more than $6 billion to programs that have boosted the value of approximately 25 million accounts by $250.
NEW YORK, Dec 4 (Reuters) – Could the Trump Account help low-income Americans build wealth?
The investment program is part of President Donald Trump’s One Big Beautiful Bill Act, but many details are still unclear.
“Overall, anything that encourages families to save early is good in theory, but the mechanics are more important than the slogans,” said Melissa Caro, a certified financial planner in New York.
How Trump Account Works
The government plans to launch this program on July 4, 2026. The U.S. Treasury will deposit $1,000 in seed money into the investment accounts of every child born between 2025 and 2028 with a valid Social Security number. The government invests the money in low-cost index funds that grow tax-deferred. Income tax will be charged on withdrawals.
A parent, guardian, employer, or other entity can add additional funds to a child’s account. Under this program, these contributions will be capped at $5,000 per year, and employer contributions will be capped at $2,500 per year.
How is the Dell family involved in this effort?
Entrepreneur Michael Dell and his wife Susan announced Monday that they will pledge $6.25 billion in philanthropy and place $250 into the personal investment accounts of 25 million American children.
Children living in ZIP codes with a median household income of $150,000 or less will receive the money, a Dell family spokesperson said.
Joseph LaVogna, an adviser to U.S. Treasury Secretary Scott Bessent, told Reuters Next that the account would help encourage investment in the U.S. economy while also teaching Americans how compound interest works as they watch their children’s money grow over time. Lavorgna said he hopes other funders will step up to invest.
What are the tax implications?
The Trump account is essentially a custodial retirement account, known as a custodial IRA, overseen by a parent or legal guardian, said Alex Caswell, a certified financial planner at Wealth Script Advisors in San Francisco. When the child turns 18, the account converts to a traditional IRA.
John Iselin, associate director of economic research at Yale University’s Budget Lab, explains that withdrawals from Trump accounts will face IRA-style treatment, including penalties for early or ineligible use.
“The support is broad and shallow, rather than targeted and large-scale,” Iselin said.
529 plans are another popular savings mechanism for families. They can use this funding to pay for college tuition along with other educational opportunities. Contributions to a 529 plan are not deductible for federal income tax, but many states offer a full or partial state income tax deduction or contribution deduction.
The money left in your 529 can also be used to save for retirement.
How much can I save?
Andrew Herzog, a certified financial planner with Watchman Group in Plano, Texas, calculates that if you leave $1,000 of seed money alone for 28 years, you’ll end up with $16,000, assuming a 10% annual return. Since 1957, the S&P 500 has delivered an average annual return of 10.54%.
“For new parents, receiving $1,000 from the federal government is a deal. Take it,” Herzog said.
According to Herzog’s calculations, if you invest $100 a month on top of your seed money until age 18 (the contribution age limit) and then grow your account for another 10 years, you’ll earn about $180,000.
For those who save more aggressively, the results are even more dramatic. If you invest the seed money, max out contributions of $5,000 each year until age 18, and then grow the account for another 10 years, you’ll have a portfolio worth $698,000 by the time your child turns 28.
Who will manage Trump’s account?
Financial companies are vying to get a piece of the program, according to public lobbying records. The Investment Company Institute, a Washington trade group representing the world’s largest asset managers, sent a letter to the U.S. Treasury Department on Oct. 29, urging it to create a “robust and competitive marketplace for account fiduciaries and custodians” rather than choosing a single program provider.
Can Trump’s accounts increase financial literacy in the United States?
“As kids grow up, there are some teachable moments about investing in your name,” says certified financial planner and financial educator Jackie Cummings Koski. “What is an index fund? What stocks do you own in the fund? How much does the fund grow? What do you use it for?”
Thomas Geoghegan, a family wealth advisor and founder of Beacon Hill Private Wealth in Summit, New Jersey, said the Treasury and philanthropic seed money is a useful boost. “The real impact comes from whether families develop the habit of giving regularly,” Geoghegan says.
Research shows automatic deposits, instant matching and clear rules are better ways to increase savings for low-income households, Caro said.
“If you put money in now, you’ll get the benefit at tax time,” Caro said. “That’s not the way to drive the behavior of the families this is targeting.”
How do I open an account?
First, fill out IRS Form 4547. You can submit this form at any time. Starting in mid-2026, you will be able to set up an online account at trumpaccounts.gov.
What details still need answers?
Some aspects are still unclear, including how accounts will be treated when families apply for federal student aid. Other questions: How will the custodian address compliance, investment limits, and employer funding?
“These operational details determine whether an account feels easy or a hassle,” Geoghegan says.
