Trump Account mobile app released, functions as IRA for kids
A mobile app for the Trump account was launched on May 28th. The government is paying $1,000 into the accounts of children born between 2025 and 2028.
Approximately 1.5 million American infants will receive $1,000 in new Trump accounts as the United States celebrates its 250th anniversary on July 4, according to the U.S. Treasury Department.
The Trump account will officially launch on Independence Day, when the government opens the account. Each newborn’s account will receive $1,000 of “seed” money, which will be invested and grown until the child reaches 18 years of age. Once you reach adulthood, your account converts to a traditional IRA and the same rules apply.
The approximately 5 million non-newborn children under 18 who signed up for Trump Accounts will also have their accounts activated on July 4, according to the Treasury Department. Although they will not receive $1,000 in newborn seed money, up to 25 million children under the age of 10 living in eligible ZIP codes can receive a $250 charitable gift deposited by the Michael and Susan Dell Foundation. Others can start receiving up to $5,000 a year per child, adjusted for inflation, starting in 2027, with contributions from family members, relatives and employers.
“By the way, nearly 40% of Americans have no exposure to U.S. stocks,” Treasury Secretary Scott Bessent said at a Senate Finance Committee hearing earlier this month. “They have no stake in the companies they help create; they have little share of the wealth they create. The Trump Account is a deep rethinking of that arrangement. They ensure that every American child benefits from private ownership and compound growth. That means every American baby is born as a shareholder.”
Is it too late to sign up for a Trump account?
There’s still time to sign up for a Trump account, and demographic data shows millions of children are eligible but are missing out.
According to the Census Bureau, there will be approximately 73.1 million children under 18 nationwide in 2024, meaning millions more children will have access to new tax-deferred investment accounts.
To sign up, use the online portal at Trumpaccounts.gov or visit the IRS site to create or use an existing account to apply. The Treasury also launched the Trump Account app, which can be used to complete account setup and management.
No donations are required, but you will be encouraged to save more after opening the account, the site said.
If you don’t have an account set up by July 4th, don’t worry. If your child is under 18, you can open an account at any time.
Who is eligible to receive $1,000 of “seed” money?
To receive $1,000 from the government, your baby must:
- Those born between January 1, 2025 and December 31, 2028.
- Be a U.S. citizen.
- Have a social security number.
What do parents need to know about donating?
The annual limit is $5,000 per child for all non-governmental funds combined, with inflation adjustment expected to occur from 2027 onwards. Employers can contribute up to $2,500 per year under the Employer Contribution Program, and that amount counts toward the $5,000 limit, but is generally excluded from an employee’s taxable income if structured through the Employer Program.
Government agencies and charities may also be able to make qualified general donations to groups of children, but those amounts do not count toward the $5,000 annual limit.
Does the Trump account have any value?
When accounts were first opened, many people said they probably wouldn’t get anything other than a free $1,000 from the government.
For example, if you’re saving money to pay for college, many financial advisors say a 529 plan is better because of the limited investment options and tax treatment in a Trump account. Trump accounts invest in low-cost index funds and are not allowed to be withdrawn until the year a child turns 18, after which they are treated like a traditional IRA with essentially the same rules. This means that withdrawals are taxed as ordinary income and may be subject to early withdrawal penalties if used for ineligible expenses.
In contrast, a 529 offers more investment options and withdrawals for qualified expenses are tax-free.
“Trump Accounts add an interesting new dimension to long-term planning, but are best thought of as a complement to, rather than a replacement for, existing education and retirement strategies,” the California CPAs said in an email.
But other advisers pointed to a loophole that would allow the Trump account to eventually become a Roth IRA rather than a traditional IRA, which could provide lifetime tax-free savings.
The loophole is that the child becomes eligible for Roth conversion in the year he turns 18 and the Trump account converts to a traditional IRA, advisers said. The move to an IRA also expands investment options beyond the low-cost index funds allowed in the Trump account.
“And if you’re strategic about how you convert your Traditional IRA (formerly Trump Account) when your child reaches 18, the Roth conversion will likely be tax-free,” Matt Sorensen, founder and CEO of Directed IRA & Directed Trust Company, said in a blog post.
The lack of tax on the Roth conversion assumes the teen has little or no income that would put him in the federal zero tax bracket, he said. “As long as the taxable portion of the Roth conversion is less than or equal to the standard deduction ($16,100 in 2026), no taxes will be paid on the conversion amount,” Sorensen said.
But even if a small tax is paid, the conversion could be worth it because of the years of tax-free growth, advisers said.
“While the Roth conversion is taxable, decades of tax-free growth are attractive,” said Richard Pong, a San Francisco certified public accountant.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
