Celebrating your kid’s first birthday? The federal government wants to give him or her a gift: a savings account and $1,000 to get started.
This gift isn’t meant to be “unwrapped” until your child turns 18, giving the investment time to compound, and eventually be put toward life’s biggest milestones—like going to college or buying a house.
President Donald Trump said the action by the U.S. Treasury Department would usher in the “first generation of ‘Trump Account’ children” during an event in late January.
“We're going to give every newborn American child a financial stake in the future—[a] head start at life and a fair shot at the American dream,” he said.
What Is a Trump Account?
It’s a new type of individual retirement account (IRA) created under last year’s One Big Beautiful Bill Act and designed for children under 18 who have a Social Security number.
Parents and legal guardians can open and manage one on behalf of their children, and family, friends and others, including employers, can contribute to it; annual contributions are capped at $5,000.
The funds will be invested in certain mutual funds or exchange traded funds (ETFs) that track an index of primarily U.S. companies, like the S&P 500.
The money can’t be withdrawn before Jan. 1 of the calendar year in which the child turns 18. When it is withdrawn, the earnings on the money contributed is taxed as income and can only be used on certain expenses—like higher education or a first-time home purchase—without incurring a 10% additional tax penalty.
After the child turns 59 ½ years old, the money can be used for non-qualified purchases without being penalized.
How can I open an account?
While Trump Accounts don’t go live until July 5, 2026, parents can elect to open an account when they file their taxes by the April 15 tax deadline this year, using IRS Form 4547.pdf
Alternatively, parents will be able to sign up on the official trumpaccounts.gov website this summer.
Who is eligible for the $1,000?
The $1,000 seed funding is available to babies who are U.S. citizens and born between January 1, 2025, and December 31, 2028.
With roughly 3.6 million births annually, the Treasury could spend roughly $15 billion funding newborn accounts.
What about money from philanthropists, employers and states?
Since announcing the accounts, several big names have pledged donations.
Michael Dell, founder of Dell Technologies, and his wife, Susan Dell, are donating a whopping $6.25 billion to fund 25 million accounts of children under the age of 10. That comes out to $250 per account.
Ray Dalio, founder of Bridgewater Associates, and his wife, Barbara Dalio, are giving $75 million—$250 per account—to help fund the accounts of more than 300,000 children in Connecticut, where the company is based and where the couple lives.
The Treasury is encouraging philanthropists to adopt a state and help jump start the accounts of children there, calling it their “50 States Challenge.”
Brad Gerstner, founder and CEO of Altimeter Capital, joined the cause pledging $250 to all children under five with Trump accounts in Indiana, Gerstner’s home state.
In addition, several companies have vowed to match employee contributions to Trump Accounts, including JPMorgan Chase, IBM and Comcast, and 20 states are considering “topping up” accounts, the Treasury Department says.
How much are accounts expected to grow?
It’s difficult to say. The answer depends on several factors including fluctuations in the stock market.
For an account created at birth with the $1,000 seed investment and no other contributions, the Treasury estimates the account could grow to about $6,000 at 18 years old, $15,000 at 27 and $243,000 at 55. That assumes an average annual return, on the high end, of about 10.5%.
Others put those estimates far lower, saying that future stock market returns on U.S. equities are expected to be closer to 3.1% to 6.7%. Critics also warn that those numbers don’t account for inflation, so the purchase power of, say, $6,000 may be a lot lower in 18 years.
Housing Takeaways
While a few thousand dollars might not sound like a whole lot, it can make a difference for a younger first-time home buyer looking to purchase a modest house. Extra savings in-pocket would help a future buyer to cover the down payment.
Additionally, the Treasury broadly sees these accounts as foundational in teaching children financial literacy early to set them up for success.
“By giving each newborn citizen a material stake in the American dream through Trump Accounts, President Trump is minting future investors on every rung of the economic ladder,” Bessent said. “He is embedding financial literacy and empowering today’s youth to shape their own financial future.”
