As a continuation of President Donald Trump‘s pitch to Americans on affordability and the economy under his administration, the U.S. Treasury and White House are celebrating the upcoming launch of a program they view as a key milestone: “Trump Accounts.”
A provision of Trump’s tax legislation, Trump Accounts are meant to give $1,000 to every newborn, so long as their parents open an account. That money is then invested in the stock market by private firms, and the child can access the money when they turn 18.
A U.S. Treasury event Wednesday brings together an assortment of politicians and celebrities — from Texas Republican Sen. Ted Cruz to rapper Nicki Minaj — to discuss the program and its potential impact on the economy. Backers of Trump Accounts have said they’re a way to help children from low-income households build wealth.
Here’s what you need to know about Trump Accounts and how to claim them.
What is a Trump Account?
It’s a new savings tool where money is invested in the stock market on behalf of a child. The child can’t access the money until they turn 18 and can only use it for specific purposes, such as paying tuition, starting a business or making a down payment on a home.
After a parent opens an account, the U.S. Treasury will contribute $1,000 for newborns. Private banks and brokerages will manage the money, which must be invested in U.S. equity index funds that track the stock market and charge the accounts no more than 0.10% in annual fees.
Parents can contribute up to $2,500 annually in pretax income, much like they do for retirement accounts. Parents’ employers, relatives, friends, local governments and philanthropic groups can also pitch in. Yearly contributions are capped at $5,000, but contributions from governments and charities don’t count toward that total.
Who gets $1,000?
As part of the initiative’s launch, parents of older children are also encouraged to open accounts, but they won’t get the $1,000 bonus. That money is only reserved for babies born during the calendar years of the Trump administration.
To qualify for the $1,000 seed money, a baby must be a U.S. citizen, have a Social Security number and be born between Jan. 1, 2025, and Dec. 31, 2028. Any parent can open an account for a qualifying child, regardless of the parent’s immigration status.
It’s important to note that the child won’t be able to access the money until they turn 18, except in rare circumstances, so it can’t help with immediate expenses. And disbursements from the accounts will be subject to taxes.
What about older children?
Children born before 2025 won’t qualify for the $1,000 incentive, but parents can still open accounts for them as long as they’re under 18. Parents can still invest up to $2,500 pretax for those kids.
In December, billionaires Michael and Susan Dell announced a $6.25 billion donation that will allow some children who are 10 and under to receive $250 in seed money if their parents open an account. That money is reserved for kids who live in ZIP codes with a median family income of $150,000 or less and who won’t get the $1,000 seed money from the Treasury.
A few weeks later, hedge fund founder Ray Dalio and his wife Barbara pledged $75 million for kids under 10 in Connecticut, where Dalio lives. That would amount to $250 for 300,000 children in qualifying ZIP codes. Those large contributions are part of an effort by the U.S. Treasury — dubbed the “50 State Challenge” by Secretary Scott Bessent — to encourage wealthy philanthropic donors to pitch in.
Other corporations participating in the program include Uber, MasterCard, BlackRock, Visa and Charles Schwab, according to the Trump Accounts website.
How do I open a Trump Account for my kids?
The accounts won’t be open for contributions until July 2026, but parents of eligible kids can sign up using Form 4547 from the Internal Revenue Service. Parents can fill out the form when filing taxes this year or when the administration opens an online portal this summer, according to the Trump Accounts website.
Registering for a Trump Account is required for a child to receive the money. In May, parents who sign up will get information about how to finish opening the accounts.
What’s the idea behind the accounts?
Backers of the accounts say they want to introduce more people to the stock market and give even children born into poverty a chance to benefit from it. Supporters also say the accounts bolster capitalism at a time when openly socialist candidates are growing more popular.
About 58% of U.S. households held stocks or bonds in 2022, according to the U.S. Securities and Exchange Commission, though the wealthiest 1% owned almost half the value of stocks in that same year.
Before Trump created the accounts, California, Connecticut and the District of Columbia were piloting “baby bonds” programs that are similar to Trump Accounts in some ways. Several other states, including Maryland, are weighing programs.
But those programs are targeted for youth growing up in poverty or foster care, plus children who lost a parent to COVID-19. Wealthier children don’t benefit. They’re also managed by the state, not private investment firms.
What do critics say?
Critics point out the accounts do little to help children in their early years, when they’re most vulnerable and most likely to be in poverty. The accounts, they say, also fail to offset cuts the Trump administration and congressional Republicans have made to other programs that benefit young people and their families, including food assistance and Medicaid. Republicans created the accounts in the same Trump tax bill that reduced spending for some of those programs.
And even with the contribution from the government, critics say the Trump Accounts will widen the wealth gap. Affluent families that can afford to make the maximum pretax contribution to the accounts will realize the greatest benefits. Poor families who can’t afford to set aside money for the accounts will benefit the least. Assuming a 7% return, the $1,000 in seed money would grow to roughly $3,570 over 18 years.
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—Makiya Seminera and Moriah Balingit, AP education writer