Giving Babies a Head Start: What You Need to Know About the New “Trump Accounts"

Dec 05 2025 00:15

In 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), ushering in a brand-new financial tool for American families: the so-called Trump Accounts. These accounts are designed to give children — starting from birth — a nest egg that can grow over time with investments, helping build long-term financial stability, future education funds, or even a down payment on a first home.

 

In short: for babies born during a certain window, Uncle Sam gives them $1,000 — and their families can build on that foundation over many years.

 

What Are Trump Accounts — In Plain English

  • A long-term savings account for kids. Trump Accounts function much like a retirement account (similar to an IRA) — but for children. The idea is to start saving early.

  • Automatic seed money for newborns (and young children). If a baby is born between January 1, 2025 and December 31, 2028, the government will deposit $1,000 into their Trump Account — as long as certain criteria are met.

  • Who’s eligible? Any U.S. child under 18 with a valid Social Security number. For babies born in the eligibility window, parents or guardians can request the $1,000 deposit. Other children (outside that birth window) may still open a Trump Account — but won’t receive the $1,000 seed from the government.

  • How the money grows. Once established, the funds in the account are invested — typically in low-cost U.S. stock-market index funds (e.g., funds that track broad indices like the S&P 500). Over time, with compounding returns, this can grow substantially.

  • Contributions beyond the seed money. Parents, family members, even employers can contribute additional money each year — up to $5,000 per child per year. Contributions can continue until the end of the year the child turns 18.

  • When the money becomes usable. The funds are designed to stay invested until the child turns 18. At that point, the account converts to a traditional IRA — and withdrawals can be used for purposes like higher education, buying a first home, starting a business, or other long-term investments.

How to Sign Up for a Trump Account (Step-by-Step)

  1. Check if your child is eligible

    • The child must be under 18 with a valid Social Security number. 

    • If the child was born between Jan. 1, 2025 and Dec. 31, 2028, they qualify for the $1,000 government deposit. 

  2. Have a parent or guardian open the account

    • A parent or legal guardian must open and manage the account until the child turns 18. 

  3. File the required IRS form

    • When the program becomes operational, families will complete Internal Revenue Service (IRS) Form 4547 — this is the official way to request their child’s Trump Account and claim the $1,000 seed contribution. 

  4. Decide how to invest / contribute

    • The default investment will be in a broad U.S. stock-market index fund. Over time, that can offer strong growth thanks to market returns and compounding. 

    • Families (or employers/relatives) may contribute up to $5,000 per year to build the account further. 

  5. Hold until age 18 (or later)

    • Withdrawals aren’t generally allowed until the child becomes an adult. At that point, the money can be used for education, a first home, starting a business — or left invested to continue growing.

Why This Matters — And What It Could Mean for Your Child

  • Compound growth over years — a powerful financial head start. Starting investing early takes advantage of compound interest. That $1,000 seed could grow significantly over 18 years, especially with additional contributions.

  • Flexibility. Unlike some savings programs that limit use to college, Trump Accounts aim to cover a broader set of future goals — education, homeownership, business, etc. 

  • Inclusive and universal. Because eligibility is broad (any U.S. child under 18 with a Social Security number), this isn’t limited to wealthy families. The program could help ensure children from all backgrounds get a financial head start. 

  • Encouraging a savings mindset from day one. Families who adopt this early — and contribute annually — set up children not just with money, but with financial habits that help later in life.

  • But… not a guarantee. As with any investment, returns depend on how the markets perform. And while $1,000 is a start, ongoing contributions are likely necessary to turn this into a “fortune.”

What Parents Should Do Now

  • If you have a child born between 2025–2028: Plan to file IRS Form 4547 as soon as the accounts go live (expected July 4, 2026) to claim the $1,000 government deposit.

  • If you have older children under 18: You can still open a Trump Account — you just won’t get the $1,000 deposit. Contributing regularly could still give them a valuable financial head start.

  • Think long-term. Use the account to build savings over years. Even modest recurring contributions can add up.

  • Compare with other saving options. Trump Accounts are compelling — but families should consider how they fit alongside other vehicles, like education savings, 529 plans, or custodial accounts, depending on goals.

  • Keep an eye on official IRS / Treasury guidance. Since this program is brand new, rules about contributions, withdrawals, investments, and tax treatment may be refined over time.

Final Thoughts

The Trump Accounts represent one of the most ambitious efforts in recent U.S. history to give children a financial jump-start from the moment they’re born. For many families, this could become a powerful foundation — a long-term savings nest egg that grows over time, offering opportunities for education, home-buying, entrepreneurship, or just a cushion for financial security.

 

As always with new programs, staying informed will be key. But for new parents — or those expecting — it’s worth taking the time to understand and plan. If approached wisely, this could become one of the gift’s that pays off decades down the road.