How do ‘Trump accounts’ work – and who will benefit? | Trump administration
A tech billionaire and his wife said Tuesday they would transfer $6.25 billion into individual investment accounts for 25 million children under the age of 10, raising new waves of questions about how these so-called “Trump accounts” would work.
The creation of these accounts was included as part of the massive tax and spending bill that Donald Trump signed into law in July. Any child born between January 1, 2025 and December 31, 2028 will be able to get a Trump account from the administration with an initial deposit of $1,000. The money will then be deposited.
“Trump accounts will be the first — I guess you could say — true trust fund for every American child, allowing family members, employers, corporations, generous donors to contribute money that will be invested and grown,” Trump said at a White House news conference focused on the $6.25 billion endowment.
As part of the press conference, the White House on Tuesday provided more information about the future of Trump accounts. However, many details remain inadequate.
Who can get Trump account?
Anyone with a social security number and under the age of 18 can open a Trump account. However, Trump accounts will not be published until July 4, 2026.
Parents and guardians are responsible for setting up and managing accounts.
Who can contribute to a Trump account? So how much can they give?
Children, parents or guardians, family members, friends and employers can contribute up to $5,000 per child per year. The US government contribution of $1,000 will not count towards this limit.
Philanthropists, charitable organizations, and some government entities such as states or tribes can also make unlimited contributions.
What about that $6.52 billion contribution?
Donated by Michael Dell and his wife, Susan, the money will go to children living in zip codes where the median household income is less than $150,000 annually. Each qualifying child will receive approximately $250.
What will happen to the money in Trump accounts?
The investment will be made in a diversified, low-cost stock index fund that tracks the general stock market. Private companies will manage these funds.
When can you withdraw money from a Trump account?
Withdrawals are only allowed when the child turns 18. But there’s a big asterisk attached to these withdrawals: At this point, the Trump account effectively operates like a traditional retirement account, which means any withdrawals could carry a hefty tax penalty.
The White House said He said Tuesday there would be some exceptions to that rule, such as “higher education expenses or first home purchases.” Brokerage firm Charles Schwab, created an explainer with more details about Trump accounts and taxes.
Will Trump’s calculations help more US children escape poverty?
Although not immediately. The Trump administration’s tax and spending bill included sweeping cuts to programs such as Medicaid and the Supplemental Nutrition Assistance Program (Snap), or food stamps. Experts fear that without the help of programs, low-income families may not be able to provide for their children or help them succeed.
Critics also argued that the Trump accounts were designed to encourage people to have more children, as the administration reportedly toyed with various pronatalist policies, such as giving $5,000 “baby bonuses” to women who give birth.
“As currently structured, these accounts will become yet another tax shelter for the wealthiest; the overwhelming majority of American families struggling to cover basic expenses like food, child care and housing will have a hard time coming up with the extra cash that can turn seed money into a meaningful investment,” Amy Matsui, vice president of income security and child care at the National Women’s Law Center, said in a statement ahead of Tuesday’s press conference.
“In addition, the law prevents many children in immigrant families from collectively receiving this benefit.”
