How to claim money from ‘Trump accounts’ program
Tech CEO Michael Dell and his wife, Susan, pledged Tuesday to contribute $6.25 billion to Trump accounts, a type of tax-advantaged savings account for children.
This commitment will expand access to seed money for children too old to qualify for $1,000 grants. Department of Treasury.
With the additional funds, approximately 25 million American children ages 10 and under born before Jan. 1, 2025, would each be able to receive $250 grants into the Trump account, according to Invest America, a nonprofit advocacy group that has partnered with the Dells.
“It is designed to help families feel supported from the start and encourage them to save as their children grow,” said founder and CEO Michael Dell. Dell Technologieshe told CNBC.
How do Trump accounts work?
Grants will benefit millions of young Americans: Roughly for perspective 3.6 million US births There was an increase of about 1% in 2024 over 2023, according to provisional data released in April by the Centers for Disease Control and Prevention’s National Center for Health Statistics.
Trump accounts, not unlike 529 college savings plans, aim to encourage early savings opportunities through annual employer contributions as well as the potential for donations from state and local governments and nonprofits.
Dell had previously pledged to match government seed money for its employees’ children “dollar for dollar” during an “Invest in America” roundtable event with Trump at the White House in June. Other CEOs at the event also pledged to contribute to savings account plans on behalf of their employees.
Trump account balances will be invested in a low-cost index fund, such as a mutual fund or exchange-traded fund. However, the asset management industry expressed his concerns about language in the legislation that could limit ETFs and mutual fund options in these accounts. They asked the Treasury to expand its interpretation.
“We’re creating a specific welfare account for each child,” Altimeter Capital CEO Brad Gerstner, who is leading the effort, said on “Squawk Box” Tuesday morning.
How to request grant money
Trump accounts are not yet available. But starting July 4, 2026, parents and others will be able to contribute up to $5,000 per year in after-tax dollars until the year before the beneficiary turns 18.
Families must fill out Form 4547 to open a Trump account for their child, according to Ben Henry-Moreland, a certified financial planner with advisor platform Kitces.com. “In this case, the government will open and finance this account on their behalf,” he said.
Withdrawals are not allowed until the beneficiary turns 18. At this point, the assets will be transferred to the individual retirement account. The beneficiary can use the funds for education expenses, job training, a first home down payment, or as capital to start a small business. They may also choose to leave funds invested for retirement.
From a tax perspective, Trump accounts are a IRA. Earnings grow tax deferred, and because Trump accounts contain a mix of after-tax contributions, initial seed money and investment income, distributions are partially taxable.
But experts say details about the tax treatment of distributions need to be further clarified by the Treasury Department and the Internal Revenue Service.
There are many questions about Trump accounts, including which organizations will use them. manage assets and details of how accounts work will turn into IRAsamong other topics.
Impact on low-income families
A one-time $250 deposit into Trump account won’t have a significant impact, experts say low income families.
“You need to start seeing more of these types of contributions to generate meaningful amounts,” Henry-Moreland said.
He also said a lot will depend on public education.
The federal government “really needs to sell these.” [accounts] to those who cannot contribute to these on their own,” he said. “This will require some organized, coordinated effort.”
Additionally, whether the Treasury Department automatically creates accounts for all eligible participants could go a long way in determining how many children, especially from low-income families, will enroll and benefit from grant money. July analysis By the Aspen Institute, a nonprofit forum.
“We strongly encourage Treasury to prioritize ensuring automatic enrollment in the implementation of the Trump Accounts program, as the success of this program for youth from low- and moderate-income families depends largely on this particular choice,” the researchers wrote.
