I’m not sure how many of you noticed, but during this year’s Super Bowl an advertisement aired promoting the newly created Trump Accounts, a provision included in the “One Big Beautiful Bill Act” signed into law on July 4, 2025.
The most widely publicized feature of these accounts is the $1,000 federal pilot program. Under this provision, a one-time $1,000 seed contribution is available for all U.S. citizens born between January 1, 2025, and December 31, 2028. These funds then become invested in broad U.S.-based index investments designed for long-term growth.
For parents who have recently welcomed a child, or plan to in the near future, it is important to understand that the account is not opened automatically. Parents or legal guardians must work with an approved financial institution to establish a Trump Account in the child’s name. Once the account is properly set up, the federal government will deposit the one-time $1,000 contribution.
In addition to the initial federal deposit, up to $5,000 per year may be contributed on behalf of the minor. Contributions can be made by family members, friends, or even employers, with employer contributions capped at $2,500 annually.
At the signing of the legislation, President Donald Trump described the accounts as, “A pro-family initiative that will help millions of American children harness the strength of our economy to lift themselves up and live out the American Dream.”
Trump Accounts are designed as long-term, tax-advantaged investment accounts intended to encourage early investing, promote wealth building, and foster financial literacy. Ideally, these accounts could provide beneficiaries with a financial launching pad in early adulthood if they choose to access the funds at that time, or they could serve as the foundation for long-term retirement savings if allowed to continue compounding.
In many ways, Trump Accounts function as a hybrid between a traditional IRA and a 529 plan. Unlike an IRA, contributions are made with after-tax dollars and are not tax-deductible, and unlike a 529 plan, growth is generally tax-deferred rather than tax-free when withdrawn. Their key advantage, however, is flexibility. While withdrawals are limited during the early growth years, the funds are not restricted solely to education expenses, giving beneficiaries broader options as they reach adulthood.
While I applaud the concept of providing children with this capital that, if invested wisely, could meaningfully impact their financial future, I must admit some disappointment in how these accounts were ultimately structured. I had hoped the legislation might include stronger restrictions on early access, perhaps positioning these accounts as a meaningful long-term solution to the retirement and Social Security challenges we are likely to face in the coming decades.
With that said, for families who qualify for the $1,000 federal deposit, I strongly encourage taking the time to establish an account and capture that benefit. For everyone else, it would be wise to sit down with a financial professional to determine whether a Trump Account, or some other savings vehicle, best aligns with your long-term goals.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)