Did you hear about the new program from the U.S. federal government? It’s called ‘’Trump Accounts’’ and many people have seen this on the news, but they don’t exactly know what this is or what they need to do to receive the money. So, if you are interested in these Trump Accounts, you should keep reading to have all the information.
Trump Accounts
They are a new type of savings account created by the federal government, and they are exclusively thought for babies (as a long-term investment). So, when a baby meets the requirements, the government deposits money on an account under the child’s name.
The idea is that the money is saved for many years so that the child receives that money when they reach adulthood.
These Trump Accounts are related to the savings system for retirement, but adapted for children since the day they are born.
Who can receive the money?
Babies who can receive the money must meet only one clear requirement: must be born between January 1, 2025 and December 31, 2028. In this case, the federal government will automatically deposit $1,000 in their Trump Account.
It doesn’t matter if the child’s parents work or not, or their level of income because the only thing that’s required to be eligible for this benefit is the baby’s birth date.
When the accounts start working
Even though the money belongs to the child since the beginning, the accounts won’t officially operate until July 4, 2026. However, the child’s parents don’t have to wait until that date to do the paperwork. The government will allow parents to start the register in May using the IRS Form 4547. This form is used to register the account and ensure that the government deposit is made correctly.
What happens with the money?
Once the money is in the account, it’s locked. So, nobody can withdraw or use it while the child is a minor. Basically, the Trump Account is closed until January 1 of the year in which the minor turns 18 years old. At that moment, the account becomes a traditional IRA account and it follows standard rules for that type of account. This may include taxes when money is withdrawn, depending on how and when it is used.
Additional contributions
Apart from the money the government sends, other people can contribute to the child’s account. There are two types of contributions:
- Third-party contributions: from family members or other individuals. They are up to $5,000 per year per child.
- Employer contributions: up to $2,500 per person, which count toward the same $5,000 yearly limit.
All the money in the account is automatically invested in mutual funds or exchange-traded funds (ETFs) that follow the S&P 500 index. This means the money is invested in the stock market with the goal of growing over time.
Michael and Susan Dell’s donation
The program received great support thanks to a donation from Michael and Susan Dell, who contributed with $6.25 billion. So, due to this donation:
- The government can cover the $1,000 contributions for babies born between 2025 and 2028.
- An additional 25 million children will receive accounts with an initial amount of $250.
The donors explained that these accounts are designed to grow over time and give young people a financial foundation when they become adults.
What parents should do
If you have a baby born in a date that’s eligible to be part of the Trump Accounts program, you (as a parent) must do the following things:
- Wait for the registration period to open in May.
- Complete and submit IRS Form 4547.
- Confirm that the child’s birth date meets the eligibility requirements.
- Make sure all information is accurate so the deposit is not delayed.
So…
Trump Accounts may sound complex at first, but when broken down, the purpose is easy to understand. The program combines government support, structured savings, and long-term investment to help future generations start adult life with a financial foundation already in place. Do you think Trump Accounts are a good idea?