Potential value for Trump-associated infant accounts could reach up to $1.9 million, states Treasury Department.
The One Big Beautiful Bill Act, signed into law by President Donald Trump on July 4, introduces a new savings program for American babies born between January 1, 2025, and December 31, 2028. This innovative initiative, called the "Trump Accounts," aims to provide a financial head start for the next generation.
Each eligible baby will receive an automatic $1,000 government deposit to kickstart their savings. Parents, relatives, and even employers can contribute up to $5,000 annually per child, with a cap that may be adjusted for inflation after 2027. These contributions can help grow the accounts significantly over the years.
The funds in Trump Accounts must be invested exclusively in low-cost U.S. equity index funds, such as the S&P 500, to take advantage of long-term market growth. No withdrawals are allowed before the child’s 18th birthday, except for rollovers to ABLE accounts. After 18, withdrawals follow traditional IRA rules.
The earnings in these accounts grow tax-deferred, meaning the child will pay taxes on them upon withdrawal after age 18. The accounts are designed for long-term savings goals like retirement or major adult expenses, rather than short-term education purposes, which 529 plans better serve.
With an average annual return of around 7% after inflation over the long term, a Trump Account could potentially grow to roughly $180,000–$200,000 by the time the child is 18, given consistent contributions and reinvestment. If maximized and left to compound, the account could grow to as much as $1.9 million by the age of 28, according to the Treasury Office of Tax Analysis.
Families may want to consider Trump Accounts as part of a comprehensive long-term saving strategy, complementing existing education savings like 529 plans. For more information, consult with a financial advisor to understand how these accounts can benefit your family's financial future.
References:
- The Hill
- CNBC
- Treasury Office of Tax Analysis
- White House Fact Sheet
- Investopedia
- The Trump Accounts, a new savings program for certain American babies, encourages investment in low-cost U.S. equity index funds, such as the S&P 500, to leverage long-term market growth.
- Parents, relatives, and employers can contribute up to $5,000 annually per child to Trump Accounts, but these contributions may be influenced by the rate of inflation after 2027.
- The economic impact of the Trump Accounts could be significant, with the potential for a single account to grow to $180,000–$200,000 by the time the child is 18, given consistent contributions and reinvestment.
- As part of a personal-finance strategy, parents may want to consider Trump Accounts as a means of savings for long-term goals, such as retirement or major adult expenses, while continuing to use education savings plans like 529 accounts for short-term educational purposes.
