What parents should know

Trump Accounts officially launched on July 4. These new tax-advantaged investment accounts for children are intended for long-term retirement savings, rather than education or short-term goals.

While more details are still to come, this guide explains how these accounts work, including details about who qualifies, what free money is available and how to maximize long-term growth potential.

What is a Trump Account?

Trump Accounts, also known as 530A accounts, are a type of individual retirement account for children, established by President Donald Trump’s “great big bill”. The accounts include a one-time matching grant of $1,000 from the US Treasury Department for children born from 2025 to 2028.

How does the Trump Account work?

The accounts work like an IRA, with some exceptions. Trump accounts can receive contributions from many sources, such as family or employers, and the funds grow tax-deferred.

The money will be invested in American stock funds, and the Bank of New York Mellon will officially manage the initial accounts. Families can track account activity through the Trump Accounts app, which was developed in partnership with Robinhood.

Who qualifies for Trump Accounts?

Trump Accounts are available to all minors 18 years of age or younger.

Any authorized person — a legal guardian, parent, sibling or grandparent — can open a Trump account on behalf of a child, as long as the child is a US citizen with a work-authorized Social Security number.

The deadline for registration is the year before the child turns 18.

Who can receive donations to the Trump account?

Children born between 2025 and 2028 will receive an initial deposit of $1,000 from the Treasury Department, once a parent or guardian opens a Trump Account.

Children born between 2016 and 2024 — who won’t qualify for the $1,000 donation — can get $250 if they live in a ZIP code where the median income is $150,000 or less, with a $6.25 billion pledge from tech CEO Michael Dell and his wife, Susan.

Eligible children will begin receiving a $1,000 test grant from the Department of Finance on or after July 4, the agency said. Dell’s $250 gift is expected to follow shortly, as the accounts are processed, according to the Dell Foundation.

In New York City, for example, an estimated 754,200 children are eligible for Dell funding, which represents $188.5 million in Dell donations, according to data provided to CNBC exclusively by a Dell Foundation spokesperson. Additionally, 186,900 children in New York City are eligible for the Treasury’s $1,000 seed deposit, representing $186.9 million in federal contributions, according to a spokeswoman.

A growing number of companies have pledged to match $1,000 Treasury account deposits for workers’ children, and philanthropists in several states have pledged additional gifts for certain deserving families. There may be more commitments to come, Treasury Secretary Scott Bessent said.

There are also reports that business leaders and philanthropists may, at some point, donate stock to new investment accounts.

How do you sign up for a Trump Account?

Parents or guardians can open accounts now by filing IRS Form 4547 with their tax return or at TrumpAccounts.gov.

Families must then download the Trump Accounts app to open an account, and track and manage account activity over time.

How to avoid Trump account scams?

For now, all official communications about your account will come via email from no-reply@trumpaccounts.treasury.gov, according to the Treasury Department: “If you receive a call or text about the Trump Account, do not respond, it may be a scam.”

Always access your child’s Trump Account through the Trump Accounts app or by typing TrumpAccounts.gov directly into your browser, the Treasury Department’s guidance says.

How can you pay for the Trump Account?

After July 4, parents, guardians, grandparents and others can contribute up to $5,000 a year in after-tax dollars up to a year before the beneficiary turns 18. The annual contribution limit is adjusted for inflation after 2027.

Employers can also contribute up to $2,500 per employee per year, which is part of the $5,000 limit and will not count as taxable income, according to the IRS. This figure also adjusts for inflation after 2027.

Additionally, qualified charitable organizations and state and local governments may make contributions up to a maximum of $5,000.

How much can Trump’s accounts grow?

TrumpAccounts.gov projects that accounts can grow to $6,000 at age 18, $15,000 at age 27 and $243,000 at age 55, assuming the account receives an initial $1,000 deposit from the Treasury and no other offers.

It also states that accounts that receive an initial $1,000 deposit into the Treasury and an additional $5,000 contribution each year can grow to $271,000 at age 18, $742,000 at age 27 and $13 million at age 55.

These estimates are based on the S&P 500’s annual average return of more than 10%.

However, to reach nearly seven figures for a child in their early 20s, parents would have to cash out the Trump accounts for years while earning “solid, uninterrupted market returns,” according to certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.

Some market analysts say that the return of the US stock market could be lower in the next decade, with Morningstar’s market simulation producing an average return of 6.3% per year, according to data provided by CNBC.

When can you withdraw money from the Trump Account?

In general, it is not possible to withdraw funds from the Trump account before the age of 18. But there are limited exceptions, including certain rollovers, distributions at death and excess contributions, according to the IRS.

Once the child turns 18, the general rules for traditional IRAs apply. Withdrawals before age 59½ are generally subject to income tax and a 10% penalty. There are exceptions to certain penalties, such as the distribution of higher education expenses or the purchase of a first home.

How would Trump’s accounts affect the wealth gap?

Proponents of the new accounts say investing in American stocks creates wealth-building opportunities for children at all income levels.

“The return on capital today is much greater than the return on labor, which means we have a growing wealth gap,” Altimeter Capital CEO Brad Gerstner, who helped lead Trump Accounts, said during a June 12 appearance on CNBC’s “Halftime Report.”

“Now we need to put money in the pockets of every child born so they can meet at the top of SpaceX, Alphabetsin all of our major companies, just like everyone else in the market,” Gerstner said.

The Urban Institute, a nonprofit research organization, says research shows that participation rates, especially among low-income families, may be low, and family contributions will vary widely by income, which could compound wealth inequality over time and concentrate benefits among higher-income families.

How do Trump accounts compare to 529s and Roth IRAs?

So far, families have enrolled more than 6 million children in Trump Accounts, the Treasury Department said in mid-June. But Trump’s accounts aren’t the only game in town.

When it comes to saving for the long term, families may also consider a 529 college savings plan, a custodial account under the Uniform Gift to Children Act or the Uniform Transfer to Minors Act, also known as UGMA and UTMA, and, if a child is earning, a Roth retirement account. Those options may be as good or better than Trump Accounts, depending on your child’s needs and long-term goals, experts say.

For some, wanting the initial grant money is enough of an incentive to open a Trump Account. But there may be another reason to consider these accounts — namely, conversion to a Roth retirement account.

This strategy would involve transferring pre-tax or non-deductible IRA funds held in the Trump account — including seed money, employer matches and philanthropic gifts — to a Roth IRA. It’s a way to bypass the capital gains requirement and start tax-free future growth, experts say.

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