The Real Value of Trump Accounts
Posted in Category: Family, Saving
Parents, can we have a quick huddle?
We all want to save for our kids’ future. Finding the money to do it is usually the hard part.
Between paying the mortgage, buying groceries, saving for retirement, and everything else that comes with parenthood, it’s easy to tell yourself you’ll start saving for your kids “next paycheck.”
But eventually…you have to start.
Because one day, almost without warning, that little kid is walking across a stage to receive a college diploma—just like my oldest recently did.
That’s why I think the real value of Trump Accounts has less to do with the government’s $1,000 seed contribution, for eligible kids, and more to do with something much bigger: they may encourage more families to begin investing for their children while time is still on their side.
Before we talk about whether a Trump Account is the right choice for your child, here’s a brief overview of how the accounts work.
| Trump Accounts at a Glance | |
|---|---|
| What is it? | A new long-term investment account for minors (similar to a traditional IRA), owned by the child but managed by an adult. |
| Who is eligible? | Most U.S. children under age 18 can have a Trump Account. |
| Who qualifies for the $1,000? | Eligible children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 Treasury contribution. |
| Is additional money available? | Some eligible children may also receive an additional $250 charitable contribution through participating programs. This is limited by zip code and to the first 25 million American children age 10 or younger born before 2025. |
| How do you open an account? | Submit IRS Form 4547 online or with your tax return. Once notified by the Treasury, activate the account through the official Trump Accounts app. For eligible children, the $1,000 Treasury contribution is deposited automatically. |
| Who can contribute? | Parents, grandparents, employers, friends, and others may contribute, subject to annual limits. For 2026 and 2027, total private contributions are capped at $5,000 per year. The federal government’s $1,000 seed contribution does not count toward this limit. Employers can contribute up to $2,500 to an employee’s Trump Account, and it won’t count toward the employee’s taxable income, but does count toward the annual contribution limit. |
| How is the money invested? | Funds are invested in low-cost, broadly diversified, primarily U.S. stock index funds to encourage long-term growth. |
| How is it taxed? | Earnings grow tax-deferred and taxes are generally due when money is withdrawn. Personal contributions are not tax-deductible. |
| When can the money be used? | Generally, no withdrawals can be made before age 18; after that, traditional IRA rules apply. |
The Real Value Isn’t the $1,000
Let’s be honest. A one-time $1,000 investment probably won’t pay for college or fund an early retirement by itself.
Assuming returns similar to the S&P 500’s long-term historical average—while remembering that past performance doesn’t guarantee future results—that initial $1,000 could grow to roughly $6,000 over 18 years.
Helpful?
Absolutely. Who wouldn’t want some free money?
Life-changing?
Probably not.
Now imagine contributing just $100 per month until age 18, in addition to that initial $1,000 seed deposit. Assuming similar long-term returns, the account could grow to roughly $66,000. Without adding another dollar (no additional contributions after 18), it could grow to more than $1 million by the child’s mid-forties. This is all hypothetical, of course, as it will depend on investment performance.
That’s the real lesson.
The government’s $1,000 may get the ball rolling, but time and consistent investing do the heavy lifting.
Our Future Value Calculator can help you crunch your own savings numbers.
Is It the Right Account?
Whether a Trump Account is the best choice depends on your family’s goals.
These accounts offer tax-deferred growth, meaning taxes are generally owed when money is withdrawn. Depending on how and when the money is used, certain withdrawals may also be subject to additional rules or penalties.
There are other account options that offer different advantages. For example, a 529 plan can provide tax-free growth and tax-free withdrawals for qualified education expenses, while a custodial Roth IRA offers tax-free growth and tax-free qualified withdrawals in retirement for children with earned income. A custodial brokerage account provides greater flexibility but generally doesn’t offer the same tax advantages.
Rather than asking which account is best, ask which account best supports your family’s goals.
Because regardless of the account you choose, consistently saving and investing over time is usually more important than choosing the perfect account.
What This Means for Military Families
Military families know that life rarely stands still. PCS moves, deployments, and career transitions can make long-term investing easy to postpone.
But children have one advantage adults can never recover: time.
Whether you choose a Trump Account, a 529 plan, a custodial Roth IRA, or another investment account, starting early—even with modest monthly contributions—has historically been one of the biggest drivers of long-term success. That’s really the lesson here.
The greatest value of a Trump Account may not be the government’s $1,000 contribution. It may simply be that it encourages more parents to begin saving and investing for their children.
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