Trump Accounts are for the benefit of children.
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Trump accounts offer a rare chance for a government-funded head start on a tax-advantaged education account.
“The federal government will actually infuse these accounts with $1,000,” says Art Werner. “It’s free money. Just face it, it’s free money.”
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Any child under age 18 with a Social Security number is eligible for a Trump account. Children born between 2025 and 2028 also qualify for a government contribution.
Trump accounts were created under the “One Big Beautiful Bill” and are codified as Code Section 530A. Werner notes the significance of where lawmakers placed the provision in the tax code, pointing out that Section 529 covers education savings plans and Section 530 covers education IRAs. This placement suggests that the new account is “primarily meant for the benefit of a child” and may be used for education or other purposes.
Parents, grandparents, or other individuals can contribute up to $5,000 annually per child until the child turns 18. Werner emphasizes the power of long-term growth, observing that a child born this year could receive “17 years of funding at $5,000 a year,” resulting in “a substantial amount” accumulating in the account.
Funds must be invested in government-approved, broad-based mutual funds with low expense ratios. He supports those restrictions, saying, “They’re not going to be risky investments. I like that.” He adds that the money remains in “lockbox form” and cannot be withdrawn before age 18.
One of the most distinctive features, he says, is what happens when the beneficiary reaches adulthood. Werner compares the account to a caterpillar becoming a butterfly. “At age 18, this Trump account magically turns into an IRA.”
Unlike a traditional IRA, which generally requires earned income to make contributions, Trump accounts can be funded for children who have no earnings. He says the account’s major advantage is the early start it provides, noting that “the kickstart is whatever is in that account.”