Nov 30, 2025
If you’re having a baby between 2025 and 2028, your bundle of joy could come home with a $1,000 head start from the government.
That’s the whole idea behind the new “Trump Accounts,” introduced as part of the One Big Beautiful Bill President Trump signed in July 2025. These accounts are meant to help families build long-term financial stability by giving kids an early foothold in future investment growth.
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The one-time payments are meant to be a savings vehicle that parents can register for their children who have Social Security numbers. If parents max out their contributions and the funds are left untouched, by the time the child is 18 the White House’s Council of Economic Advisers estimates the account could be sitting at six figures.
So how do these Trump Accounts work?
Making the most of “Trump Accounts”
According to the One Big Beautiful Bill, babies born between 2025 and 2028 can be registered to get a Trump Account with $1,000 from the government (1). Parents can add up to $5,000 a year, and all of this money gets invested in U.S. stock-market index funds, such as the S&P 500.
According to projections from the White House’s Council of Economic Advisers, a baby born in 2026 whose parents max out contributions could see $303,800 by the time they turn 18 and $1.09 million by age 28, assuming average market returns. If parents skip additional contributions, the account still grows to $5,800 by 18 and $18,100 by 28.
When the child turns 18, the Trump Account converts to a traditional IRA, which means taxes are taken when the money is withdrawn.
There’s a potential workaround: a Roth IRA conversion. If done correctly, all future withdrawals could be completely tax-free after age 59.5. Normally, Roth conversions trigger taxes, but if the converted amount falls under the 0% income tax bracket (around $11,925), the tax hit could be zero. However, families should note that the IRS hasn’t officially confirmed whether Roth conversions will be allowed for Trump Accounts (2).
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Setting up your kids for financial independence
Though the Trump Accounts sound like a great way for families to get a head start for their kids, parents have several other strategies that can point their children in the right direction when it comes to saving money:
Roth IRAs for kids: If your child has some earned income from a part-time job, you can open a Roth IRA in their name. The contributions are made with after-tax dollars, and the money grows tax-free for life. This can be a great way to teach kids about saving and investing, and to give them a head start on retirement (3).
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529 college savings plans: These plans let families save for higher education with tax advantages. Contributions grow tax-free, and withdrawals for qualified education expenses aren’t taxed. More than 30 states also offer state tax income tax deductions or credit for 529 contributions. It’s important to remember that only qualified education expenses count for the tax-free benefit withdrawal (4).
Regular brokerage accounts or custodial accounts: Looking for more flexibility? Consider custodial accounts (UGMA/UTMA) in a child’s name. There aren’t any contribution limits but taxes may apply on investment gains. This option could be a great way to save up for goals like buying a first car (5).
Teaching financial literacy: Perhaps the most important strategy of all is having conversations with your kids about money; including paying bills, budgeting, investing, and saving. Talk to your kids about how to make smart decisions with their money early and be savvy financial role models for them (6).
Trump Accounts are just one tool that parents can leverage to help their kids plan for a solid financial future. Add in some smart tax moves, steady contributions and a financial education along the way, and you’re on your way to helping your kids develop a money management playbook that can help build their future.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
White House (1); Ed Slott and Company (2); CNBC (3); Saving for College (4); Fidelity (5); FDIC (6)
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Jessica is a freelance writer with a professional background in economic development and small business consulting. She has a Bachelor of Arts in Communications and Sociology and is completing her Publishing Certificate.
