MW Your 5 biggest questions about 'Trump accounts,' answered
Andrew Keshner
Here's who is eligible for $1,000 in free money - and how to sign up
President Trump rings the opening bell of the New York Stock Exchange ahead of the launch of "Trump accounts" in the Oval Office on Monday. The accounts are a new type of tax-deferred investment vehicle for children.
It's the first trading day for a generation of children to start building wealth using newly established "Trump accounts."
President Donald Trump rang the opening bells for the New York Stock Exchange and the Nasdaq on Monday to mark the occasion.
So what are Trump accounts, anyway - and is it worth getting one for your child?
One year after lawmakers created the specialized investment accounts for kids, surveys show there are many people who don't know about the new savings tool. Even for people who are aware of Trump accounts, there's still uncertainty about exactly how they work.
Here are answers to some of the biggest questions about Trump accounts.
What is a 'Trump account'?
Also known as a 530A account, Trump accounts are a new type of tax-deferred investing account that can be opened for children under age 18. By law, the money in the account must be invested in low-cost index funds that track the performance of the U.S. stock market. At the moment, the money can only go to the State Street SPDR Portfolio S&P 500 exchange-traded fund SPYM.
After a child's account is created, parents, family, friends and employers can all add money to it. There's a $5,000 yearly contribution limit. When the child turns 18, the account becomes a traditional individual retirement account, or IRA. That means money will be taxed when it's withdrawn, and withdrawals before the account beneficiary turns 59-and-a-half years old can only be made for certain expenses, such as paying for college or to help buy a first home.
The federal government is giving $1,000 in free starter money to more than 1 million of the more than 6 million accounts created so far.
The money in the account belongs to the child, not to the parents or guardians who created it.
Financial planners say when it comes to building wealth, it's not about timing the market - it's about the time spent in the market. Trump accounts seek to apply that concept to millions of children: Start investing super early and reap the rewards years or decades later.
See also: There's a 'Trump account' hack that can unlock decades of wealth-building for your kid
Did you say something about free money?
Yup: The federal government will add $1,000 to the accounts of U.S. citizen children born between Jan. 1, 2025 and Dec. 31, 2028. So far, approximately 1.4 million of more than 6 million created accounts have claimed the seed money, according to Treasury Department officials.
For the households that activated their account, the money should be in there Monday, Treasury officials said last week.
The Trump accounts came about in the One Big Beautiful Bill Act, the massive Republican tax legislation that became law last year. The law also authorized a pilot program donating the $1,000 seed money to eligible children.
Some lawmakers have proposed making the $1,000 seed contributions for newborns a permanent feature of the accounts.
It's not just the federal government chipping in. A growing number of employers say they are also going to contribute to the accounts of their workers' children.
Philanthropists can also donate to the accounts and there have been some high-profile pledges already. The biggest so far is a $6.25 billion pledge from Michael and Susan Dell that will fund accounts of children under age 10 who live in areas where the median income is lower than $150,000.
Meanwhile, a $250 million pledge from Micron Technologies $(MU)$ will put money in the accounts of employees' kids. It will also give $250 to accounts of children who live in certain parts of states where Micron operates, which is Idaho, New York, Virginia, California, Colorado, Minnesota and Texas.
Who is eligible for a Trump account?
Accounts can be created for any child under age 18 with a valid Social Security number, according to the IRS. When it comes to the $1,000 seed money, the IRS notes that it's for babies who are U.S. citizens and have a valid Social Security number. It's free to sign up for an account.
How do you sign up for one?
To sign up, parents or guardians need to go to the IRS website and fill out Form 4547. That's the tax form specially created to open a Trump account. There is also a Trump Accounts app and a website, but the IRS form is the starting point. Here's the link.
The Social Security Administration said last week it is also launching a way to automatically enroll newborns into Trump accounts. The updated guidance to hospitals should start this week, according to the agency's press release.
That's a big deal, because while the accounts may sound appealing, parents and guardians still have to take an extra step to sign up with the IRS. That extra step may be a barrier for many households, experts say.
Should I get a Trump account for my kid?
The Trump accounts join a range of other tools parents can use to help their children save for the future. For example, 529 accounts are designed to pay for higher education costs. The money in those accounts comes out tax-free for school expenses. In some states, families can get a tax deduction for contributions to 529 accounts.
Meanwhile, there's no tax deduction for Trump Account contributions. After age 18, money can be withdrawn penalty-free - but not tax free - for milestones like college or a first-time home.
There are also other options for parents who want to help their kids start investing in the stock market at a young age, including custodial brokerage accounts or youth accounts. Now, kids as young as 13 can make their own trades in these accounts.
Trump accounts can only be invested in U.S. equities, and the lack of exposure to lower-risk bonds is one potential drawback, according to some experts.
But it could be wise for parents to open a Trump account for their child - even if they don't plan to contribute money to it themselves. That's especially true for anyone with a newborn or having a baby in the next couple of years: By some estimates, the free $1,000 from the government would grow to approximately $5,000 once the child turns 18.
But it's also worth it for anyone with a kid under age 18 to set up an account. A philanthropist or employer may decide to donate to the accounts at any time, meaning the child could get an unexpected contribution.
For example, philanthropists are allowed to donate stock directly to accounts, the Treasury Department announced last week. On Monday, Gwynne Shotwell, the president and COO of SpaceX $(SPCX)$, announced she was donating more than 2 million shares of the new publicly-traded company that smashed IPO records last month.
The shares "goes to the Accounts of children (ages 11-17) that live in areas with lower average household incomes with a bit more emphasis for those that live near our central Texas home," she wrote.
For these kids to have a piece of SpaceX, the key thing is having a Trump account set up in the first place.
It's still very early for Trump Accounts. It remains to be seen how large the cash contributions will get from outside sources. Rules may change in the future to allow for all sorts of wealth-building opportunities. While there are other ways for parents to save money for children, experts say it's worth setting one up, just in case your child becomes eligible for a contribution.
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-Andrew Keshner
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(END) Dow Jones Newswires
July 06, 2026 13:59 ET (17:59 GMT)
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