Trump Accounts, new tax-advantaged investment accounts for children in the United States, have officially launched. These accounts are designed for long-term savings, especially retirement, rather than short-term spending. Eligible children born from 2025 through 2028 can receive a one-time $1,000 contribution from the U.S. Treasury Department after an account is opened. Families can then contribute up to $5,000 per year, with the money invested in U.S. stock funds and allowed to grow tax-deferred.
How Trump Accounts Work
Trump Accounts are available for children aged 18 or younger. Parents, legal guardians, grandparents, adult siblings, and other authorized individuals can open an account for a child, provided the child is a U.S. citizen with a work-authorized Social Security number. The funds generally cannot be withdrawn before age 18. At that point, the account converts into a traditional Individual Retirement Account (IRA), subject to the usual IRA rules.
The real power of Trump Accounts is time. Suppose a family contributes the maximum $5,000 per year for 18 years and earns an average annual return of 7 percent, which is well within historical norms. Using a conservative assumption that each contribution is made at the end of the year, the account would grow to about $170,000 by the time the child reaches adulthood.
Benefits and Opportunities
For many families, that alone would be life-changing. A young adult with roughly $170,000 in long-term retirement savings begins adulthood in a radically different position from someone starting from zero, especially since some of the funds can be used without paying a penalty to pay for college or for a down payment on a home.
Employers can contribute up to $2,500 per worker each year, which counts toward the $5,000 annual limit. Qualifying charities, philanthropists, and state and local governments can also make contributions under specified circumstances, and those contributions do not count toward the $5,000 limit.
Original reporting: Fox News (HLL/CB) — read the source article.
