By MAKIYA SEMINERA and MORIAH BALINGIT, Associated Press Education Writer
The launch of “Trump Accounts” marks a significant step in President Donald Trump‘s economic policy, aimed at promoting financial growth for future generations. The initiative, celebrated by the U.S. Treasury and the White House, is part of a broader strategy to address economic disparities.
Trump Accounts, a provision of the president’s tax legislation, offer $1,000 to newborns with accounts opened by their parents. The funds are then invested in the stock market until the child reaches 18, providing a potential financial foundation.
An event on Wednesday by the U.S. Treasury will gather politicians and celebrities like Sen. Ted Cruz and Nicki Minaj to discuss the program’s economic implications. Proponents argue that Trump Accounts are a tool for wealth-building among children from low-income families.
Understanding Trump Accounts
Trump Accounts are savings tools where investments are made in the stock market on behalf of a child. Access to the funds is restricted until the child turns 18 and can be used for specific purposes like education, business ventures, or home purchases.
The U.S. Treasury contributes $1,000 to accounts for newborns, managed by private banks and brokerages. Investments must be in U.S. equity index funds with annual fees capped at 0.10%. Parents can contribute up to $2,500 annually in pretax income, similar to retirement accounts. Contributions from employers, relatives, and other entities can further bolster these accounts, with a yearly cap of $5,000, excluding contributions from governments and charities.
Eligibility for the $1,000 Contribution
The $1,000 contribution is reserved for babies born between Jan. 1, 2025, and Dec. 31, 2028, who are U.S. citizens with a Social Security number. While older children can have accounts opened for them, they do not receive this initial deposit.
The funds remain inaccessible until the child is 18, except in rare cases, and disbursements are subject to taxes.
Options for Older Children
While children born before 2025 aren’t eligible for the $1,000, accounts can still be opened for them. Parents can contribute $2,500 pretax annually for these children.
In December, the Dells pledged $6.25 billion, offering $250 to children 10 and under in specific ZIP codes. Similarly, Ray Dalio and his wife Barbara committed $75 million for children under 10 in Connecticut, providing $250 each to 300,000 eligible children. These donations are part of a larger initiative by the U.S. Treasury to engage wealthy donors through the “50 State Challenge.”
Companies like Uber, MasterCard, BlackRock, Visa, and Charles Schwab are also involved in the program.
Opening a Trump Account
Parents can begin contributing to Trump Accounts in July 2026, using IRS Form 4547. Registration is crucial for receiving the $1,000, with an online portal available this summer for sign-ups.
Parents who register will receive instructions in May on completing the account setup.
The Concept Behind Trump Accounts
The initiative aims to familiarize more Americans with the stock market, providing opportunities for children from impoverished backgrounds to gain from it. Advocates argue it reinforces capitalism amid rising socialist sentiments.
As of 2022, 58% of U.S. households owned stocks or bonds, but the top 1% held nearly half of the stocks’ value. Prior to this, similar programs like “baby bonds” were piloted in California, Connecticut, and D.C., focusing on aiding children in poverty or foster care. These are managed by states rather than private firms.
Criticisms of the Program
Critics argue that Trump Accounts do little to assist children during their most vulnerable early years and fail to compensate for cuts to programs like food assistance and Medicaid. The accounts, they claim, may widen the wealth gap, benefiting wealthier families more due to their ability to make larger contributions. With an assumed 7% return, the $1,000 could grow to about $3,570 over 18 years.
The Associated Press’ education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters, and funded coverage areas at AP.org.
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