What is Trump Account? New savings program for children
American parents will soon have another option to secure their children's financial future.
Trump Accounts, created as part of a sweeping GOP-backed tax and budget bill last year, will officially launch in July 2026 as an investment and savings option for children.
Technically, the accounts are to be launched on Thursday, and parents who have already signed up for the program will be able to start activating them, according to Wednesday's material from The Wall Street Journal. However, depositing funds will only be possible from July.
Business Insider explains everything you need to know about new accounts.
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Trump Accounts are investment accounts for children. The federal government will pay PLN 1,000. hole. (approx. PLN 3,650) for newborns to start saving on the account. Parents or guardians can then contribute their own funds – up to PLN 5,000. hole. annually (approx. PLN 18,250) – to increase the potential increase in savings, although contributions are not obligatory.
Adults will control the account until the child turns 18. After reaching the age of majority, the child will be able to withdraw the funds or continue to use the account for long-term investing. The account will be fully in the child's name.
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Who qualifies?
Parents can open a Trump Account for any child under 18 with a valid Social Security number. Only children born between January 1, 2025 and December 31, 2028 will receive a payment of PLN 1,000 from the government. hole. (approx. PLN 3,650).
Dell Technologies founder Michael Dell and his wife Susan announced they will donate an additional $250. (approx. PLN 913) to the accounts of children under 10 years of age living in areas where the median household income is less than PLN 150,000. hole. (approx. PLN 547,500).
How does it work?
The US Department of the Treasury will automatically make a one-time payment of PLN 1,000. hole. to each eligible child's account once it is opened. Parents, friends or employers will then be able to donate up to PLN 5,000. hole. annually for each child, starting from July 4, 2026. Families with several children will be able to open multiple accounts.
Visa also announced that it will allow credit card holders to transfer points and rewards to their child's account.
The money can be invested in any diversified portfolio of low-cost index funds, such as funds tracking the S&P 500 Index. Account holders will be able to track their balance and investment performance via the app.
Teens and young adults will be able to contribute their own earnings once they start earning money. Having a Trump Account does not limit your ability to save in other accounts, such as a Roth IRA (a tax-advantaged American retirement account).
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How to open a Trump Account?
Parents or guardians will be able to open a Trump Account through the Internal Revenue Service (IRS). They will need to complete the newly created IRS Form 4547 when they file their tax return this spring. The form requires basic identifying information, such as the child's name, address, date of birth, Social Security number and citizenship status.
Parents will also be able to open an account for their child through the government's online portal, which is due to launch in the summer. Updated information will be posted at trumpaccounts.gov.
How and when can the money be used?
Funds for Trump Accounts will be blocked until the calendar year in which the child turns 18. Control of the funds will then be transferred to the account owner. Holders will be able to use the money for a down payment for an apartment, college tuition, a new business or other larger expenses. This distinguishes the program from other savings accounts for children, such as 529s, which can only be used for specific purposes, such as higher education.
Account holders do not have to withdraw money after they turn 18. They can continue to deposit funds and treat the account like a standard investment account well into adulthood.
How will the account be taxed?
Trump Accounts will offer tax benefits similar to traditional IRAs. Government initial payment of PLN 1,000. hole. will not be treated as taxable family income, and parents' contributions will be tax deferred. However, these contributions must come from after-tax money.
Account holders will not pay tax on investment gains as long as the funds remain in the account, but when the money is withdrawn it will be taxed at standard income tax rates.
Can an entrepreneur make payments to the accounts of employees' children?
The company owner can pay up to PLN 2,500. hole. annually (approx. PLN 9,125) for the children of its employees on Trump Accounts. These contributions are tax deductible and count towards the annual limit of PLN 5,000. hole. for the account.
JP Morgan and Bank of America have already committed to making payments to their employees' accounts under the Trump program in the amount of PLN 1,000. hole.
The above text is a translation from American edition of Business Insider
