Parents of newborns could soon receive a major financial boost for their child’s future education.
A new federal program — commonly referred to as a “Trump Account” — will provide eligible babies with a $1,000 government-funded investment account, and experts say it could grow significantly over time.
Who Qualifies?
Under the new law, babies born between January 1, 2025 and December 31, 2028 are eligible. To qualify, the child must be a U.S. citizen and a Social Security number.
A parent would have to create the account in the child’s name. The funds cannot be accessed until age 18.
How the Accounts Work
These accounts function similarly to an IRA. Parents can let the initial $1,000 grow on its own or contribute up to $5,000 per year.
According to TrumpAccounts.gov, the $1,000 seed investment could grow to:
$5,800 by age 18 $17,000 by age 27 $200,000 by age 55With maximum yearly contributions, the account could reach $2.7 million by age 55. However, these projections are based on historic S&P 500 averages and are not guaranteed.
Expert Insight
Stephen Kates of Bankrate says the accounts could be especially helpful for families with fewer resources.
“It’s a nice start for people who might not have as many resources to save for their children,” said Kates.
He adds that early exposure to investment growth can make a significant difference.
“If that money is allowed to compound even over the first 18 years, it puts them in a position to advance far in the future,” Kates said.
But Kates also notes limitations. Because the accounts function like IRAs, withdrawals may come with taxes or penalties, and they cannot be used for high school expenses.
How Trump Accounts Compare to 529 Plans
Kates emphasizes that Trump Accounts are not a replacement for 529 education plans.
“529s are much more flexible… not just for higher education expenses, but even high school education expenses,” Kates said.
For education-related costs, he says a 529 plan remains the strongest option.
How to Sign Up
Parents can create a Trump Account by filing Form 4547 when submitting their taxes. Starting mid‑2026, families will also be able to enroll directly at TrumpAccounts.gov.
The Treasury Department will initially create the accounts, and later families can transfer them to banks, credit unions, or investment firms.
Kates’ advice is simple: “Do not turn down free money.”
Additional Support for Older Children
Families with children up to age 10 may also receive help.
Michael and Susan Dell are contributing $6.25 billion to the program, providing $250 to eligible kids living in ZIP codes with a median income of $150,000 or below.
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