Every American Child Can Now Start Building Wealth From Birth

A New Kind of Nest Egg

Trump Accounts, the president's new foray into free cash for American children, officially launched on July 4th — the nation's 250th birthday. The accounts are designed to help families grow savings for children from the time they're born, capitalizing on the roughly 20 years they have before entering the workforce. The White House has framed it as a generational shift in how Americans build wealth, and the early numbers suggest significant interest — even if questions about fairness and complexity linger.

A senior Treasury official confirmed that more than 6 million children had been registered for the accounts ahead of launch, with 1.4 million of those eligible for the $1,000 government seed money. Treasury Secretary Scott Bessent called it the "most important government benefit for young people since the GI Bill." That's a bold claim — but the mechanics behind the program are worth understanding before accepting the hype.

How the Accounts Actually Work

Trump Accounts are a new type of tax-advantaged investment account for children, created under the One Big Beautiful Bill Act (OBBBA). Children born between January 1, 2025, and December 31, 2028, who are U.S. citizens can receive a $1,000 government deposit to start their account. Parents, family, friends, and others can contribute up to $5,000 combined per year, with that contribution limit indexed to inflation after 2027.

Funds are invested in low-cost U.S. stock index funds until age 18, then follow traditional IRA rules. Beneficiaries generally cannot withdraw money before age 18 — or around 2043 for babies born in 2025 — which is when the account becomes more like a traditional Individual Retirement Account. The potential upside is real: if $250 a year is added to a child's account, the pot could be worth $19,000 by the time they turn 18. It could be as high as $271,000 if family members or employers contribute the maximum $5,000 a year.

Big Money Backing — and Big-Name Critics

A growing number of companies, including JPMorgan Chase, Intel, and Steak 'n Shake, have promised to contribute an additional $1,000 for employees' children born from 2025 to 2028. Billionaire philanthropists Michael and Susan Dell pledged $6.25 billion to supplement the accounts, meaning 25 million children ages 10 and under will get an extra $250 apiece — though only those living in ZIP codes with median household incomes under $150,000 are eligible.

Adam Michel, director of tax policy studies at the Cato Institute, says the idea of the scheme is admirable but warns it might "not live up to the rhetoric." He says the main benefit is the $1,000 starting subsidy but suggests many families would be better off using existing savings accounts. He also points out that lower-income children may feel compelled to take the money out when they turn 18 to help make ends meet — and therefore face a withdrawal penalty. Will McBride, chief economist at the Tax Foundation, says the scheme is too complicated to sign up to, which will lead to a "minority that benefits."

Who Could Miss Out — and What Comes Next

Unlike 529 plans, distributions from Trump Accounts are taxed as ordinary income. The accounts will also likely be treated as student assets on the FAFSA, assessed at a higher rate than parent-owned 529 assets, which could reduce need-based financial aid. For parents focused specifically on education savings, a 529 college savings plan is likely better suited because it benefits from state tax breaks and higher contribution limits.

Without automatic enrollment and more progressive contributions, critics warn that Trump Accounts risk concentrating the largest benefits among families that already have the greatest capacity to save. Still, the Social Security Administration has issued updated guidance to hospitals to allow parents to sign up for accounts at birth — including at birthing centers and through licensed midwives — a move one expert called "a very positive development for ensuring the policy works for everyone," making it "much likelier that low- and moderate-income households have an account for their children." Whether that promise is fulfilled will depend on how many families — especially the most vulnerable — actually find their way through the signup process in the months ahead.