'Trump Account' newborns could have $1.9M by 28, Treasury Dept. says. Here's what's required to get that much

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When the One Big Beautiful Bill was signed into law on July 4, it created a new account for children. The so-called “Trump account” provides a one-time $1,000 deposit from the government at birth and gives parents and relatives the chance to make additional contributions each year.

The Treasury Department has now claimed that the accounts could grow to $1.9 million over 28 years.

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Although to reach that goal, parents would need to invest quite a bit of additional money beyond that initial $1,000 seed contribution.

Here's what you need to know about these accounts, how they work, how much they could grow and how they compare to other popular investment options parents can leverage for their children.

Trump accounts get a $6.5 billion boost

The One Big Beautiful Bill allows parents to open Trump accounts at any bank of their choosing for children born after Dec. 31, 2024, and before Jan. 1, 2029, and the government will provide the initial $1,000 investment. However, the child must be a U.S. citizen with a Social Security number.

This leaves a gap for children born before the end of 2024, but some billionaires are already piling in to help.

On Dec. 2, Michael Dell, the founder and CEO of Dell Technologies (NYSE: DELL), along with his wife, Susan, pledged to contribute an additional $6.5 billion to Trump accounts (1). The couple, with an estimated net worth of $150 billion (2), has promised to deposit $250 into the Trump accounts of at least 25 million children aged 10 and under who were born before 2025 and are therefore not eligible for the $1,000 seed money.

It’s also not the first time the Dell family has made a move like this. During the “Invest America” roundtable event at the White House in June, Michael Dell committed to matching the $1,000 seed deposit “dollar-for-dollar” for every eligible child of Dell Technologies employees.

The money can then be put into an eligible investment such as a mutual fund or ETF that tracks a financial index like the S&P 500. The investment can't have fees or expenses above 0.1% and must include equity investments primarily consisting of U.S. companies.

Parents are allowed to contribute up to $5,000 per year to these accounts, while their employers can invest up to $2,500 (note that the $2,500 employer contribution counts towards the $5,000 annual limit). This amount is adjusted for inflation. While employer contributions are not taxed, parent contributions aren't tax-deductible.

However, earmarking an additional $5,000 annually to invest in Trump accounts might not be feasible for many parents, especially with rising expenses. The annual costs of raising a small child average $29,419 today, according to LendingTree’s latest report on childcare. This is a 35.7% increase from LendingTree’s last survey in 2023 (3).

But that doesn’t mean you can’t get a head start when it comes to securing your child’s future. Here are a few smart steps that might help you lay the foundation, regardless of whether you tap into the Trump accounts.

Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

Set up an emergency fund

Getting started with an emergency fund to meet unforeseen expenses is key. Whether it’s a sudden doctor’s visit or emergency childcare, having a rainy day fund with at least three to six months’ worth of expenses can offer peace of mind.

A good emergency fund has both a high interest rate, so your fund can grow, and high liquidity, so you can access it when you need it.

You can earn up to 4.15% APY on your emergency funds for your first three months (0.50% APY boost on top of the 3.50% base variable APY) with a Wealthfront Cash account. That’s over ten times the national deposit savings rate, according to the FDIC’s November report.

Plus, Wealthfront charges no account fees as well as free transfers to eligible accounts 24/7. And your deposits of up to $8 million are insured by the FDIC through program banks.

Another option is the SoFi high-yield account, which offers 4.30% APY (0.70% APY boost on top of a 3.60% standard APY) on deposits for the first six months.

Like Wealthfront, SoFi also levies no monthly fees or minimum balance requirements — making it easier to keep more of your emergency fund working for you.

Sign up now, and you can earn a bonus of up to $300 for setting up direct deposit.

Turn your spare change into an investment opportunity

You can save spare change from everyday purchases and invest it in a diversified portfolio of ETFs with Acorns.

Here’s how it works: Once you link your debit and credit cards with Acorns, the app will automatically round up your transactions to the nearest dollar and save the rest to be invested in a smart investment portfolio. So your $3.25 morning coffee turns into a $0.75 investment in your child’s future.

While it might not seem like much at first glance, your spare change adds up over time. Let’s look at the math: A $1,000 initial investment and $20 worth of weekly round-ups can result in over $55,000 in 18 years, assuming it compounds at 10% annually (4). The S&P 500 index’s annual returns have averaged 10.54% since its inception in 1957 (5).

The best part? You can get a $20 bonus investment when you sign up with a recurring monthly contribution.

Cut your investing costs with discount brokers

For those who want to invest more rigorously, using discount brokers like Robinhood can help lower your total bill. You can buy and trade stocks, options, ETFs and even cryptocurrency.

Robinhood doesn’t charge commissions or trading fees, so every dollar you make on your investments goes directly to you — you’ll never have to give a cut to a broker.

You can get started with as little as $1. What’s more, you can get a free stock when you sign up for Robinhood using this link.

Get expert advice from Wall Street veterans

If you need help choosing the right investments, you can get advice from a team of former hedge fund analysts with Moby. Their team of experts provides three stock recommendations per week, helping you make informed decisions.

Moby’s individual stock picks have outperformed the S&P 500 index’s returns by an average of 11.95% per year over the last four years. And that’s on top of the index’s annualized returns of about 10%.

Even better, Moby offers a 30-day money-back guarantee so you can try before you buy, and make sure that their recommendations align with your own goals. Sign up today and become a wiser investor within minutes.

When can your child access these funds?

The invested funds will grow tax-free until the money is withdrawn, with children having the option to take out the money once they reach the age of 18. At that time, a withdrawal triggers a tax event and is treated like an IRA for tax purposes.

As the Tax Foundation and AEI explain, this means:

• Withdrawals will be taxed at ordinary income tax rates

• Withdrawals are subject to a 10% penalty unless made after 59½ or used for a qualifying purpose, such as covering college costs or going towards a home

The goal is for children to benefit from compound growth and, as the Treasury Department explains, the accounts could potentially be worth as much as $1.9 million by age 28.

However, that would require parents to max out the accounts or invest the maximum every year until the child's 17th birthday (which starts at $5,000 per year and will be adjusted up for inflation).

If there are no additional contributions, however, even the initial $1,000 could turn into between $3,000 and $13,800 over 18 years, according to the Treasury, with the amount dependent on how the account ultimately performs.

Are these accounts a good value?

The Trump account is just one of several tax-advantaged accounts parents can set up for their children, and many financial experts don't believe it is the best one.

A Roth IRA can be a better option if the child has ordinary income to contribute to it, because Roth IRAs allow tax-free withdrawals after 59 ½ as well as withdrawals of contributions any time, penalty-free.

A 529 account could also be a better choice, because money can be withdrawn tax-free if it is used for qualifying educational expenses. And even a Uniform Transfers to Minors Account (UTMA) could be preferable because it allows for penalty-free withdrawals for any reason or transferred to other accounts; plus, investment gains can be taxed at the more favorable capital gains tax rate.

"Trump accounts provide a more limited and restricted tax benefit than existing saving incentives, such as 529 accounts," the Tax Foundation reports.

Most parents are not maxing out these existing accounts, which provide more advantages, so it is unlikely that they'll be setting aside a full $5,000 into the Trump account either.

Still, the $1,000 is there for babies born during the eligible years. So, if nothing else, parents should open the account to claim those funds and leave them to grow — extra cash from Uncle Sam is still extra cash.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

CNN (1); Forbes (2); LendingTree (3); Acorns Calculator (4); Investopedia (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.