Trump Accounts (OBBBA)

Definition

Trump Accounts are child-focused, tax-advantaged investment accounts created under the One Big Beautiful Bill Act (OBBBA) of 2025 to encourage long-term saving from an early age.

Purpose

Designed to build wealth early, these accounts give children a financial head start and promote long-term participation in investing.

Key features

• $1,000 Government Seed: One-time deposit for children born 2025-2028
• Up to $5,000/year Contributions: From parents or others
• Child-Owned, Parent-Managed: Custodial until age 18
• Eligibility: Must be under 18 at 12/31/26 with a Social Security number
  

Tax & investment treatment

• Tax-deferred growth
• After-tax contributions (not deductible)
• Investments limited to low-cost index funds/ ETFs
• Converts to a traditional IRA at 18
• Potential opportunities for tax-free Roth Conversions
  

Pros

• Harnesses long-term compounding
• Provides universal starter savings
• Encourages early financial literacy
  

Cons

• Limited flexibility vs. 529 plans
• No upfront tax deductions
• Greater benefits for families able to contribute more
  

Bottom line

Trump Accounts are a government-seeded, long-term investment tool for children, aiming to grow wealth from birth, with outcomes largely dependent on continued contributions and time in the market.