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-Editorial
A sweeping new savings initiative created under the recently enacted “One Big Beautiful Bill” will establish investment accounts for millions of American children, with federal officials projecting that balances could grow to hundreds of thousands of dollars by the time participants reach adulthood.
The program creates what are being called “Trump Accounts,” designed to provide American children a financial foothold from birth. Supporters say the measure could dramatically expand household wealth, boost participation in the U.S. stock market, and give families new incentives to save for their children’s futures.
Under the law, every child born in the United States after Dec. 31, 2024, and before Jan. 1, 2029, will be eligible for a Trump Account, provided one is formally established. Each eligible child will receive an initial $1,000 deposit from the federal government.
Parents may contribute up to $5,000 annually per child, while employers are allowed to contribute up to $2,500 each year without affecting the parent’s taxable income. Together, these provisions give families the potential to save significantly on behalf of their children, especially if contributions are sustained over time.
The program also allows children born before Jan. 1, 2025, who are under the age of 18, to establish accounts with the same features, though they will not receive the $1,000 government seed deposit.
The funds placed in Trump Accounts are required to be invested in stock-based vehicles such as mutual funds or exchange-traded funds that mirror the performance of major U.S. stock indexes, including the S&P 500. Withdrawals are prohibited until the beneficiary turns 18. At that point, the account is treated similarly to a traditional Individual Retirement Account (IRA) and becomes subject to the same withdrawal and tax rules.
By mandating stock market-based investment, the program ties the long-term performance of the accounts to the overall health of the U.S. economy. Federal officials argue that, over time, stock market participation has proven to be a reliable path toward wealth accumulation.
According to estimates released by the White House Council of Economic Advisers, the potential growth of Trump Accounts is substantial.
For a child born in 2026, the Council of Economic Advisers projects that a Trump Account could reach about $303,800 by age 18 and more than $1,091,900 by age 28 if maximum annual contributions are made. With half the maximum contributions, balances are estimated at $154,800 by age 18 and $555,000 by age 28, while accounts receiving no contributions beyond the government’s $1,000 seed money could still grow to $5,800 by age 18 and $18,100 by age 28. The projections, based on average historical returns of the S&P 500 total return index since 1975, remain significant even under more pessimistic scenarios, with balances of $187,000 by age 18 and $772,000 by age 28 if maximum contributions are made. In higher-return scenarios, the accounts could grow as large as $730,000 by age 18 and nearly $1.9 million by age 28. “These accounts have the potential to change the trajectory of wealth for millions of families,” the CEA noted in its analysis.
Contribution limits for parents and employers will be adjusted annually for inflation, meaning the maximum allowable deposits will increase incrementally over time. Once account holders reach age 18, the contribution rules will shift to mirror those of traditional IRAs, currently capped at $7,000 annually, also indexed to inflation.
This structure allows the accounts to grow not only through investment gains but also through steadily increasing deposits over decades.
Administration officials and supporters of the legislation have promoted Trump Accounts as a generational wealth-building tool. They argue the accounts will reduce disparities in savings, help families prepare for large expenses such as education or homeownership, and promote long-term financial planning from an early age.
Supporters also highlight the program’s employer contribution incentive, which allows up to $2,500 per year in tax-free deposits. They say this provision could encourage businesses to offer the accounts as part of employee benefits packages, creating a new form of financial support for families.
The Trump Accounts share similarities with previous proposals for “baby bonds” or children’s savings accounts, which have been debated for decades. Some versions of those plans have focused on government-funded seed deposits designed to grow over time, while others have emphasized parental contributions and incentives for long-term savings.
What distinguishes the Trump Accounts is their combination of federal seed money, tax-advantaged employer contributions, and mandatory investment in stock-based funds. Analysts say the design reflects both a policy push for long-term household savings and a belief in the stock market’s role as a wealth generator.
If widely adopted, the accounts could influence not only household wealth but also patterns of stock ownership and participation in retirement-style savings vehicles. Officials project that the program could result in a substantial increase in the number of young adults entering adulthood with meaningful financial assets.
The accounts could also carry broader macroeconomic implications. Higher participation in equity markets could lead to increased capital investment, while families with greater financial security might have more flexibility to spend, invest in education, or start businesses.
At the same time, the program’s ultimate impact will depend on participation rates, market conditions, and the ability of families across income levels to contribute consistently over time.