Your child may already have a Trump Account waiting to be claimed.
Treasury announced Oct. 1 that eligible children under 18 with valid Social Security numbers had been automatically enrolled. Nearly 70 million accounts now exist, according to the White House. The accounts give families an opportunity to start investing for their children’s future.
But having an account does not necessarily mean your child has money in it.
Who Gets Money?
U.S. citizens born Jan. 1, 2025, through Dec. 31, 2028, qualify for a one-time $1,000 federal contribution. An authorized adult must request that contribution; automatic enrollment alone does not trigger the payment.
Other children may qualify for contributions from philanthropists, nonprofits or participating donors. Eligibility can depend on age, location or other criteria.
For example, Michael and Susan Dell committed $6.25 billion to provide $250 deposits for 25 million children born between 2016 and 2024, with recipients selected largely using ZIP-code income data. Not every child qualifies.
Qualifying charitable contributions can reach automatically established accounts even before parents claim them. Those funds remain invested for the child. An account without federal, donor or family contributions, however, has nothing to grow.
How to Claim the Account
Start at TrumpAccounts.gov and follow the links to the official Trump Accounts app for iPhone or Android.
Parents or guardians must verify their identity and relationship to the child, review the child’s information, accept the account terms and complete the activation instructions. Request the $1,000 contribution if eligible.
Claiming also allows family members, friends and employers to contribute.
Where is the money invested?
The accounts initially are established through Treasury’s program, with cash contributions automatically invested in a low-cost fund that tracks the S&P 500—a collection of about 500 major U.S. companies.
Parents do not need to pick individual stocks or manage daily trades. Treasury has announced additional approved index funds, but investment choices during childhood remain limited. Certain philanthropic gifts also may include individual company shares.
Families can transfer the full account directly to another financial institution that offers Trump Accounts, following the program’s transfer rules. Moving it does not remove the investment or withdrawal restrictions.
For families, the approach requires relatively little day-to-day attention: Claim the account, check it periodically and contribute when affordable. The money remains invested, although its value can rise or fall with the stock market.
Can Parents Get Their Contributions Back?
Generally, no. If you contribute $500 and later need it for rent or another household emergency, you cannot simply withdraw it.
The money belongs to the child, and ordinary withdrawals are prohibited until Jan. 1 of the year the child turns 18. Families should contribute money they can afford to leave invested while keeping emergency savings accessible.
How Can Children Use the Money at 18?
Starting Jan. 1 of the year your child turns 18, traditional IRA rules generally apply. They can withdraw some or all of the money for college, a first home, a car or other expenses—but taxes and penalties depend on how they use it.
For college or eligible job training: Withdrawals can avoid the 10% early-withdrawal penalty when covered by qualifying education expenses for that year. These include tuition, required fees, books and supplies. Some room and board costs also qualify for students attending at least half time. There is no fixed dollar cap, but scholarships and other tax-free assistance reduce the expenses that count. Income tax may still apply.
For a first home: Up to $10,000 over the child’s lifetime can qualify for an exception to the penalty. Income tax may still apply.
For a car, vacation or other spending: The taxable part generally faces both income tax and a 10% penalty, unless another exception applies. They can cash out the account, but doing so could mean a substantial tax bill. There is no special withdrawal change at age 30.
How Small Contributions Could Grow
Suppose a family puts $25 a month into a child’s account from birth through age 18—a total of $5,400.
Assuming a 7% average annual return, those contributions could grow to about $10,500 by age 18. If the child leaves the money invested, adding nothing more and making no withdrawals, it could reach about $180,000 by age 60.
For a child who also receives the $1,000 federal deposit at birth, those balances could be about $13,900 at 18 and $238,000 at 60.
Even the $1,000 deposit alone, under the same assumptions, could grow to about $3,380 at 18 or $56,000 at 59½.
These are illustrations, not guaranteed returns. Investments can lose value, and the figures are before withdrawal taxes and do not account for inflation.
Which Money is Taxable?
Money parents, children or relatives contribute after paying taxes on it is not taxed again when withdrawn. Federal, employer and qualifying charitable contributions, plus all investment earnings, generally are taxable when withdrawn.
Each withdrawal generally includes a share of taxable and nontaxable money. The child cannot simply choose to withdraw the parents’ contributions first.
For example, suppose a $5,000 account contains $2,000 in family contributions and $3,000 in government money and investment earnings. If the child cashes out the entire account to buy a car, $3,000 would count as taxable income, and the additional 10% penalty would generally be $300. The income tax owed depends on the child’s income and tax situation.
If that same withdrawal qualifies for the education exception, the $300 penalty disappears, but the $3,000 still counts as taxable income.
At 59½, withdrawals no longer face the early-withdrawal penalty. Income tax still applies to government, employer and qualifying charitable contributions, plus all investment earnings. Money the family contributed after paying taxes on it is not taxed again.
At 18, a Choice About Retirement Savings
Starting Jan. 1 of the year the child turns 18, the Trump Account begins operating under traditional IRA rules. The young adult can keep the money invested there or, with help from their family, choose to convert some or all of it to a Roth IRA.
The difference is when taxes are paid. With a traditional IRA, taxable money faces income tax when withdrawn. Moving that money into a Roth means paying any income tax due on the conversion now, but qualified retirement withdrawals—including future investment earnings—are tax-free.
A Roth can be attractive when the young adult’s tax rate is low and the money has decades to grow. Converting smaller amounts over several years may reduce the tax bill. However, special tax rules for some young adults can affect those savings.
Keeping the traditional IRA may make sense if converting would create a large tax bill now. A qualified tax adviser can help the young adult and family compare the choices and plan the timing.
One Part of a Savings Plan
Trump Accounts can complement other savings options. A 529 education plan, for example, offers federally tax-free withdrawals for qualified education expenses.
Parents can claim available benefits now, consider small contributions they can afford and choose a mix of accounts that fits their family’s goals.