‘Trump Accounts’ promise big benefits — but there’s a catch that could cost you $90k
President Donald Trump and members of his administration are calling on parents to open "Trump Accounts" for their children to provide a nest egg fund when they turn 18. As a part of the administration's affordability push, the U.S. Treasury and the White House launched the program, a.k.a Section 530A accounts, as a savings tool for parents to create a fund that will give children a head start when they turn 18. While the program claims it will benefit low-income families the most, calculations from The US Mirror show that parents would need to spend $90,000 over 18 years to get the maximum benefit.
On Wednesday, President Trump and Treasury Secretary Scott Bessent attended a summit in Washington, D.C., to promote Trump accounts. There, the president shared details on how the investments work, claiming that children would typically get $200,000 by the time they turn 18, based on the average contributions. "We will fund those personal accounts with a seed contribution of $1,000, which will compound and grow over the course of their lives, and could grow into very, very substantial numbers," Trump said, per The Mirror. He added that parents, employers, churches, states, and family would also be able add up to $5,000 in additional money for those accounts.
As per the Trump account website, children, parents or guardians, grandparents, family members, friends, and employers can contribute up to $5,000 per child per year, and qualifying charitable organizations and government entities can make additional contributions beyond the $5,000 cap. The website adds that estimates based on historical S&P 500 averages show that a contribution of $5,000 per year, for 18 years, will help the child get the maximum benefit of $303,800. Thus, a total contribution of $90,000 over 18 years must be made to maximize benefits. On the other hand, lower contributions of $250 will yield $20,700 after 18 years, while a contribution of $0 will yield $5,800, because of the seed fund.
“And with every modest contribution, the Trump account should reach at least $50,000 in value by the time the child turns 18, and could be very substantially more than that,” the president added in his address. “With slightly greater contributions, the typical account could grow to $100,000, $200,000, or even grow up to past $300,000 per child. The most likely case is in the $200,000, $300,000 range,” he claimed.
As of Monday, parents filing their 2025 tax return can open a Trump account by making elections on IRS Form 4547. The two elections are to open an account and to receive the $1,000 “pilot program contribution.” The account will be for the babies born in the U.S. between January 1, 2025, and December 28, 2028, with a Social Security number. These accounts will receive the seed fund of $1,000 from the Treasury and an additional $250 contribution from the $6.25 million fund pledged by Michael Dell and his wife, Susan. However, children under 10, and born before January 1, 2025, will get just the $250 seed fund.
More on Market Realist:
Big banks jump in on 'Trump Accounts' with $1,000 matches for employees’ kids
Trump hints at another government shutdown: 'I think we have a problem'
Experts warn Trump’s ‘One Big Beautiful Bill’ could worsen the US debt crisis
