Trump Accounts
Let’s talk about the free money on the table.
Originally published on Substack
Whether you love the name or hate it, this one is worth paying attention to.
On July 4th, the federal government launched a brand new investment account for children called a Trump Account (also known as a 530A account). If you have a child in your life, or you are expecting one, you’ll want to read on.
What Is a Trump Account?
A Trump Account is a government-created, tax-deferred investment account for any U.S. child under 18 with a Social Security number. Think of it as a starter IRA for kids but without the earned income requirement that makes regular IRAs hard for children to qualify for.
It officially launched on July 4, 2026, and the accounts are managed by BNY Mellon, with Robinhood serving as the brokerage and trustee. Besides opening and managing accounts at TrumpAccounts.gov, there is also a dedicated app, built by BNY and Robinhood, available in the Apple and Google app stores.
Who Is Eligible?
Any U.S. child under 18 with a Social Security number can have a Trump Account. That includes newborns, toddlers, and children up to age 10 who were born before January 1, 2025.
Babies born between January 1, 2025 and December 31, 2028 receive a $1,000 government seed automatically. Children aged 1 to 10 born before 2025 may receive $250 if they live in a qualifying ZIP code where the median household income is $150,000 or less. That $250 is funded by Michael and Susan Dell’s $6.25 billion pledge. You can read more my post: The $250 Head Start
More than 6 million accounts have already been opened.
How to Set One Up
Step 1: Fill out IRS Form 4547 at TrumpAccounts.gov or download the Trump Accounts app from the Apple or Google app store.
Step 2: The IRS processes the application and sends the approved forms to BNY Mellon and Robinhood, who open the account.
Step 3: The Treasury deposits $1,000 into eligible accounts starting July 4th.
Step 4 (optional): Once the account is funded, you can transfer it to another financial institution like Fidelity, Schwab, or Vanguard if you prefer, and keep the tax benefits. Once transferred, you can use Endowe to make it easy for family and friends to contribute.
The process takes a few minutes.
Who Can Contribute?
Anyone can contribute: parents, grandparents, godparents, employers ($2500 max per year), even charities. The combined limit is $5,000 per child per year from all sources, and it must be in the account by December 31st. You cannot make retroactive contributions for the previous tax year.
Good news on gift taxes: as of June 29, 2026, the IRS confirmed that contributions to Trump Accounts qualify as present-interest gifts, meaning they count toward but don’t automatically trigger the annual gift tax exclusion of $19,000 per recipient. For most contributors giving $5,000 or less, no gift tax return is required.
What Can the Money Be Invested In?
Investments are limited to low-cost U.S. index funds and ETFs with expense ratios of 0.1% or below, meaning no international funds or bonds during the growth period. The default is an S&P 500 ETF. The money is locked until the child turns 18, at which point the account converts to a traditional IRA. A Roth conversion is possible at that stage and worth discussing with a tax professional.
Now, let’s talk about the pros and cons of the account.
The Pros
Free money is free money: The $1,000 government seed requires nothing from you except opening the account. $1,000 invested from birth, at 7% average annual return, grows to roughly $14,974 by the time the child turns 40.
No earned income requirement: Unlike a Roth IRA, which requires the child to have a job, anyone can open a Trump Account for any child immediately.
Anyone can contribute: The $5,000 annual limit from all sources means a child’s whole community can participate, which is exactly the kind of communal wealth building that Endowe was designed to make easy.
Low-cost investments only: The 0.1% expense ratio cap keeps fees low.
Tax-deferred growth: The money grows without being taxed year over year, compounding faster than it would in a taxable account.
The Cons
Here are a few things worth knowing before you open one.
It’s taxed like a traditional IRA, not a Roth: When the money is eventually withdrawn in retirement, it’s taxed as ordinary income not at the lower capital gains rate. A UGMA/UTMA custodial account or a Roth IRA would offer better tax treatment in some scenarios.
Money locked until age 18: The money cannot be touched until the year the child turns 18 so if you want the flexibility to use it before adulthood, this isn’t the right account.
Not better than a 529 for education: If your primary goal is funding college, a 529 still wins — it offers tax-free withdrawals for education expenses that Trump Accounts don’t.
Seven states may not recognize the tax benefits: If you live in California, Hawaii, Kentucky, Massachusetts, Pennsylvania, South Carolina, or Wisconsin, check with a tax professional first. Those states may not recognize the federal tax benefits.
What the Money Looks Like after 18 Years
Let’s make this real. All three scenarios below assume a 7% average annual return over 18 years.
The government seed alone: The $1,000 deposited at birth grows to $3,380 by the time the child turns 18. A nice start but that’s not where the story should end.
The government seed + community contributions through Endowe: Here’s where it gets interesting. The $5,000 annual contribution limit means family and friends can show up every birthday, holiday, or graduation and it all counts. If the child’s community contributes just $2,000 a year on top of the $1000 government seed, that child turns 18 with $76,138.
If they contribute $4,000 a year using Endowe to pool gifts from grandparents, godparents, aunts, uncles, and family friends, that number becomes $148,896 at 18.
That is the idea Endowe was built around long before Trump Accounts existed.
The government seed gives every eligible child a starting line. The community of friends and family is what turns that starting line into a real financial foundation.
Trump Accounts are a genuinely useful new tool especially for communal wealth building. The free money is real and anyone can contribute. But they’re not right for every goal. Want flexibility? A UGMA/UTMA is better. Funding college? A 529 still wins. Live in one of the seven states that don’t recognize the tax benefits? Run the numbers first.
As always, the best account is the one you actually open. A Trump Account with $1,000 in it today beats a perfect investment strategy you haven’t started yet.
With lots of love,
Your godmother Ada
Disclaimer: As someone in finance as a regulated investment professional, I want to be clear: I’m not your financial adviser, and this post is education, not personalized advice. All investments carry risk including possible loss of principal, and past performance doesn’t guarantee future results. Tax rules for Trump Accounts are still evolving so please consult a tax professional before making decisions. Talk to a professional who knows your full situation before making money moves.
