Daijiworld Media Network – Washington
Washington, Dec 3: A new federal initiative under US President Donald Trump's tax law aims to give every newborn in the country a financial head start. Parents who open a “Trump Account” for their child will receive $1,000, which will be invested in the stock market and accessible when the child turns 18. Older children are also eligible for accounts, but without the $1,000 bonus.
The bonus applies only to children born during the Trump administration.
What are Trump accounts?
Trump Accounts are a savings programme designed to invest money on behalf of children, giving them a financial boost through low-cost US stock index funds.
Eligibility
• Any child under 18 with a Social Security number can have an account.
• Newborns between January 1, 2025, and December 31, 2028, receive the $1,000 contribution if parents open an account.
• Older children can open accounts but do not receive the bonus.
How they work
• Parents or guardians manage the accounts.
• Private banks and brokerages invest the funds in US stock index funds.
• Parents can contribute up to $2,500 per year pretax. Family, friends, employers, and local governments can contribute up to $5,000 annually. Charities and some government entities can contribute without limits.
• Billionaires Michael and Susan Dell have pledged $6.25 billion to support children under 10 in lower-income areas, with each eligible child receiving roughly $250.
Access and limitations
• Children can withdraw funds only after turning 18, with withdrawals taxed and potentially penalised similar to retirement accounts. Exceptions exist for higher education or a first home purchase.
• Trump Accounts will not address immediate needs like food, healthcare, or childcare. Some immigrant children may be excluded from the $1,000 seed money.
The accounts officially open for contributions on July 4, 2026, and parents can start signing up via IRS Form 4547 before then.