What Is a Trump Account for Kids? What You Need To Know About How to Enrol, and the Benefits for Parents and Employers

The Trump Account for Kids is a new federal savings initiative aimed at giving American children a financial head start. Eligible children born between 1 January 2025 and 31 December 2028 will automatically receive $1,000 (around £740), with the account fully in the child's name.

Parents or legal guardians will serve as custodians until the child turns 18, with the option to contribute additional funds to maximise growth. Experts are highlighting the urgency for families and employers to act promptly to secure the benefits before the enrolment deadline.

How Trump Accounts Work

Any child under 18 with a valid Social Security Number can have a Trump Account. Parents or legal guardians must enrol their children when filing taxes, which triggers the transfer of funds to a participating financial institution.

Accounts are designed to grow automatically, with contributions invested in low-cost, diversified index funds. There is no requirement for parents to deposit additional money, but families, friends, and employers may contribute up to $5,000 (approximately £3,700) per year per child to enhance long-term growth.

The investment strategy behind Trump Accounts focuses on balancing risk and potential growth. Financial analysts note that investing in a diversified portfolio of index funds helps ensure that children's funds have the potential to grow steadily over time without exposing them to excessive risk.

Benefits for Parents and Children

The Trump Account provides families with a structured way to save for major life events. Funds can be accessed without penalty when the child turns 18 for qualified expenses, including higher education, a first home, or starting a business. Withdrawals prior to age 18 may be subject to restrictions, and any withdrawals are taxed at ordinary income rates.

Parents have the flexibility to contribute at any time, up to the annual limit, offering the potential for compounded growth. Even without contributions, the initial $1,000 allocation provides a foundation for children's future financial security. By making early contributions, families can significantly increase the total funds available when children reach adulthood.

Opportunities for Employers and Corporations

Employers are also able to participate in the Trump Account programme. Companies may contribute up to $2,500 (roughly £1,850) per employee's child, with all contributions being fully tax-deductible. Many organisations are considering salary reduction programmes, commonly known as cafeteria plans, which allow employees to make pre-tax contributions to their children's Trump Accounts.

Corporate involvement provides dual benefits. Employees gain access to an early savings opportunity for their children, while companies strengthen their benefits packages and promote financial literacy within their workforce. By supporting early investment in children's futures, employers can enhance long-term employee satisfaction and engagement.

Additional Considerations for Families

Funds in Trump Accounts are intended for long-term financial goals. While withdrawals are primarily restricted to education, business startups, or first-home purchases, custodians maintain full control over the account until the child reaches adulthood.

Families are encouraged to enrol children as soon as possible to guarantee eligibility for the $1,000 initial deposit. Over the years, contributions from parents and employers can grow into a significant fund, providing a meaningful financial foundation for young adults entering higher education or the workforce.