What Parents Should Know About the $1,000 ‘Trump Accounts' for Babies

Time​ Magazine

10-06-2025

Almost every baby born in America would get a $1,000 investment account from the government under a program President Donald Trump promoted on Monday.
'This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation, and they'll really be getting a big jump on life,' Trump said at a roundtable at the White House with top business executives.
Dubbed 'Trump Accounts' by the Administration, the proposal is a provision in Trump's 'One Big Beautiful Bill,' the sweeping tax and spending package now making its way through Congress. The bill passed the House with the provision included, but the package has faced resistance in the Senate.
If the legislation passes, the proposed program would create accounts for children born as early as the beginning of this year.
Here's what parents should know about the program.
What are 'Trump Accounts'?
The 'Trump Accounts' created for newborns under the program would be tax-deferred investment accounts privately held by children's guardians.
The government would make a one-time contribution of $1,000 to each account, according to the White House. The accounts would then 'track a stock index and allow for additional private contributions of up to $5,000 per year,' the White House said.
The program 'will afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning,' the White House said.
Who would be eligible?
The accounts would be available for children born in the country after Dec. 31, 2024 and before Jan. 1, 2029.
In order to open an account, at least one of the child's parents or guardians would need to have a Social Security number with the authorization to work in the U.S., The Washington Post reported.
How would withdrawing the money work?
At the age of 18, the child would be able to withdraw up to half of the money in the account, according to Forbes. When they turn 25, they would be able to access the full account balance for certain purposes, such as small business loans and higher education. Only when the account beneficiary turns 30 would they gain full control of all the funds for any purpose.
The Milken Institute, a nonprofit, nonpartisan think tank, estimated in a report released in March that an initial government grant of $1,000 invested in a broad-based equity index fund of U.S. companies would, on average, grow to $8,000 after 20 years, $69,000 after 40 years, and $574,000 after 60 years.
How much would the program cost?
Lawmakers have not shared a projected cost for Trump Accounts. But the Post estimated that, since there are roughly 3.6 million babies born in the country each year, the cost of the program could be greater than $3 billion a year.
What would the impact of the program be?
Some economists and policy experts have expressed concern that the program could exacerbate economic inequality.
Trump Accounts are similar to 'baby bond' programs that operate in California, Connecticut, and Washington, D.C. But those state programs were intended to minimize the wealth gap by offering support for children from low-income households, whereas the Trump program would be available to people regardless of their socioeconomic status. As a result, experts have noted that families from higher income households would be able to contribute more to the account, on top of the initial $1,000, and therefore have more funds accumulated in the account.
Some financial experts have also voiced skepticism of the program, saying the benefits are small compared to other tax-shielded savings options, such as 529 college savings accounts.
Others have pointed out that the proposal is coming at the same time that Republican lawmakers are proposing significant cuts to social safety net programs, such as Medicaid and the Supplemental Nutrition Assistance Program.
'Feel like low-income families would prefer their assistance buying groceries not get cut, but that's just me,' Brendan Duke—the senior director for federal budget policy at the nonpartisan research and policy institute, Center on Budget and Policy Priorities— said in a post on X, in response to a post about Trump Accounts.