What Is a Trump Account?

A complete guide to the new federally seeded savings accounts for U.S. children, also known as Federal Child Savings Accounts or MAGA Accounts.

Overview

The Trump Account, also known as the Federal Child Savings Account, is a government-backed savings program that gives every eligible U.S. newborn a $1,000 federally funded investment account. These accounts, established under the 2025 Budget Reconciliation Bill, are designed to jumpstart savings for children and promote long-term wealth building for families. The program covers all children born after January 1, 2025. ¹

How Trump Accounts Work

Trump Accounts function similarly to a custodial Roth IRA or 529 college savings plan, with key differences in funding, usage, and investment structure. Here's what you need to know:

• Each eligible child receives a $1,000 deposit from the federal government.
• Parents, family members, and employers can contribute up to $5,000 per year.
• Contributions grow tax-deferred and are invested in a low-cost U.S. stock index fund.
• Funds can be used for college, a first home, or to start a business.
• Accounts must be used by age 30 or they are automatically distributed.

Eligibility Requirements

To qualify, a child must:

• Be a U.S. citizen born after January 1, 2025.
• Have a Social Security Number.
• Have at least one parent (both if married) with a valid SSN. ²

Contribution Limits and Funding

In addition to the federal seed deposit, families can contribute up to $5,000 per year, indexed to inflation starting in 2027. Employers may also contribute up to $2,500 per child annually, tax-free. ³

Gift contributions from extended family or friends are allowed. Charitable grants and government matching programs are considered “exempt contributions” and do not count toward the $5,000 limit.

Investment Rules

Trump Accounts are invested exclusively in a low-cost U.S. stock index fund (e.g., an S&P 500 ETF). Families cannot choose individual stocks or bonds. This structure ensures low fees and simple, long-term growth potential. ⁴

Tax Benefits

Trump Accounts grow tax-deferred, meaning no taxes are due on earnings until withdrawal. Qualified withdrawals are taxed only on the earnings portion, at favorable long-term capital gains rates. Non-qualified withdrawals are taxed at regular income tax rates and face a 10% penalty on earnings. ⁵

Qualified Uses of Funds

Funds can be used for:

• Higher education (college, vocational, or credentialing programs)
• First-time home purchases
• Small business or farm start-ups

Withdrawals must begin no earlier than age 18. Between ages 18–24, only 50% of the balance can be accessed. Full access is granted at age 25, and the account must be fully used by age 30.

How to Open a Trump Account

Accounts will be available in late 2025 or early 2026. The U.S. Treasury will oversee account creation and will likely partner with approved financial institutions. Junior Jar and other fintech partners will offer user-friendly account setup tools and guidance. ⁶

Comparison to 529 Plans and Roth IRAs

While 529 plans offer tax-free withdrawals for education, they cannot be used for housing or business. Roth IRAs offer tax-deferred growth but require the child to earn income. Trump Accounts provide more flexible early-life usage and do not require earned income for contributions. ⁷

Next Steps

Families with children born in 2025 or later should prepare to open a Trump Account once available. Sign up for updates from trusted platforms like Junior Jar to ensure you don’t miss your opportunity to receive the $1,000 federal seed contribution and begin saving early.

Sources

1. Saving for College – MAGA Account Overview savingforcollege.com⬏
2. Journal of Accountancy – Tax Changes in Senate Budget Bill journalofaccountancy.com⬏
3. Barron's – Trump Accounts Employer Contributions barrons.com⬏
4. Kiplinger – GOP Proposes MAGA Savings Accounts kiplinger.com⬏
5. Barron's – Trump Savings Accounts Pros and Cons barrons.com⬏
6. Axios – Trump Accounts for Babies Coming in 2026 axios.com⬏
7. Barron’s – Comparison to Other Tax-Advantaged Accounts barrons.com⬏