When most people hear the phrase "retirement account," they picture someone in their 50s reviewing a 401(k). By 2026, however, millions of American infants hold one as well.
The tax law signed on July 4, 2025, established Trump Accounts. The program gives every qualifying child born between 2025 and 2028 $1,000 from the federal government, invested in the stock market until the child turns 18.
What Is a Trump Account?
The IRS defines a Trump Account as a new form of individual retirement account for children. The government deposits $1,000 into the accounts of U.S. citizens born between January 1, 2025, and December 31, 2028, who have a valid Social Security number.
Accounts opened on July 4, 2026, and beginning October 1, 2026, the Treasury automatically enrolled eligible children. Parents must still claim these accounts and request the $1,000 deposit. BNY Mellon serves as the government's financial agent, and Robinhood acts as the broker.
Family members can contribute up to $5,000 per year, according to the Congressional Research Service, and employers can provide up to $2,500 of that amount. Federal contributions and donations from nonprofits or governments don't count toward this limit.
Private donors have also stepped in. In December 2025, Michael and Susan Dell pledged $6.25 billion to seed about 25 million accounts with $250 each, targeting children aged 10 and under who were born before the federal contribution began.
Where Does the Money Go?
Until the child reaches 18, the account must hold index funds that track the S&P 500 or other indices composed largely of U.S. companies. The rules prohibit investments in individual stocks, bonds, or sector funds and cap annual fund fees at 0.1% (CRS).
This structure mirrors a typical long-term strategy built on broad diversification, low fees, and plenty of time.
Consider a $1,000 deposit earning 7% a year, a common long-run assumption after inflation. By age 18, it would grow to about $3,400. Left untouched until age 60, with no additional contributions, it would reach roughly $58,000.
What's the Catch?
The child generally can't withdraw money until age 18. After that, the account operates like a traditional IRA. Earnings are taxed as ordinary income, and withdrawals before age 59½ usually incur a 10% penalty. Exceptions include education expenses, up to $10,000 toward a first home, and certain medical costs.
The CRS also notes that tax-deferred accounts usually favor higher-income households, since they can contribute more and face higher tax rates. Employer contributions could widen this gap. In 2025, 83% of the highest-paid workers had access to an employer-sponsored retirement plan, while only 36% of the lowest-paid workers did.
Can I Get One?
If you're a teenager reading this, you've likely missed the $1,000 deposit. However, any child with a Social Security number can have a Trump Account opened, provided the child won't turn 18 before the end of the year the account is established.
If you're earning income as a teen, you should usually direct your money into a custodial Roth IRA instead. Qualified withdrawals from a Roth are tax-free, and the account offers greater investment flexibility. The main advantage of a Trump Account is that it doesn't require a job. For college savings, a 529 plan generally provides larger tax benefits.
Conclusion
Trump Accounts give millions of children a starting balance and direct it into investments that build wealth over decades. If you're a teen with a paycheck, however, a Roth IRA may be the smarter choice. The key takeaway is that the earlier compounding begins, the less money you'll need.
