A new American policy seeks to redefine the financial start every child gets in life, directly tackling the stark inequality between those born into privilege and those who are not. While affluent families often provide a trust fund, many young adults from less privileged backgrounds step into immediate financial responsibility at 18. A provision in former President Donald Trump's tax legislation, now law, introduces the 'Trump Account'—a program designed to give every eligible newborn a $1,000 head start for their future.
How Does the Trump Account Work?
The mechanism is straightforward yet significant. For every child born in the United States between January 1, 2025, and December 31, 2028, the US Treasury will contribute $1,000 into a dedicated long-term investment account, provided their parents open one under the new program. This money is not accessible as cash. Instead, private firms will invest the funds in the US stock market, specifically in low-fee equity index funds. The child can only access the accumulated amount after turning 18, and solely for major life milestones like higher education, starting a business, or buying a first home.
Parents can boost this nest egg by contributing up to $2,500 per year from their pre-tax income, similar to a retirement savings plan. Employers, relatives, and even local governments can also add funds, with a total annual contribution cap of $5,000 (excluding the government's initial grant and charitable donations). Importantly, a parent's own immigration status does not bar them from opening an account for their eligible US-citizen child.
Expanding Reach: The Dell Donation and Eligibility
The program received a notable boost recently from philanthropists Michael and Susan Dell. Their foundation pledged funding to provide a $250 incentive for parents of children aged 10 and below to open accounts, provided the children live in ZIP codes with a median family income of $150,000 or less. This donation specifically targets those who would not receive the Treasury's $1,000 because they were born before 2025.
However, the full $1,000 seed money has strict eligibility criteria. The child must be a US citizen with a Social Security number and must be born within the specific four-year window of the Trump administration (2025-2028). Families can begin the enrolment process by submitting Form 4547 to the IRS, with an online portal set to go live in July 2026 for contributions.
Debate: A Path to Prosperity or Deepened Inequality?
Proponents of the Trump Account hail it as a revolutionary tool for financial inclusion. They argue it democratizes stock market investing, allowing children from all economic backgrounds to benefit from long-term capital growth. Supporters believe giving every newborn a financial stake could counter socialist appeals by providing a tangible path to asset building. This is notable in a country where, in 2022, 58% of households owned stocks, but the wealthiest 1% held nearly half the total value.
However, critics voice serious concerns. They point out that the account offers no immediate relief to struggling families with young children, when financial needs are most acute. They also note the policy was passed alongside cuts to essential programs like Medicaid and food assistance. A major criticism is that the program could inadvertently widen the wealth gap. Families with disposable income to max out the $2,500 annual contributions will see their children's accounts grow exponentially more than those who can only rely on the initial $1,000. Projections suggest that with a 7% annual return, the government's $1,000 alone would grow to roughly $3,570 by age 18—a helpful sum, but one that may pale next to accounts bolstered by regular family contributions.
The Trump Account enters a landscape where several US states like California and Connecticut already have 'baby bond' programs. Key differences exist: those state schemes are typically government-funded and managed, and target only children in poverty or foster care. The federal Trump Account includes all children regardless of family income but relies on private market investment.
As enrolment prepares to begin, the debate continues over whether this long-term investment vehicle will truly level the playing field or simply provide another advantage to those already positioned to save.
