Starting in July, families will have a new way to save money for their children's future through Trump Accounts — a tax-advantaged IRA that begins with a $1,000 balance.
"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," President Donald Trump said.
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David Perez, founder of Tax Maverick, broke down how the accounts work, who qualifies, and how families can maximize the financial benefit.
Who is eligible?
Any parent with a child under 18 can open a Trump Account. However, the $1,000 seed money is reserved for children born between Jan. 1 and Dec. 31, 2026 — a two-year window.
How do you open one?
Parents must apply at trumpaccounts.gov on behalf of their children and name a beneficiary. Applicants must also file Form 53A with their tax return to receive the $1,000 gift.
How does it compare to a 529 or Roth IRA?
Perez described Trump Accounts as a hybrid between a 529 plan and a traditional IRA.
"I would consider it not a Roth, but I would consider it a hybrid between a 529 and a traditional IRA because it is going to be taxed at some point," Perez said.
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Unlike a 529, the funds are not limited to educational expenses. The money can be used to buy a home, plan for retirement, or for other financial goals.
How much could it grow?
The White House projects that $1,000 left untouched could grow to nearly half a million dollars by retirement, based on roughly 7% annual compound interest. Parents can contribute up to $5,000 per year until the child turns 18, which Perez said could grow to approximately $3 million by retirement age.
What happens at 18?
Withdrawals are allowed at 18, but early withdrawal penalties and ordinary income taxes apply. Perez recommends converting the account to a Roth IRA at that point.
"The moment you turn it into a Roth, the interest and the taxes or the accumulation period becomes tax-free," Perez said.
Because most 18-year-olds are in a low tax bracket, the conversion tax could be minimal — potentially zero.
