Here’s how the $1,000-per-baby ‘Trump accounts’ would work and who would qualify
The plan would give every eligible newborn a government-funded investment account, but it’s worth reading the small print.
You may have heard about the ‘Trump accounts’ and have some doubts, so I’m here to give you as brief a summary as possible to cover all the main aspects as we know them.
Very simply, and as the name implies, these are $1,000 investment accounts the federal government would open for nearly every baby born in the U.S. from January 1, 2025, through to December 31, 2028. The funds would sit in a tax-deferred account tied to a stock index. Parents or others could add up to $5,000 per year to it.
FAQs: $1,000-per-baby ‘Trump accounts’
How do you qualify?
Your child must be born in the U.S. within that four-year window. At least one parent must have a Social Security number and be authorized to work in the U.S.
Can you touch the money?
Not for a while. At 18, the child can withdraw up to 50%, and at 25 they can access more for specific things like college, buying a home, or starting a business. Full access comes at age 30. Early or unapproved withdrawals before then? You pay taxes and a 10% penalty.
What’s the long-term value?
Assuming no extra contributions, the $1,000 could grow to about $8,000 by age 20 and potentially $69,000 by age 40if invested in a U.S. stock index, according to estimates.
Is it automatic?
Yes. Families wouldn’t need to apply. That’s one of the pluses - it avoids red tape, especially for parents just getting home from the hospital.
What’s the catch?
The same $1,000 goes to every family, regardless of income. Families with more money can invest more and will likely benefit more. Critics call it “regressive” - helpful to some, but likely to widen existing wealth gaps. It’s worth noting that it’s not the first time this initiative has been suggested.
How much would this cost the government?
If around 3.6 million babies are born each year, the price tag could top $3 billion annually.
What else should you know?
While it’s a nice gesture, some experts say it won’t replace cuts to social programs like SNAP or Medicaid, and clearly doesn’t benefit couples who can’t or decide not to have children. Others argue it’s no substitute for better education funding, housing policy, or paid family leave.
The “Trump accounts” are part of Trump’s larger tax plan, now stuck in the Senate. Whether it becomes law – or just a campaign talking point – remains to be seen.
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