Trump Accounts: A New Way to Invest in Your Child’s Future
If you’re raising kids in Greater Houston, you already know how fast the costs of their future can snowball—college, first apartments, and maybe even a starter home. A new federal program aims to give kids a built-in head start: “Trump Accounts,” a long-term investment account for children created as part of President Donald Trump’s recent tax and spending package.
The big idea is simple: eligible children receive a government-funded boost, and families can keep building on it over time.
How Trump Accounts Work
A Trump Account is a government-backed investment account designed to hold money for a child until adulthood.
Basic structure:
Who can have one: Any child under 18 with a valid Social Security number can eventually have a Trump Account.
Who gets the $1,000 deposit: U.S. citizen children born between January 1, 2025, and December 31, 2028 can receive a one-time $1,000 federal contribution when a parent or guardian opens the account.
How it’s invested: The money is placed in low-cost, broad U.S. stock index funds. You don’t pick individual companies; the account tracks the overall stock market.
How much can be added: Families and others can contribute up to $5,000 per year per child. Employers can cover up to $2,500 of that amount. Certain charities and government entities may add additional funds that don’t count toward the $5,000 cap.
Who’s in charge: A parent or guardian manages the account until the child becomes an adult. The program will roll out in phases, with parents choosing to open the account and then following federal instructions to activate it.
How the Money Can Grow
Trump Accounts are built around compound growth—the idea that money invested early and left alone for years has the chance to grow on itself.
Because the accounts are invested in broad index funds:
Performance generally follows the overall stock market.
Over 18 to 30 years, steady contributions can turn into meaningful savings.
If markets underperform, growth slows—just like any other stock-based investment.
For Houston families able to contribute regularly, a Trump Account could become a valuable resource for college, a first home, or even long-term retirement savings. For others, the $1,000 federal deposit alone still provides a small but significant starting point.
What It Means for Houston Families
Tech billionaire Michael Dell and his wife Susan Dell have pledged roughly $6.25 billion to support Trump Accounts, adding an extra $250 for up to 25 million children.
That additional contribution is reserved for kids living in ZIP codes where the median household income is under $150,000. That includes many neighborhoods across Greater Houston.
Supporters view Trump Accounts as a modern version of “baby bonds,” meant to encourage long-term saving and financial literacy. Critics worry that families already struggling to cover food, rent, and utilities will have little extra cash to invest, limiting the program’s impact for those who may need the most help.
In the end, each Houston family has to decide whether a Trump Account fits their financial reality.
How to Open a Trump Account for Your Child
(Always check the latest IRS instructions or speak with a tax professional before filing.)
1. Make sure your child qualifies
Confirm that your child meets the age, citizenship, and Social Security number requirements described earlier. If you’re aiming for the $1,000 federal seed contribution, also make sure your child’s birthdate falls within the 2025–2028 window.
2. Complete IRS Form 4547
As the parent or legal guardian, you fill out IRS Form 4547 to:
Create a Trump Account in your child’s name, and
Request the federal contribution if your child is eligible.
You can file this form on its own or include it with your 2025 federal tax return, depending on your timing and tax situation.
3. Follow Treasury’s activation instructions
After the IRS processes your form, the U.S. Treasury or its financial agent will contact you. You’ll use a secure website or portal to verify your identity and activate the account. The account isn’t ready to use until this step is complete.
4. Begin contributions when the program opens
The federal government plans to allow contributions starting around July 4, 2026. From that point on, you and others can contribute up to the annual limit per child, including any employer contributions. Certain charities or government agencies may also add funds on top of that limit if your family qualifies.
5. Understand the investment approach
The program automatically invests Trump Account balances in low-fee U.S. stock index funds. You don’t trade or choose specific stocks. The goal is slow, steady growth over many years—not day-trading or speculation. Balances will rise and fall with the market along the way.
6. Plan ahead for age 18 and beyond
Until your child turns 18, the money must stay in the account. At 18, the account transitions to follow traditional IRA rules. Depending on the rules at that time, your child may be able to use some funds early for qualified education expenses or a first home purchase, while other early withdrawals could trigger taxes and penalties. Leaving the money invested allows it to keep growing for long-term goals like retirement.
How Trump Accounts Fit Into Your Bigger Financial Picture
Trump Accounts are one tool, not a complete plan.
Before contributing, consider how they interact with:
529 college savings plans
Custodial accounts (UGMA/UTMA)
Roth IRAs for minors
Regular savings or investment accounts
Each option has different tax treatment, withdrawal rules, and potential effects on college financial aid.
If you’re unsure which combination makes sense, talk with a Houston-area CPA, financial advisor, or tax preparer. Ask them to compare Trump Accounts with what you’re already doing so you can match your strategy to your budget, goals, and comfort level with risk.
About This Story
Note: Trey McWilliams provided expert commentary for this story. Houston City Beat did not receive compensation for this information.
For parents trying to give their kids a leg up in an increasingly expensive world, Trump Accounts may be one more way to build a financial foundation, especially if you start early, contribute when you’re able, and pair this account with other smart money tools.
