How do Trump Accounts work?

President Donald Trump celebrated the launch of Trump Accounts from the Oval Office on Monday. The president rang Wall Street’s opening bells to mark the first day of trading for his signature retirement accounts for children younger than 18. Though the accounts are intended for retirement, children can access their Trump Account funds after their 18th birthday, using them on eligible expenses like college or buying a first home. Children born during Trump’s second term can also be elected by their parents to receive a one-time gift of $1,000 from the Treasury Department.

Trump said in a speech at the White House Rose Garden Monday that the Trump Accounts are meant “to ensure that every American child is born with a head start and a fair shot at the American Dream. Because by the time they’re 18, they could have a lot of money.”

How do the accounts work? Officially called a “530A,” Trump Accounts are investment accounts that will convert into an IRA on the child’s 18th birthday. In the meantime, money will be invested into American companies in a low-risk diversified investment fund. Parents and children can monitor investments through the Trump Accounts app, which will show them the stocks their funds are invested in. When the child turns 18, they can choose to withdraw money, facing taxes and a 10% fee, or leave it in the account to grow further.

Who qualifies? Anyone under 18 who is a U.S. citizen and has a Social Security number can sign up for an account. A child must be born between Jan. 1, 2025, and Dec. 31, 2028, to qualify for the $1,000 gift.

How many are getting the free money? Of the 6 million Trump Accounts that have been opened, 1.4 million are eligible for the $1,000 deposit, according to a White House news release.

Where’s the money coming from? Trump’s One Big Beautiful Bill Act, which the president signed last July, created the Trump Accounts initiative. The $1,000 gift is a refundable tax credit and is paid by the Treasury Department.

Who can add money to a Trump Account? Though no contributions are necessary, families can contribute a total of $5,000 per year into an account. Employers can contribute up to $2,500 per year, and local governments, philanthropists, and nonprofits may also contribute. Michael Dell, founder and CEO of Dell Technologies, promised in a post on X to contribute $250 to each of the first 25 million children who sign up for the accounts. Gwynne Shotwell, president and COO of SpaceX, pledged to give shares of SpaceX stock to over 2 million low-income children between 11 and 17 years old.

Where’s the money now? Initially, all Trump Accounts will be invested in State Street SPDR Portfolio S&P 500 ETF, a fund also known as SPYM. The fund tracks the performance of the S&P 500, which measures the top 500 companies in the American stock market. According to a statement from the Treasury Department, parents will have additional investment options in the next few months.

How much money can the accounts accumulate? If an account has only the $1,000 deposit, the child is projected to have $6,000 after 18 years. Totals increase with investment: for example, if a family contributes $250 per year in addition to the $1,000 deposit, the account will grow to $19,000 after 18 years, according to the Trump Accounts website.

Will this help low-income children? According to Treasury Secretary Scott Bessent, 86% of children signed up for an account are from families earning less than $200,000 a year.

Are there risks or strings attached? A Trump Account is free federal money and enjoys low fees, according to a fact sheet from the U.S. Bank, a private company. However, the U.S. Bank notes that withdrawals from the account will be taxed as income, and future changes to the law could impact how the account works. They emphasize that a Trump Account is for long-term retirement savings and does not replace other investment mechanisms, like a 529 plan or Roth IRA.

What do critics say? Adam Michel, director of tax policy studies at the Cato Institute, wrote in a policy brief that Trump Accounts are less of an investment and more of a government welfare program, because they rely on transfers from the government, employers, and nonprofits. Michel also criticizes the accounts’ penalties for early withdrawals, which harm young, lower-income households who often need access to their savings to cover expenses.