The new Trump savings account is basically like giving your kid a Wall Street starter kit wrapped in red, white, and blue ribbons. Uncle Sam (and a billionaire couple) want to help American kids build savings for the future, and are willing to put down serious money to do it. It's like planting a money field that kids can harvest in the future. But is it for everyone?
Here are Five Fast Facts on the new Trump savings accounts:
- 💡 The Big Idea - The Trump administration wants to both improve Americans' savings situation (currently around just $8k) and get more young people into the stock market early. Giving them a savings account does both, so it's a win-win!
- 🧢 Capping It - The annual contribution cap is $5k per year per child (adjusted for inflation later). Up to $2,500 of that can come from an employer without counting as taxable income for the parent - it's like getting free lunch money from your boss's wallet!
- 💲 Free Seeds - Some kids will get free seed money, too. Babies born between Jan. 1, 2025 and Dec 31, 2028 get a one-time $1k grant from the government (assuming they are U.S. citizens with a Social Security number). On top of that, billionaires Michael and Susan Dell (yep, that Dell) pledged $6.25 billion to give $250 each to roughly 25 million kids under age 10 in lower-income areas.
- 🚫 No Shenanigans - The money is locked up tighter than a superglued piggy bank! No withdrawals are allowed before age 18, not even for emergencies, college, or other necessities like a new gaming setup or hot sneaks. After age 18, it acts like a traditional IRA with possible taxes and penalties on early pulls before age 59½.
- 🥱 Vanilla By Design - Investments are super boring on purpose (low-cost mutual funds or ETFs that track broad U.S. stock indexes like the S&P 500). There are no wild crypto bets, no single stocks, no sector funds like "only tech" or "only oil." The idea is steady long term growth, not flashy-flash-flash (which means risk).
🔥Bottom line: You have to meet the eligibility requirements, of course, and you will have to pay taxes on it when you take the money out (depending on how the contributions go in), so it's not like these accounts are completely string-free. And if you need flexibility, you may be better off with a 529 or some kind of IRA account, which both give you more options and contingencies. However, these accounts are terrific if you have the discipline to put money in regularly and let it grow like a long term investment should! Especially if you get the free seed money or employers putting money in, it has the potential to give kids a very real 7-figure nest egg with minimal investment from you along the way.
Are your kids eligible for a Trump savings account?
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