CHICAGO (WLS) — President Donald Trump is touting a new child-focused savings initiative known as Trump Accounts, a program that opened July 4 and provides government-backed starter funds to certain eligible children.
The tax-deferred investment accounts are designed for minors under 18 and are placed in low-cost index funds. Trump drew attention to the rollout while taking part in the New York Stock Exchange opening bell ceremony, which was held from the White House.
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But financial professionals caution that parents should weigh the details carefully and decide whether the accounts fit their broader savings and planning priorities.
“It does become the child’s property when they turn 18, so you may be intending that this is going to be used for college or for a home purchase. They may think it’s a great way to go to a World Cup game,” said Ann Garcia, a wealth advisor with The Mather Group.
Program details show that children born from 2025 through 2028 are eligible for a $1,000 federal seed contribution. In addition, the first 25 million children age 10 and younger who reside in ZIP codes where the median yearly income is under $150,000 can receive another $250, funded by private donations.
Garcia said households that meet the requirements for the government-funded deposits should give serious thought to claiming the benefit.
“My personal opinion is if you’re eligible for free money, take it,” Garcia said.
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Even so, Garcia noted that families who are not eligible for the extra money still have other ways to build savings for a child. She pointed to Illinois’ 529 college savings plans as one option, emphasizing that 529 withdrawals are not taxed in Illinois, whereas money taken out of a Trump Account is subject to taxes.
“If you take $10,000 out of a 529 you have $10,000. If you take $10,000 out of a Trump account, you might have $7,500,” Garcia said.
Trump Accounts also differ from 529 plans in other ways. Contributions are capped at $5,000 per year, and investments are limited to low-cost U.S. stock index funds managed by Bank of New York Mellon and Robinhood.
U.S. Rep. Sean Casten, D-Ill., criticized Robinhood’s involvement, saying the company has previously faced settlements related to its treatment of customers.
“You are going to have very young kids receiving this account and being potentially encouraged to buy and sell things by a company that really has a bad track record of looking out for all investors,” Casten said.
Parents can open an account by filing an IRS form online at TrumpAccounts.gov. Financial advisors recommend consulting a financial professional before deciding whether the accounts are the right fit for a family’s savings strategy.
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