Trump Accounts: A New Way to Build Long-Term Wealth for the Next Generation

On December 2, 2025, philanthropist billionaires Michael Dell and Susan Dell announced a $6.25 billion charitable commitment to help fund newly created, tax-advantaged savings vehicles known as Trump Accounts. Their pledge is designed to support approximately 25 million children and jumpstart long-term saving and investing at an early age.

These accounts officially launch on July 4, 2026, with the goal of helping families save for their children’s futures while teaching core financial concepts such as investing, compound growth, and long-term planning.

For most children age 10 and under who do not qualify for the federal newborn contribution, the Dell donation will provide a $250 initial deposit per child, giving millions of families a meaningful starting point.

What Are Trump Accounts?

Trump Accounts were signed into law under the One Big Beautiful Bill Act on July 4, 2025. They are designed to promote wealth building for younger Americans by providing a structured, tax-deferred investment account beginning in childhood.

Once active in 2026, any U.S. child under age 18 with a Social Security number may qualify. In addition, newborns from 2025 through 2028 will receive a federal “head start” in the form of a one-time $1,000 contribution from the U.S. Treasury.

Contribution Rules and Tax Treatment

Trump Accounts function similarly to a non-deductible traditional IRA, with several important features:

• Annual contribution limit: Up to $5,000 per child
• Employer contributions: Employers may contribute up to $2,500 per child
• Combined funding: Parents and employers can jointly reach the $5,000 limit

Tax treatment:

• Contributions are not tax-deductible
• Investment growth is tax-deferred
• Withdrawals of earnings are taxed at ordinary income rates

This structure allows assets to grow without annual tax drag, while still maintaining flexibility for future use.

Investment Options Inside the Account

Investment choices within Trump Accounts are intentionally limited during childhood. Accounts may only invest in low-cost index exchange-traded funds (ETFs) or mutual funds, ensuring broad diversification and minimizing expenses.

This approach serves two purposes:

1. It removes pressure from parents to select individual stocks.
2. It introduces children to how diversified market investing works.

As children grow older, they can observe how markets move and begin to understand references to benchmarks such as the S&P 500 Index or the Dow Jones Industrial Average as part of real-world financial education.

What Happens at Age 18?

Once the account holder turns 18, the restrictions are lifted. At that point:

• Funds may be used for qualified purposes such as education, a first home, or other approved uses.
• The account holder gains broader investment flexibility, including individual stocks and bonds.
• Like a traditional IRA, non-qualified withdrawals before age 59½ may be subject to a 10% penalty.

In addition, the account becomes eligible for Roth conversions. For young adults with little or no earned income, this creates a unique planning opportunity to convert funds at very low tax rates and potentially enjoy decades of tax-free growth in a Roth structure.

Why Trump Accounts Matter

Trump Accounts add a new “bucket” to the family financial planning toolkit, alongside options such as 529 plans and Roth IRAs. They are particularly compelling for families who want to:

• Teach financial literacy through hands-on investing
• Encourage long-term thinking from an early age
• Create another method for intergenerational wealth transfer

From an estate-planning perspective, contributions to these accounts qualify under the annual gift tax exclusion, allowing parents and grandparents to move assets out of their taxable estates while supporting a child’s future.

Over time, the compounding effect of early contributions—especially when paired with disciplined investing—could materially improve financial outcomes for the next generation.

Planning Ahead

Although Trump Accounts will not be available until mid-2026, families who plan early may be best positioned to take full advantage of contribution strategies, Roth conversion opportunities, and coordinated estate planning.

By James Blue, Fee-Only Advisor | Blue Advisors

James Blue is the founder of Blue Advisors, a fee-only financial planning and investment management firm based in Columbus, Ohio.

This content is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. The views expressed are those of the author as of the date published and are subject to change without notice. Blue Advisors is a fee-only registered investment advisory firm. Advisory services are offered only pursuant to a written advisory agreement and to clients in the State of Ohio, the Commonwealth of Pennsylvania, and other jurisdictions where Blue Advisors is properly registered or exempt from registration. Past performance is not indicative of future results. Readers should consult with their financial advisor, tax professional, or attorney before making financial decisions.