🚀 What’s a Trump Account (aka MAGA Account)?

The One Big Beautiful Bill (signed July 4, 2025) creates Trump Accounts—custodial investment accounts for U.S.-born kids incorporating some cool savings kicks:

• $1,000 seed money from the government for every child born Jan 1, 2025–Dec 31, 2028—no income limits.

• Annual contribution envelope: up to $5,000/year (indexed to inflation starting after 2026). Earnings grow tax-deferred; investments must be low-cost U.S. equity index funds or ETFs (<0.10% expense ratio).

• Employer contributions: up to $2,500/year, tax-free for the employee.

• Access rules:

  • Locked until age 18.

  • After 18, partial access (e.g., education, business, first-home) taxed at favorable capital gains rates.

  • Full, penalty-free access allowed from age 30.

Financial pros caution that while it offers some advantages, these accounts may lag behind 529 plans, Roth IRAs, or UTMAs, depending on your goal.

📈 Taxish Take

We love that every child gets free starter capital, and that both parents and employers can contribute. The fact employers can pitch in up to $2,500 tax-free? That’s a sweet perk.

But:

• Contributions by parents aren’t deductible.

• Early withdrawals for non-qualified reasons face penalties and ordinary income tax.

• It’s just one tool—not a full solution for college, retirement, or generational wealth.

At Taxish, we see Trump Accounts as a smart piece of the puzzle: great for starting a saving habit, seeding long-term investing, and unlocking business-centric funding early. But they play best when used alongside other tax-advantaged vehicles.

🧩 Case Study: Meet Sarah, Small Business Owner & Mom of Twins

Background:

• Sarah runs a cozy bakery in Indiana.

• She and her husband have twin boys born in March 2026 (eligible!).

• They want to help their boys later: college, maybe a small business, or a first home.

What They Do:

1. Open Trump Accounts right after birth:

   • Government deposits $1,000 per twin.

   • Sarah’s bakery, if organized, provides $2,500/year per child—up to the employer cap.

2. Personal contributions:

   • They add $1,500/year per child—totaling $3,500 each year combined with employer contributions (total $6,000/year per child)—within the $5,000 limit from personal sources plus employer 2.5k.

3. Invest in a low-cost S&P 500 ETF (<0.10% fee).

4. Let it work:

   • By age 18, each account—without further deposits—could skyrocket to around $50k–$80k (assuming historical ~7% average returns).

   • At 18, they’d unlock access for “qualified” use like trade school or starting a small bakery branch.

5. Long-term flexibility:

   • If unused, full access opens at age 30—for anything: college, business expansion, or buying property.

Why it works for Sarah:

• She kickstarts the account with the $1,000 gift and sweetens it with employer contributions.

• She starts early to harness compounding.

• She keeps options wide—her boys can use it for entrepreneurship, not just college.

And because she encourages her boys to pick educational or business goals early, those partial withdrawals after 18 can become powerful launch points.

✅ Taxish Tips for Maximizing Trump Accounts

Tip	Why it matters
Open your child’s account ASAP	Only available for kids born 2025–2028 who opt in before age 18
Max out employer contributions	Up to $2,500/year is effectively free money from their job.
Use low-fee index ETFs	IRS rules cap fund fees at 0.10%; index funds offer performance edge .
Pair with 529 or Roth IRA	For dedicated goals like college or retirement, more specialized vehicles are more flexible/tax-advantaged.
Plan withdrawals strategically	Use funds for qualified education or business by age 30 to minimize penalties and taxes.

👶 Pre-2025 Babies? No Freebies, but Still Options

If your child was born before January 1, 2025, don’t count yourself out—“legacy” Trump Accounts are still a go! While kiddos born outside the 2025–2028 window miss out on the government’s $1,000 seed money, they’re fully eligible to open a Trump Account and stack contributions like the rest. Parents, grandparents, or even businesses can pitch in up to $5,000 a year (in cash or cash-equivalents), and employers can still drop in $2,500 annually—tax-free for the employee. 

Same tax perks, same investment rules, same flexibility at age 18 and 30. So if your toddler’s already tearing up the living room, you can still start planting financial roots today.

📍Where Do I Participate?

Unfortunately, there’s no glittery “Trump Account” vending machine at Target (yet), but the official list of banks and brokerages offering Trump Accounts is in the works. Think of it as a VIP guest list dropping fashionably late (expected mid-2026). In the meantime, keep an eye on your financial institution or stalk the Treasury Department’s updates for the official rollout and how to apply once things go live.

🏁 Final Word

Trump Accounts add a powerful and accessible tool to the family finance toolkit:

• Free baby money

• Tax-deferred growth

• Employer perks

• Clear long-term purpose

But they’re not a cure-all. Use them alongside 529s, Roth IRAs, and income protection plans for a holistic wealth strategy.

For business-owning parents like Sarah, they can be a seed investment in your kids’ future dreams—whether that’s college degrees, craftsman trade, or mini-enterprises.

Got a baby on the way (or already in the bassinet)? Let’s cook up a game plan that blends Trump Accounts with other tax-smart moves—so you can build a future nest egg without cracking your wallet. 🐣💸