New Savings Plan for Kids: What You Should Know

A new savings plan called "Trump Accounts" has been introduced. It aims to help families save for their children's future. The government will give $1, 000 to each child born between 2025 and 2028. Families can add up to $5, 000 each year. Employers can also contribute up to $2, 500. The money must be invested in a low-cost stock fund. To qualify, the child must be a U. S. citizen, and both parents must have Social Security numbers. Parents can open an account using a new IRS form. The Treasury Department will help complete the process starting in May 2026. Michael and Susan Dell have donated $6. 25 billion to expand this program. Their donation will give $250 to children aged 10 and under who were born before 2025. This will help kids in areas where the median income is less than $150, 000. The goal is to reach 25 million children. The money in these accounts can be used for higher education, buying a home, or starting a business. However, it can only be withdrawn when the child turns 18. Taxes on the growth of the money are deferred until withdrawal. Supporters like that the program is simple and gives every child a financial boost. Critics argue it is not targeted enough, as it gives money to everyone, regardless of need. They also say it adds more complexity to existing savings options, like 529 accounts, which offer more flexibility and tax benefits.