Trump wants to give your child a thousand dollars just for being born! No paperwork or forms required.
And what if I told you there’s thousands more up for grabs if you know how to get it?
I’ll show you how to claim this free money and whether a Trump Account is better than a 529 plan or Roth IRA.
What Are Trump Accounts?
Here’s the big idea: The government wants to give your baby $1,000 in an investment account – if your child is born between January 1, 2025 and December 31, 2028.
The coolest part? You don’t have to do anything to get it.
Once your baby is born, the government uses their Social Security info to open the account automatically. A letter comes in the mail, and your kid has their first investment!
That’s not all, you can get an extra $2,500 for free – keep reading to find out how.
By the way, if your child was born before 2025, you can still open an account for them, you just won’t get that free $1,000.
Trump Account Explained: How it Works
So what happens next?
You don’t get to choose where the money is invested. It’s automatically invested in the U.S. stock market through a low-cost index fund, which is ideal for long term investment for a kid.
And you can add more money. In fact, you can contribute up to $5,000 per year. And here’s the big bonus: your employer can also add up to $2,500 a year, and you won’t pay taxes on it.
And who doesn’t like free money!
If you take full advantage of this account, that free $1,000 plus the $7,500 yearly contribution will grow to $385,000 by the time your kid turns 18!
That’s enough for college and a down payment for a house – before your kid even graduates high school.
Plus, starting in 2027, the $5,000 limit will go up with inflation. So you can save even more as the cost of living rises.
When Can Your Kid Use the Money in the Trump MAGA Account?
Remember, this isn’t a piggy bank your child can smash at will.
The money in the account is not accessible till your child turns 18, after which the account is treated like a traditional IRA.
The money in the account grows tax-deferred, and the withdrawals are taxed as regular income – plus a 10% penalty if the money is taken out before age 59½. The 10% penalty is waived for some key expenses like higher education and purchase of a home.
The idea is to help your child with life’s big milestones, not to provide cash for cars or vacations.
Trump Account vs 529 Plan and Roth IRA
So should you use a Trump Account instead of a 529 plan or a Roth IRA? Let’s compare.
529 Plans are great for college. Money grows tax-free, and there’s no tax when your kid uses it for school. Some states even give you a tax break for contributing.
Roth IRAs require your kid to have earned income. Your kid can use their contributions anytime, and all the growth is 100% tax-free in retirement.
With Trump Accounts, your kid has to pay taxes when they withdraw – even if it’s for college. And that’s a big difference.
Also, Trump Accounts can hurt your kid’s financial aid chances since FAFSA counts this as their asset, not yours. This could reduce how much aid they get for college.
Trump Account vs 529 Plan or Roth IRA: Bottom line
Trump Accounts are great as a bonus, but should probably not be the primary savings tool for your child.
If your baby’s born between 2025 and 2028, grab the free $1,000.
If you are already saving for your child, use this on top of a 529 account or Roth IRA.
