12/05/2025
Parents planning to saving for their children’s education now have a new tool in their arsenal—Trump Accounts—but are the president’s new name-branded plans really the best option when it comes to building up a college fund?
What Are Trump Accounts?
The accounts were created as part of the reconciliation bill, One Big Beautiful Bill Act, signed into law by Trump in July.
A kind of retirement account for children, Trump Accounts are designed to encourage parents to save and invest with a slight boost from the federal government. Each account includes a $1,000 government contribution for eligible children: U.S. citizens born between January 2025 and the end of 2028.
These accounts permit up to $5,000 in annual after-tax contributions, and allow savings to grow tax-deferred until the owners make withdrawals. But withdrawals can only start once a child turns 18, after which the Trump Account functions like an individual retirement accounts, with the attached tax penalties.
The money may only be invested in a qualified mutual fund or exchange-traded funds which track either the S&P 500 or another basket of American equities, according to the IRS website.
