Eligible Families Can Now Receive $1,000 Federal Deposit for Children Through New Trump Accounts
Millions of American families are now able to begin receiving a $1,000 federal contribution for eligible children as the newly launched Trump Accounts program officially starts accepting deposits. The program is designed to help families build long-term savings for children by providing a government-funded starting balance for qualifying accounts.
Although the program officially begins this week, the federal deposits are expected to reach eligible accounts after the Independence Day holiday since banks are closed for July 4. The payments are expected to be processed over the coming weeks as accounts become active and meet the program requirements.
The Trump Accounts program is available to all U.S. children under the age of 18 who have a valid Social Security number. However, the $1,000 federal seed contribution is only available for children born between January 1, 2025, and December 31, 2028. Families with older children may still open an account, but those children do not qualify for the initial government-funded deposit.
To receive the federal contribution, parents or legal guardians must first establish a Trump Account for their eligible child. Without an active account, the government cannot issue the $1,000 seed payment. Families can open the account by filing IRS Form 4547 with their federal tax return or by submitting the form separately at another time during the year.
The accounts are managed by a parent or legal guardian until the child reaches adulthood. During that time, the money remains invested and is intended to grow through long-term market performance. The accounts are tax-deferred, allowing investment earnings to accumulate over time before withdrawals are made under the program’s rules.
In addition to the government’s initial contribution, parents, relatives, and other eligible contributors may deposit up to $5,000 each year into the account. These annual contributions are invested alongside the original federal funding to help increase the account’s value over time. According to White House projections, an account that receives the maximum annual contributions and remains invested without withdrawals could potentially grow significantly by the time the child reaches adulthood.
When the account holder turns 18 years old, the funds become available without penalty if they are used for approved purposes. Qualified expenses include paying for higher education, purchasing a home, or starting a business. While withdrawals for these approved purposes avoid penalties, they remain subject to ordinary income tax under the program’s rules. Control of the account also transfers to the child once they reach adulthood.
The U.S. Department of the Treasury, which oversees the Trump Accounts program, has also announced how the money will initially be invested. At launch, all contributions—including the federal seed money and any additional deposits—will automatically be invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM). Treasury officials selected this exchange-traded fund because it tracks the performance of the S&P 500 Index while maintaining low investment costs. The department has also stated that four additional low-cost index fund options will be introduced later, giving account administrators more investment choices in the future.
The launch of Trump Accounts marks the beginning of a new federal savings initiative focused on helping eligible children build financial assets from an early age. Families who have children born during the qualifying period should ensure an account is properly established so they can receive the government’s $1,000 contribution once processing begins.
Sources
- Internal Revenue Service (IRS)
- U.S. Department of the Treasury
- The White House
