❓WHAT HAPPENED: Starting in July 2026, all U.S. newborns from 2025 to 2028 will receive a $1,000 government-funded account to help with future financial needs. These accounts are similar to hybrid IRAs, allowing investments and contributions from family and employers. When the child turns 18, the account will convert to a traditional IRA, offering tax benefits and growth potential.
👤WHO WAS INVOLVED: U.S. President Donald J. Trump, Ian Berger, an analyst with Ed Slott and Company, and Cheryl Costa, a financial adviser in Framingham, Massachusetts.
📍WHERE & WHEN: United States, 2025-2028
💬KEY QUOTE: “To me, it’s a supercharged IRA.” – Cheryl Costa
🎯IMPACT: Newborns receive a $1,000 investment at birth to kickstart lifelong savings, encouraging early financial planning for families of all incomes. While it won’t cover immediate expenses, it lays the foundation for future wealth, especially when supplemented by additional contributions.
American newborns are eligible to receive $1,000 from the U.S. government starting this year through 2028, according to a provision included in the One Big Beautiful Bill Act. These new ‘Trump Accounts’ are intended to assist families with their children’s financial and economic needs.
The government will provide a one-time contribution of $1,000 to each account for U.S. citizens born between 2025 and 2028 who have been assigned Social Security numbers, aligning with Trump’s current term in office. According to financial experts, they are structured almost like hybrid individual retirement accounts.
There are no income restrictions for this contribution. Family members and employers can contribute up to $5,000 each year to the accounts. There’s no tax deduction for contributions made before a child turns 18, but funds provided by employers, up to $2,500 a year, won’t count as taxable income.
Money in the accounts must be invested in low-cost stock mutual funds or exchange-traded funds tracking a U.S. stock index, like the S&P 500. Withdrawals are permitted when the beneficiary turns 18, and from then on, the account will be converted to an IRA, subject to standard contribution limits and rules, according to Ian Berger, an analyst with Ed Slott and Company. Under Internal Revenue Service (IRS) rules, traditional IRA contributions are tax-deductible for those who qualify based on income and other factors.
Withdrawals from traditional IRAs before age 59½ are generally taxed as ordinary income, plus a 10 percent penalty, although this can be waived in certain circumstances, such as using the funds to pay for higher education, for the birth of a child, or to make a down payment on a first home. “To me, it’s a supercharged IRA,” said Cheryl Costa, a financial adviser in Framingham, Massachusetts, of the ‘Trump Accounts.’ The accounts are expected to launch in July 2026.
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