President Donald Trump announced a new stimulus payment plan for millions of American families with children born on or after certain dates. This “Trump Account” plan will deliver hundreds of millions of dollars to all those who filed taxes after December 31, 2024, and will receive a one-time payment of $1,000 by January 1, 2029.
For the president, this is a “pro-family initiative” that will help millions of Americans take advantage of “the strength of our economy” to help the next generation, at a time when birth rates are declining not only in the United States but also in dozens of countries around the world.
What are the “Trump Accounts” stimulus payments?
The “Trump Accounts” would be tax-deferred investment accounts. These accounts would be privately held by the legal guardians of the beneficiary children. The federal government would make a one-time contribution of $1,000 to each account, the White House announced. The accounts would be designed to track a general stock market index.
The accounts will later “track a stock market index and allow for additional private contributions of up to $5,000 a year,” the White House said. The program “will offer a generation of children the opportunity to experience the miracle of compound growth,” the same source stated. It also noted that it will set them on a path to prosperity from the start.
Trump Accounts are similar to “baby bond” programs existing in some states. However, those state programs typically target children from low-income households. The proposed federal program would be available without socioeconomic restrictions.
As a result, experts have observed a potential differentiating effect. Higher-income families could contribute more money to the account beyond the initial $1,000. This would allow them to accumulate more funds over time due to compound growth.
Eligibility and availability of “Trump Account” funds
As we mentioned, eligibility is for babies born between December 31, 2024, and January 1, 2029. To apply for an account after the baby’s birth, at least one of the child’s parents or guardians must have a Social Security Number, and that number must be authorized to work in the United States.
At age 18, the beneficiary of the Trump Account can withdraw up to half of the accumulated funds, and upon turning 25, they can access the full balance for certain specific purposes. For example, they can use it for small business loans and higher education.
Upon reaching the age of 30, the account holder will be able to access the accumulated funds at their discretion and without limit.
The $1,000 in Trump Accounts can be converted into $574,000
The Milken Institute, an independent, nonpartisan think tank, published a report in March estimating that an initial $1,000 grant, like the Trump Account, if properly invested, could significantly grow into hundreds of thousands of dollars.
On average, it would reach $8,000 after 20 years, but could grow to $69,000 after 40 years and $574,000 after 60 years. This assumes an investment in a broad-based stock index fund.
Based on current U.S. birth data, with an average of 3.6 million babies born per year in recent years, the program is estimated to cost the federal government about $3 billion annually.