How the New Trump Accounts May Secure Your Grandchild’s Retirement

Children born from 2025-2028 and a U.S. citizen with a valid Social Security number, will receive $1,000 once they opt in for a Trump account.  

Families can contribute up to $5,000 per year, after-tax and indexed for inflation up to and including age 17.

These contributions are non-deductible to the family and are not taxable to the child.

Employers can contribute up to $2,500 per year which counts against the $5,000 cap.

The funds must be invested in a broad U.S. equity index fund like the S&P 500.

At age 18, the child has full control of the account. 

Just like an IRA, withdrawals of earnings, employer contributions and the initial $1,000 deposit are taxable and subject to a 10% early withdrawal penalty if the withdrawal is non-qualified.  

At age 18, the White House and Treasury Department estimate the account could be worth $303,800 assuming the initial $1,000 seed, $5,000 maximum annual contribution and an average 10% annual return. 

At age 28, this account, if not touched, could be worth more than $1 million.

At age 65, it could be worth approximately an astounding $23 million. 

Unlike an IRA, the child does not need to have earned income for a contribution to be made.