\u201cThey\u2019re basically a special type of traditional individual retirement account that can be opened for children under 18,\u201d Olivia S. Mitchell, professor of business economics and policy at the Wharton School of the University of Pennsylvania, told Straight Arrow.<\/p>\n
\t\t![\"QR](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/04\/app-download-block-qr-code.png\")
<\/p>\n
\n\t\t\tDownload the SAN app today to stay up-to-date with Unbiased. Straight Facts\u2122.\t\t<\/p>\n
\n\t\t\tPoint phone camera here\t\t<\/p>\n
What are Trump Accounts?<\/p>\n
Trump Accounts are essentially a different kind of individual retirement account, or IRA.<\/p>\n
The idea behind Trump Accounts dates back<\/a> to the 1990s with what were called Baby Bonds.<\/p>\n In 1990, economist Michael Sherraden published<\/a> a piece arguing public policy should help people build long-term wealth, but the idea got little traction in Washington.<\/p>\n \u201cA long time ago, progressives, liberals decided that one of the things to do to make the country less unequal is to make sure that kids have some wealth from the time that they are born,\u201d Joshua Gotbaum, scholar in economic studies at the Brookings Institution, told Straight Arrow.<\/p>\n In a rare moment of semi-bipartisanship, conservatives have recently taken up that mantle.<\/p>\n \u201cConservatives decided that that was a good thing, because if kids had had investments as they were growing up, they would have an incentive to do something with their lives to make those investments work,\u201d Gotbaum said.<\/p>\n So, in President Donald Trump\u2019s so-called \u201cOne Big Beautiful Bill,\u201d Trump Accounts were born.<\/p>\n Those accounts are established for people under 18 and cannot be accessed until they turn 18.<\/p>\n They are essentially a typical IRA, meaning any money goes into the account pre-tax and is taxed when it\u2019s withdrawn.<\/p>\n That money grows in several ways, the first being that it cannot be touched until the owner turns 18.<\/p>\n Second, the funds are invested in a broad-based index, similar to a major stock index like the S&P 500.<\/p>\n Third, the money comes from numerous places.<\/p>\n \u201cThey use tax incentives to encourage a wide weight range of investors in a child\u2019s future,\u201d Ray Boshara, senior policy adviser at Washington University in St. Louis, told Straight Arrow. \u201cPhilanthropy, nonprofit, cities, states, employers, they can all contribute to the account prior to age 18.\u201d<\/p>\n For some, that includes the U.S. government.<\/p>\n Any child born between Jan. 1, 2025, and Dec. 31, 2028, will receive $1,000 to that account from the federal government.<\/p>\n Kids born after July 2026 can be enrolled before they ever get home.<\/p>\n \u201cWhen a child is born in the hospital, parents sign a form to create a Social Security account, and what the Social Security Administration just announced is that they will essentially use that form to open a [Trump] Account,\u201d Gotbaum said.<\/p>\n Trump Accounts also received one of the most charitable gifts in U.S. history from<\/a> Michael and Susan Dell. They pledged more than $6 billion to the new program.<\/p>\n That\u2019s another area where Trump Accounts differ. Under current law<\/a>, a charitable organization cannot make a donation to one individual child because it would be viewed as an impermissible private benefit.<\/p>\n Giving that much to the children with Trump Accounts is different.<\/p>\n \u201cA 501(c)(3) can make a grant to all the kids in an area, all the kids in a town, and so that\u2019s another innovation that these accounts can do,\u201d Gotbaum said.<\/p>\n One Big Beautiful difference<\/p>\n When it comes to a traditional IRA versus a Trump Account, they are relatively similar.<\/p>\n Nearly one-third<\/a> of Americans have a form of an IRA.<\/p>\n However, there\u2019s a major difference between an IRA and a Roth IRA.<\/p>\n While an IRA goes in pretax and gets taxed when you withdraw, a Roth IRA gets taxed as it goes in and then can be withdrawn tax-free.<\/p>\n \u201cThink about it as how you can frontload a traditional IRA, and then basically all the rules around traditional IRAs take over starting at age 18,\u201d Boshara said.<\/p>\n Trump Accounts are built like the traditional IRA but can be converted to a Roth IRA after the child turns 18.<\/p>\n Meaning you\u2019d need to pay the taxes for what\u2019s in there, but the rest of the growth moves like a Roth IRA.<\/p>\n \u201cSomebody under existing law could take a traditional IRA and do a Roth conversion,\u201d Boshara said. \u201cPay whatever taxes they have to do that conversion, so that for the remainder of its growth it would be a Roth IRA.\u201d<\/p>\n