The ringing of the Wall Street opening bell echoed from the Oval Office this week as Donald Trump launched a new savings scheme for American children. But even as the White House hailed the Trump Accounts as a way to give younger generations a stake in the American dream, tax experts warned that the plan could leave lower-income families worse off.
The accounts are available to all US children under 18, with babies born between 2025 and 2028 qualifying for a $1,000 contribution to kickstart their savings. Parents can open an account via an app, and families, friends and employers can contribute up to $5,000 per year per child. The money must be invested in a low-cost index fund designed for long-term growth, and grows tax free. But withdrawals are subject to taxes and a possible 10% penalty if taken before age 59½, unless the funds are used for higher education, buying or building a first home, or personal emergency expenses.
“Trump Accounts launch for US children, but experts warn scheme is too complex for lower-income families.”
According to a Congress report, Trump Accounts are a new form of traditional individual retirement account, differing only in certain rules. They add to existing tax-efficient savings schemes such as IRAs and 529 college savings plans.
The White House argues that the scheme offers millions of children a way into stock ownership, which it says has historically been “unevenly distributed, with many households – especially younger and lower‑income families – having little or no exposure”.
But Will McBride, chief economist at the Tax Foundation think tank, called the scheme too complicated to sign up to, predicting that only a “minority that benefits” will take advantage. He said those parents would be “relatively well-informed, relatively well-off, relatively tuned in [and] have their act together”.
Andy Blocker, head of policy at financial services firm Edward Jones, said the $1,000 contribution for babies born during Trump’s second term would remove a barrier, but the full quote was not available in the source. The launch comes as the cost of living remains a major issue ahead of November’s mid-term elections, raising the question of whether the accounts will prove a genuine boost or merely another complication for families already struggling to save.