Trump Accounts: Perks for Babies and Billionaires

Apparently, the Trump administration has discovered a solution to childhood poverty. Give certain newborns $1,000, invest it in the stock market, and wait 18 years. What could possibly go wrong?

Meanwhile, we’re still waiting for those promised lower grocery and gasoline prices. Families are struggling to put food on the table, keep a roof over their heads, and afford healthcare, but apparently we’re supposed to be thrilled that Junior might someday have a few thousand dollars in an investment account. Well, assuming, of course, he makes it that far.

We see you, Donald. Putting a child’s name on the account doesn’t make the sales pitch any less suspicious.

The program, called Trump Accounts (because of course it is), provides a one-time $1,000 government contribution for eligible American children born between January 1, 2025, and December 31, 2028. Parents can open accounts for older children, too, but those kids don’t qualify for the federal contribution. Apparently, being born in or before December 2024 was a poor financial decision. I hope those babies have learned something.

And why the narrow birth-date window? Because this isn’t just about helping children. It’s also another nudge from an administration worried that Americans aren’t having enough babies. Apparently, $1,000 invested for a child who won’t be able to use it for years is supposed to make parenthood more appealing. The administration seems considerably more interested in increasing the birth rate than making parenthood affordable.

When Billionaires Come Bearing Gifts

Under Treasury rules, wealthy donors can contribute individual company stocks to children’s Trump Accounts through approved charitable organizations. The children may be required to hold those shares for years, while donors may qualify for existing charitable tax advantages.

Think about that arrangement. A billionaire gets to choose which company stock to give away, while the child receiving it may have no choice but to hold on to it, even if its value plummets. The donor potentially enjoys a tax benefit and receives credit for being generous. The kid gets a crash course in market volatility.

I’m sure some donors have perfectly honorable intentions. I’m equally sure they have accountants who understand the arrangement considerably better than the families receiving the shares. And while there’s no evidence that billionaires are going to systematically dump worthless stock into children’s accounts, I’d still like to know why the donor gets more say over the investment than the family receiving it.

The U.S. Treasury even suggests that corporate donors might want to build goodwill and brand loyalty among the children and families receiving their stock. How touching. Apparently, we’re supposed to believe that billionaires are distributing company shares to cultivate a generation of grateful little customers. Yeah, no.

If this is all about helping children, why does the program need to accommodate the interests of wealthy donors quite so carefully?

The Fine Print on Free Money

And what happens when Junior turns 18? Does he get a check to help with college, rent, or a reliable used car? Not quite. The account generally transitions to traditional IRA rules, complete with tax considerations and possible early-withdrawal penalties. Certain exceptions apply, but this isn’t unrestricted birthday money.

Financial experts have questioned whether Trump Accounts are the best place for families to invest additional money. Adam Michel of the Cato Institute has raised concerns about their tax treatment, while Morningstar has compared them with 529 education savings plans, which may offer better advantages depending on the family’s needs.

My advice? Claim the $1,000 if your child qualifies. It’s free money, and there’s no reason to refuse it just because the account has Trump’s name on it. But don’t feel obligated to contribute another dime, especially if money is tight. If you can afford to invest more, compare your options. Other accounts may offer better tax advantages, greater flexibility, and more control over your investments.

Take the government’s money. Just don’t assume that because Washington opened an account for your child, Washington suddenly cares about you. Use history as your guide.