Trump Accounts Launch With $1,000 Seed Money and $5,000 Annual Cap for Children
Updated
Updated · Forbes · Aug 19
Trump Accounts Launch With $1,000 Seed Money and $5,000 Annual Cap for Children
3 articles · Updated · Forbes · Aug 19
Summary
$1,000 in federal seed money will go to eligible children born from 2025 through 2028 under the new 530A IRA, with families able to contribute up to $5,000 a year until age 18.
At 18, each account automatically becomes a traditional IRA, locking in tax-deferred growth but subjecting most later withdrawals to ordinary income tax and a 10% early-withdrawal penalty before age 59½.
State Street's SPDR S&P 500 ETF is currently the only investment option, and employers can contribute up to $2,500 annually without taxing the employee, reducing how much family members may add.
A hypothetical child receiving $5,000 each year for 18 years at a 7% return could have more than $180,000 by age 18 and over $4 million pre-tax by age 65.
The accounts may complement rather than replace 529 plans, 401(k) saving and other child-investment options, especially because after-tax contributions can create basis-tracking and double-tax risks without later Roth-planning strategies.