New Trump Accounts: Hype or Help?

January 11, 2026

Planning & Saving

Excitement around the new “Trump Accounts” for children has spread through the frum world. That’s not surprising. The Orthodox Jewish community tends to have many kids, be very pro-Trump, and prioritize personal responsibility and ownership. So the creation of an investment account branded by the super-popular president, seeded with a $1,000 “baby bonus,” makes for great buzz.

The White House’s Council of Economic Advisers (CEA) says that, with full maximization of Trump Accounts and average U.S. stock-market returns, kids can accumulate $303,800 by age 18 and $1,091,900 by age 28. That certainly sounds like a huge game-changer. Right?

But while the “free” money the Trump administration arranged for babies is real, the hype surrounding Trump Accounts is way overdone. Let’s walk through what we actually know so parents can take what’s due to them—and then get back to real life.

IRAs for Kids

There are two separate pieces to the new Trump Accounts. The first is the headline-grabbing “baby bonus.” The second is a new, tax-preferred investment account created specifically for minors. At its core, a Trump Account is best understood as an IRA for kids.

Typically, funding an IRA requires earned income, which makes them impractical for babies and young children who, for the most part, don’t have jobs. Trump Accounts rely on new legislation to bypass that restriction, allowing money to be invested in a child’s name years before they’re working. In most other respects, these new accounts follow existing IRA rules. Keeping this distinction in mind makes the rest of the discussion much clearer.

How Trump Accounts Are Opened, Funded, and Invested

This program isn’t live yet, but it is expected to launch sometime in 2026. Based on IRS guidance released on December 2, 2025, here’s how the mechanics are expected to work. A parent or guardian sets up an initial account by completing a form. Once opened, the account belongs to the child, with an adult acting as the responsible party. Contributions will supposedly be allowed after July 4, 2026.

Click here for full IRS guidance details

Click here for FAQs

Click here to view CEA estimates

During childhood, total combined contributions per kid from parents, relatives, charities, etc. are capped at $5,000 annually, with inflation-adjusted increases in future years. Importantly, the money in a Trump Account is locked up. With minimal exceptions, funds cannot be accessed until the child turns 18 (at which point the account begins operating like a traditional IRA). This lockup is a double-edged sword. While it forces long-term saving and compounding, unlike other savings vehicles, there is no option to withdraw Trump Account money earlier, even for emergencies.

(An employer may contribute, up to $2,500 per year, to a Trump Account of the employee or the employee’s dependent (which counts against the $5,000 overall account annual limit), and this contribution will not count toward the employee’s taxable income. The rules governing such an employee benefit would follow the discrimination testing rules of similar FSA perks.)

Investment choices are also tightly restricted. Until adulthood, Trump Account balances will be invested only in U.S. stock index funds—essentially broad, S&P-500-style exposure to American companies. No cash or bonds. No individual stocks, sector funds, leverage, or actively managed investment strategies are allowed. Fees are somehow to be capped at extremely low levels, reinforcing the program’s core intent: passive participation in the long-term growth of corporate America.

(I say “somehow” because the institutions responsible for these new tiny, strictly managed accounts will probably lose money doing so at the levels now being proposed by the government. I imagine the US Treasury will be subsidizing the program.)

The “Baby Bonus”

Now that we understand the structure of the Trump Account itself—its strict rules and limited flexibility—we can return to the “baby bonus.” Under a limited pilot program, the federal government will deposit $1,000 into a Trump Account for eligible children born between January 1, 2025, and December 31, 2028, once the required elections are made by parents. This is a one-time contribution, not an annual benefit, and the program is explicitly temporary now.

That $1,000 contribution is not taxable, does not count toward the $5,000 annual contribution limit, and does not reduce any other tax benefits. It is deposited directly into the child’s Trump Account and invested in the aforementioned index fund. In other words, the money is real, clean, and additive. But it is also fixed, limited, and not an ongoing entitlement. Is that a big deal? Headline news? I don’t think so.

The Math Behind the Hype

A thousand dollars invested for the long run is a nice little gift, but it won’t do much for most recipients. The eye-popping CEA figures cited by the White House above assume that parents somehow fund the full $5,000 allowed every single year. For every child. Shkoyach.

If we isolate the impact of the one-time $1,000 baby bonus, the CEA estimates look very different. Invested for 10 years, it grows to about $5,800. Over 28 years, it reaches roughly $18,110, before taxes. A big nothingburger, as Don Jr. might say.

Better Options Already Exist

The new Trump Account is also far less practical for long-term saving for kids than existing options. UTMA and 529 accounts allow far greater contributions, additional flexibility, broader investment options, and more favorable tax treatment. The White House pitches Trump Accounts as vehicles that young adults can eventually tap into. But after the childhood lockup period, all Trump Accounts functionally become traditional IRAs. Since IRA withdrawals are fully taxable—and are usually subject to an additional 10% early-withdrawal penalty—they are inferior vehicles for giving young people an “early jump on life.”

The Practical Bottom Line

Tachlis: Anyone eligible for free federal money should obviously take it. But I doubt accountants or financial planners will encourage parents to fund even a nickel above the $1,000 gift. While the restrictiveness of Trump Accounts may encourage long-term thinking, the downsides mean that almost no one will use them beyond the free money. The hope will therefore probably not live up to the hype.

A Final Wrinkle: Billions in Dell Money

One final tidbit is worth noting. Michael and Susan Dell, of Dell Computer fame, have committed $6.25 billion to seed Trump Accounts with $250 each for roughly 25 million children, targeting those living in ZIP codes with a median family income of $150,000 or less.

That means many frum communities—Lakewood included—will likely be eligible for an additional $250, deposited into local kids’ Trump accounts.

Again. This is free money. Yay. Take it if you end up being eligible.

The additional funds still don’t change the financial math in any meaningful way. But it does suggest that the program may be aiming more for inspiration than impact.

As an inspiration for long-term investing, Trump Accounts may have some value—even if, for most families, the dollars themselves remain symbolic rather than transformative. I’m skeptical, especially given the overt political branding built into the program’s very name, but maybe there’s more here than I’m seeing. I’d genuinely love to be wrong.