Trump Accounts have the potential to build long-term financial security for millions of US children; however, some experts say they may not do much to reduce the wealth gap in the long run.
The tax-deferred investment accounts, which will be launched on July 4, include a one-time deposit of $1,000 from the US Treasury Department for children born between 2025 and 2028. Additional funds may be available for eligible families.
The money in the Trump Accounts will be invested in US stock funds, with the aim of kicking off wealth building opportunities from a very young age.
“All the money that goes into these accounts will be invested in the best 500 companies in America. They will be direct shareholders,” Altimeter Capital CEO Brad Gerstner, who helped lead the Trump administration’s new savings plan, in a May 28 interview on CNBC’s “Halftime Report.”
“We’re going to take all the people who feel left out and left behind,” Gerstner said.
When it comes to wealth building opportunities, especially investing in the stock market, many families miss out. The top 10% of Americans own more than 87% of corporate stocks and mutual fund stocks, data from the Federal Reserve shows.
So far, families have enrolled nearly 6 million children in Trump Accounts, the Treasury Department said in late May. Theoretically, that’s about 40% of all eligible children, according to Madeline Brown, senior policy fellow at the Urban Institute, a Washington-based think tank.
“Therefore, the question leading up to July, when the money will actually be deposited, is whether low-income families, poor families and those who do not have the means to invest money on behalf of their children are there in the registered group or a large group that has not yet registered,” he said.
The grant money is a great incentive
For some, seeking an initial grant is a drag, but other funds may be available, depending on certain conditions.
Children 10 years of age or younger and born before Jan. 1, 2025 — who wouldn’t qualify for a $1,000 donation — could get $250 in their accounts if they live in a ZIP code where the median income is $150,000 or less, thanks to a $6.25 billion pledge from tech CEO Michael Dell and his wife, Susan. That money is targeted directly at low-income families, they said, even though only about 3% of ZIP codes have a median income above $150,000, according to a CNBC analysis of US Census Bureau data.
A growing number of companies have also pledged to match $1,000 account deposits in the Treasury for workers’ children, and philanthropists in many states have pledged additional gifts for certain deserving families.
The tax freeze leaves some families out
However, because signing up for a Trump Account requires two steps — first by filing IRS Form 4547 with a 2025 tax return or through TrumpAccounts.gov, followed by an activation process — participation rates, especially among low-income families, may be low, according to a research report by the Urban Institute.
“The decision to link registration primarily to tax filing leaves out the children who will need it most: A large portion of low-income families owe no federal income tax, and many of them do not pay at all,” the report said.
Opt-in ‘creates conflict’
Experts say automatic enrollment, rather than requiring families to opt in, is the only way to ensure widespread participation in the Trump account across all income levels.
“In any of these programs, you’re looking to have a frictionless experience, and anything that creates friction will reduce the participation in the program,” said Brown.
“If welfare program administrators in general, and universal savings account administrators in particular, have learned anything in recent decades, it’s the importance of automatic enrollment,” Nina Olson, executive director and founder of the Taxpayers’ Rights Center, wrote in a January letter to the Treasury Department. “A system that requires manual entry, no matter how uncontroversial, will have a hard time gaining mass adoption.”
If the Treasury automatically established accounts for all eligible participants, it could go a long way toward determining how many children — especially from low-income families — signed up and benefited from the grant, according to a previous study by the Aspen Institute, a nonprofit forum.
The investment gap is likely to persist
Even among those who have already opened a Trump Account in a child’s name, family contributions would also vary widely by income, which could compound inequality over time and concentrate benefits among higher-income families, some experts say.
“A wealthy family can build a nest egg of $150,000 by the time their child turns 30. Meanwhile, a child from a low-income family will likely be left with $2,500,” Connecticut state treasurer Erick Russell said in a 2025 statement.
Projections by TrumpAccounts.gov show that the accounts could grow to $15,000 by the time the beneficiary turns 20, assuming no other contributions beyond the Treasury Department’s seed money. That compares to $742,000 if parents also contributed the maximum $5,000 each year. These estimates are based on US stock markets up 10%.
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