Tech CEO Michael Dell and his wife Susan on Tuesday pledged $6.25 billion to the so-called Trump Account, a type of tax-advantaged savings account for children.
This initiative will expand access to seed money for children who are not old enough to qualify for a planned $1,000 grant from the Treasury Department.
With the additional funding, about 25 million American children under the age of 10 born before Jan. 1, 2025, will each receive a $250 grant in Trump’s account, according to Invest America, a nonprofit advocacy group affiliated with the Dells.
“It’s designed to help families feel supported from the start and encourage them to continue saving as their children grow,” said Michael Dell, founder and CEO. Dell Technologieshe told CNBC.
How Trump Account Works
Under President Donald Trump’s “Big and Beautiful Act,” which Congress passed in July, anyone would be able to open a Trump account on behalf of a child under 18. Each baby born between 2025 and 2028 will receive a one-time credit of $1,000 into their account. There are no income requirements and anyone is eligible to receive government seed money as long as their child is a U.S. citizen.
The grants will benefit millions of young Americans: By comparison, there will be about 3.6 million births in the U.S. in 2024, an increase of about 1% from 2023, according to preliminary data released in April by the Centers for Disease Control and Prevention’s National Center for Health Statistics.
Like 529 college savings plans, Trump accounts are intended to encourage early savings opportunities and can receive annual contributions from employers as well as contributions from state and local governments and nonprofit organizations.
Mr. Dell previously pledged to provide government seed money to the children of his employees “dollar for dollar” during the Investing in America roundtable with President Trump at the White House in June. Other CEOs at the event also pledged to contribute to the savings account plan on behalf of their employees.
Mr. Trump’s account balance will be invested in low-cost index funds such as mutual funds and exchange-traded funds. However, the asset management industry has expressed concerns about language in the bill that could limit ETF and mutual fund options in these accounts. They asked the Treasury Department to expand its interpretation.
“We’re creating a private prosperity account for every child,” Brad Gerstner, CEO of Altimeter Capital, which is spearheading the effort, said on “Squawk Box” Tuesday morning.
How to claim the grant
Trump’s account is still unavailable. But starting July 4, 2026, parents and others will be able to contribute up to $5,000 a year after taxes until the year before the beneficiary turns 18.
Ben Henry Moreland, a certified financial planner with advisor platform Kitces.com, said families must fill out Form 4547 to open a Trump account for their child. “In that case, the government would open and fund this account on its behalf,” he said.
Withdrawals are not allowed until the beneficiary turns 18 years of age. At that point, the assets are transferred to an individual retirement account. Beneficiaries can use the funds for educational expenses, job training, a down payment on their first home, or capital to start a small business. You can also choose to keep the invested funds for your retirement.
From a tax perspective, Trump’s account would function like an IRA. Profits grow tax-deferred, and distributions are partially taxed because Trump’s account is a mix of after-tax contributions, initial seed money and investment income.
But experts say the details of the tax treatment of distributions require further clarification from the Treasury Department and the IRS.
Many questions remain about Mr. Trump’s account, including who controls the assets and details of how the account was converted to an IRA.
Impact on low-income households
Experts say the one-time $250 deposit into Trump accounts won’t have a big impact on low-income households.
“We need to see more of these types of donations to generate meaningful amounts,” Henry Moreland said.
Additionally, much depends on public education, he says.
The federal government “needs to sell these (accounts) to people who wouldn’t necessarily donate themselves,” he said. “This is going to require some organized and coordinated effort.”
Additionally, whether the Treasury Department automatically opens accounts for all eligible participants could go a long way in determining how many children, especially from low-income families, enroll and benefit from the subsidies, according to a July analysis by the Aspen Institute, a nonprofit forum.
“We strongly recommend that the Treasury Department prioritize enabling automatic enrollment in the implementation of the Trump Account program, as success for young people from low- to moderate-income households is highly dependent on this specific choice,” the researchers wrote.
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