Trump Accounts have the potential to build long-term financial security for millions of American children. But some experts say it may not do much to reduce wealth inequality over time.
The tax-deferred investment account, which begins July 4, includes a one-time $1,000 deposit from the U.S. Treasury for children born between 2025 and 2028. Other funds may be available to qualifying families.
The funds in the Trump account will be invested in a U.S. stock fund with the goal of starting wealth-building opportunities at an early age.
Brad Gerstner, CEO of Altimeter Capital, which spearheaded the Trump administration’s new savings initiative, said in an interview on CNBC’s “Halftime Report” on May 28 that “all the money that goes into these accounts is invested in 500 of America’s best companies. They become direct shareholders.”
“We’re going to rescue all the people who feel marginalized and left behind,” Gerstner said.
Many families are missing out on wealth building opportunities, especially when it comes to investing in the stock market. The top 10% of Americans own more than 87% of corporate and mutual fund stocks, according to data from the Federal Reserve.
In late May, the Treasury Department announced that families had enrolled nearly 6 million children in Trump accounts. That’s about 40% of all eligible children, said Madeline Brown, senior policy associate at the Urban Institute, a Washington-based think tank.
“So the question heading into July when the money actually gets deposited is whether low-income households, low-wealth households, people who don’t have the means to invest for their children are part of the group that has registered or are they part of the larger group that has not registered,” she said.
Grants are a great incentive
For some, claiming the first grant is a lottery, but other funding may also be available depending on specific criteria.
Children age 10 and under and born before January 1, 2025 (not eligible for the $1,000 contribution) can receive $250 in their account if they live in a zip code with a median income of $150,000 or less. That’s courtesy of a $6.25 billion pledge from tech CEO Michael Dell and his wife Susan. The funding is targeted specifically at low-income households, but only about 3% of ZIP codes have a median income of more than $150,000, according to a CNBC analysis of U.S. Census Bureau data.
A growing number of companies are also pledging to match $1,000 in state funds in their accounts for the children of their employees, and philanthropists in several states are pledging additional donations to certain eligible families.
Tying tax returns excludes some families
But because signing up for a Trump Account requires two steps: first filing an IRS Form 4547 with your 2025 tax return or filing via TrumpAccounts.gov, followed by an activation process, overall participation rates may be low, especially among low-income households, the Urban Institute research report said.
“The decision to tie registration primarily to tax filings leaves behind the children who need it most. A significant proportion of low-income families owe no federal income taxes, and many do not file at all,” the report said.
Opt-in ‘creates friction’
Experts argue that automatic enrollment, rather than requiring families to opt-in, is the only way to ensure widespread participation in Trump accounts at all income levels.
“We want a frictionless experience in any of these programs. Anything that creates friction will reduce participation in the program,” Brown said.
“If there’s one thing social program administrators in general, and Universal Savings Account administrators in particular, have learned in recent decades, it’s the importance of automatic enrollment,” Nina Olson, executive director and founder of the Taxpayer Rights Center, wrote in a letter to the Treasury Department in January. “Programs that require manual opt-in, no matter how smooth, have a hard time achieving majority adoption.”
If the Treasury Department automatically established accounts for all eligible participants, it could go a long way toward understanding how many children, especially those from low-income families, are enrolled and benefiting from subsidies, according to a previous analysis by the Aspen Institute, a nonprofit forum.
The investment gap is likely to continue
Even among those who have already opened Trump accounts on behalf of their children, other experts say family contributions vary widely by income, which could widen the gap over time and concentrate benefits among higher-income families.
“Wealthy families can build a nest egg of $150,000 by the time their child turns 30, while children in low-income families are likely to be left with about $2,500,” Connecticut State Treasurer Eric Russell said in a statement in 2025.
TrumpAccounts.gov projects that the account could grow to $15,000 by the beneficiary’s late 20s, assuming no contributions exceed the Treasury seed money. This compares to $742,000 if the parents also contributed up to $5,000 each year. These estimates are based on US stock market returns of over 10%.
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