Trump Accounts
Dear Dr. Per Cap:
I’m interested in the new Trump Accounts to help my children save money for college. How do they work?
Signed,
Thrifty Dad
Dear Thrifty Dad,
Trump Accounts were the hot topic of a White House press conference on January 28th to encourage families to save for their children’s future. The program is currently being designed and slated to launch July 5, 2026. These accounts are a component of the federal tax and spending bill that became law last summer.
Any child under the age of 18 is eligible to enroll in the program for whom families can contribute up to $5,000 annually with post-tax earnings, similar to how an adult might contribute to a Roth IRA (individual retirement account).
In fact, Trump Accounts are custodial IRA’s for kids that allow for early penalty free withdrawals if the funds are used for higher education or a first-time home purchase. The money must be invested in a mutual fund that tracks the broader stock market so think of it like a head start on saving for retirement.
One feature of Trump Accounts that’s getting a lot of attention is for babies and young children born between January 1st, 2025 and December 31st, 2028. A special pilot program will provide $1,000 in seed money as an added incentive for those families to save.
To receive that money, families need to open a Trump Account by completing IRS Form 4547 when filing their tax returns beginning as early as this tax season. According to the TrumpAccounts.gov website, families can begin making contributions in July 2026.
Moreover, employers, charities, and even states can also contribute to Trump Accounts on behalf of employees and other families. For example, PC moguls and philanthropists Michael and Susan Dell have pledged to contribute an extra $250 for families in zip codes with median income levels below $150,000.
One drawback to Trump Accounts is that not all of the details appear to be ironed out yet. Treasury has not designated an administrator for the program. Moreover, there are some complexities to how Trump accounts will be handled with regard to fees on contributions and taxes. Issues such as who contributes to the accounts, the age of the account holder when making a withdrawal, and what the money is used for all factor into the mix.
There also isn’t any current information about any Trump Account outreach programs specifically targeted to Native families. Which raises an interesting point. Trump Accounts are not a new concept.
Matched savings accounts, also known as Individual Development Accounts, children’s custodial savings accounts, and 529 college savings programs have been around for years. Moreover, many of these asset-building programs have strong track records of creating financial security and opportunities in Indian Country. For example, The Oklahoma Native Assets Coalition offers a Children’s Savings Account Program for all families anywhere in the country.
Like any investment, I recommend doing a little homework before investing in a Trump Account or any other asset building program. They each have benefits and disadvantages depending on a family’s needs. Study up and see what makes the most sense for your child’s college education and financial future.
Funded by First Nations with support from the FINRA Investor Education Foundation, it's important to note that the content provided does not constitute professional or financial advice, and Dr. Per Cap is not a licensed investment advisor. Questions can be directed to Dr. Per Cap at [email protected].
"I sincerely hope my work inspires others as we continue to foster economic empowerment through education, innovation and self-reliance for both present and future generations.”
Shawn Spruce, Champion of Financial and Investor Education in Native Communities, Host of Native America Calling
