Trump shares new details on 'Trump Accounts' savings program

WASHINGTON - President Donald Trump shared details Wednesday about the proposed "Trump accounts," an initiative that would provide newborns with a government-backed savings program.

Alongside Treasury Secretary Scott Bessent, Trump spoke on the program in Washington, which was tucked into his landmark One Big Beautiful Bill Act.

Trump also brought up Rapper Nicki Minaj on stage. 

What they're saying:

"For the first time ever, we're going to give every newborn American child a financial stake in the future," Trump said. 

"Over the next 15 years, we're going to put 3 to $4 trillion of wealth into the hands of young Americans who otherwise would have really started out with nothing." he later added.

What are ‘Trump accounts'?

Dig deeper:

The " Trump Accounts " is a program, where the U.S. Department of the Treasury will deposit $1,000 into investment accounts it sets up for American children born between Jan. 1, 2025 and Dec. 31, 2028. 

RELATED: Michael and Susan Dell pledge $6.25B for children’s investment accounts in Trump program

Under the new law, "Trump Accounts" are available to any American child under 18 with a Social Security number and their families can fund the accounts, which must be invested in an index fund that tracks the overall stock market. 

When the children turn 18, they can withdraw the funds to put toward their education, to buy a home or to start a business.

"Parents, employers, churches, states and loved ones will also be able to add up to $5,000 in additional money for those accounts," Trump said. "And with every modest contribution, Trump account should reach at least $50,000 in value by the time the child turns 18. It could be very substantially more than that. With slightly greater contributions, the typical account will grow to 100,000 200,000. It can even grow up to $300,000 per child."

What about older children?

Dig deeper:

Children born before 2025 won't qualify for the $1,000 incentive, but parents can still open accounts for them as long as they're under 18. In addition, parents can still invest up to $2,500 pretax for those kids.

And thanks to a historic donation by the Dell family, some children 10 and under may receive an additional $250 in seed money if their parents open an account. 

RELATED: With 'Trump Accounts,' your child could qualify for $1,000: What to know

That money is reserved for kids who live in ZIP codes with a median family income of $150,000 or less and who won’t get the $1,000 seed money from the Treasury.

How do I open a Trump Account for my kids?

What you can do:

The accounts won't be open for contributions until July 2026. But parents of eligible kids can sign up now by filling out Form 4547 from the Internal Revenue Service. As of Wednesday afternoon, that form was not yet available on the Trump Accounts website.

In May, parents who sign up will get information about how to finish opening the accounts. 

Beginning in July, the White House says it will have a website where parents can register for the accounts.

What's the idea behind the accounts?

What they're saying:

Backers of the accounts say they want to introduce more people to the stock market and give even children born into poverty a chance to benefit from it. 

They believe that giving every newborn $1,000 will help combat the rising popularity of socialism and offer more people the opportunity to build wealth. 

About 58% of U.S. households held stocks or bonds in 2022, according to the U.S. Securities and Exchange Commission, though the wealthiest 1% owned almost half the value of stocks in that same year.

Before Trump created the accounts, California, Connecticut and the District of Columbia were piloting "baby bonds" programs that are similar to Trump Accounts in some ways. Several other states, including Maryland, are weighing programs.

But those programs are targeted for youth growing up in poverty or foster care, plus children who lost a parent to COVID-19. Wealthier children don't benefit. They're also managed by the state, not private investment firms.

The other side:

Critics point out the accounts do little to help children in their early years, when they're most vulnerable and most likely to be in poverty. They also say the accounts do little to offset the cuts the Trump administration and congressional Republicans have made to other programs that benefit young people and their families, including food assistance and Medicaid. 

And even with the contribution from the government, critics say the Trump Accounts will widen the wealth gap. Affluent families that can afford to make the maximum pretax contribution to the accounts will realize the greatest benefits. Poor families who can't afford to set aside money for the accounts will benefit the least. Assuming a 7% return, the $1,000 in seed money would grow to roughly $3,570 over 18 years.