A landmark $6.25 billion philanthropic pledge from Michael and Susan Dell has brought significant attention to a new federal savings program for children. The initiative, known as "Trump Accounts," aims to provide a wealth-building foundation for American youth through government and private seed funding. Here is a detailed breakdown of how the program is designed to work.

What Are Trump Accounts?
Formally created by legislation passed in July, Trump Accounts are tax-advantaged savings and investment vehicles for minors, functioning similarly to an Individual Retirement Account (IRA). They are designed to receive contributions from multiple sources, including family, employers, and charitable organizations, with investments growing tax-deferred.

Opening an Account and Claiming Seed Money
An authorized adult (parent, guardian, grandparent, or adult sibling) can open an account for a U.S. citizen child under 18 by filing IRS Form 4547, either separately or with their 2025 tax return. Online account opening will begin in mid-2026.

• Government Seed Money: Children born between 2025 and 2028 are eligible for a one-time $1,000 deposit from the Treasury, with no income restrictions.

• Dell Foundation Grant: Children aged 10 or under born before 2025 may qualify for a $250 grant if they live in a ZIP code with a median income of $150,000 or less—a threshold covering about 97% of U.S. ZIP codes.

Funding, Investments, and Growth Potential

• Contributions: Starting July 4, 2026, families can contribute up to $5,000 annually in after-tax dollars. Employers can also contribute up to $2,500 per worker per year, which does not count toward the family limit or as taxable income for the employee.

• Investments: Funds must be invested in low-cost, broad U.S. equity index funds (ETFs or mutual funds) with annual fees capped at 0.1% and no use of leverage.

• Growth: While the initial $1,000 grant alone is projected to grow to roughly $4,700 by age 18 (assuming a 9% annual return), consistent additional contributions can significantly increase the balance. Adding $50 per month, for example, could grow the account to over $29,000 by adulthood.

Withdrawals and Alternatives
Funds are generally inaccessible until the child turns 18, after which standard IRA rules apply: withdrawals before age 59½ are subject to income tax and a 10% penalty, with exceptions for higher education or a first-time home purchase. The program joins a landscape of existing tax-advantaged accounts like 529 plans and Roth IRAs, but is distinguished by its universal seed funding and focus on general wealth building rather than a specific goal like education or retirement.