WASHINGTON, DC – JANUARY 28: U.S. President Donald Trump arrives on stage before delivering remarks during the Treasury Department’s Trump Accounts Summit at Andrew W. Mellon Auditorium on January 28, 2026 in Washington, DC. “Trump Accounts” are a portion of recently passed tax and spending legislation where the federal government will deposit $1,000 into investment accounts for every child born between 2025 and 2028 once parents sign their children up while filing their income taxes. (Photo by Win McNamee/Getty Images)
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The budget reconciliation law that was signed into law last year, the One Big Beautiful Bill Act, included a number of provisions. One of them created a new type of savings mechanism called 530A accounts, but you may have heard of them referred to as Trump Accounts. That was followed by a pledge of $6.25 billion by Michael and Susan Dell in December to encourage families to take advantage of this opportunity.
While this could be an opportunity for individuals to start putting money away at the very earliest stages, many Americans still have questions about the way these accounts will operate. Here is a quick overview of how Trump Accounts work and what they could mean for small business owners and their workers.
The program is open to two groups. The first group is newborn U.S. citizens who are born between July 4, 2025, and December 31, 2028, who are part of a pilot program. They are also eligible to receive a $1,000 contribution from the U.S. Department of Treasury. In addition, children born outside of that window who are under 18 can also be enrolled in the program on a voluntary basis without the $1,000 contribution. Parents can enroll their children by filing a Form 4547 with the Internal Revenue Service or starting the process online at TrumpAccounts.gov.
Individuals can start contributing to the accounts on July 4, 2026, with anyone in the child’s life, including parents, relatives, and friends, being able to contribute post-tax dollars. Employers are also able to support their workers with kids who are eligible with contributions of up to $2,500 pre-tax. The maximum annual amount that can be contributed is $5,000. This differs from a 529 account, which is tax-free and has higher contribution limits and must be used for education. (Mention a few employees who have).
Nonprofits, state governments, and other organizations can also make unlimited, equal pre-tax contributions if they go to kids who live in a zip code where the median income is less than $150,000 a year. This is where the Dell contribution will go. Their $6.25 billion pledge will give $250 each to 25 million children up to the age of 10 who are not eligible for the pilot program to create their own accounts. These contributions will not count towards the $5,000 limit.
The accounts themselves will be managed by the Treasury Department through a financial agent with the money being invested in a stock mutual fund or another exchange-traded fund that tracks a qualified American stock index. Individuals cannot withdraw from their accounts before January 1 of the year they turn 18 and when they do, the money they receive that was initially contributed pre-tax is treated as ordinary taxable income. An additional 10% income tax will apply if the withdrawal is not used for a first home, post-secondary education, the birth or adoption of a child, and other exceptions. As with an IRA, that 10% penalty will no longer apply for individuals after they turn 59 and a half.
A report by the National Institute on Retirement Security found that the median amount of savings across all U.S. workers was only $955, and an analysis by the Pew Charitable Trusts reported that 56 million workers at businesses across the U.S. cannot save through a retirement plan with their jobs. While current small business owners and workers are not eligible to open these accounts, they have potential to help create a path of economic sustainability for the next generation of Main Streets and beyond.