Trump Accounts Give Newborns $1,000. Financial Advisors Aren’t Impressed.
ARTICLE SUMMARY
Federal seed contribution: Parents of children born between 2025 and 2028 receive a one-time government deposit of $1,000 into tax-deferred “Trump Accounts,” with annual private contributions capped at $5,000. Funds are invested in a U.S. stock index portfolio and are accessible under certain conditions at specific ages.
Intended benefits and outreach: Treasury Secretary Scott Bessent described the program as a tool to promote long-term savings, financial literacy, and early engagement with the economy. However, he also raised concerns that, over time, such accounts could act as a “backdoor for privatizing Social Security.”
Criticism from experts: Financial professionals have questioned the program’s usefulness. They noted that existing tools like 529 plans—and alternatives like custodial Roth IRAs or insurance strategies—often offer more favorable tax benefits, flexibility, and broader use.
Equity concerns: Policy analysts warn that because eligibility and contributions are universal—not income-based—the initiative may favor wealthier families capable of contributing more over time, potentially exacerbating economic inequality. It also doesn’t address immediate needs of lower-income families.
