Key Points
- A proposed savings account for children, originally called the MAGA Account, was renamed the “Trump Account” during a last-minute revision to the House budget bill.
- The account would allow families to contribute up to $5,000 per year for future education, home purchases, or small business costs, but provides limited tax benefits.
- A $1,000 federal seed deposit is proposed for eligible children born between 2025 and 2028 as part of a pilot program.
In a late-stage revision (PDF file) to their proposed federal budget, House Republicans have renamed a child savings plan from the “MAGA Account” to the “Trump Account.” The change reflects ongoing efforts among Republican lawmakers to align legislative proposals with former President Donald Trump.
The savings program, originally named the “Money Account for Growth and Advancement,” is intended to encourage early saving for children under the age of 8. The renamed Trump Account would allow families to deposit up to $5,000 per year and invest only in broad U.S. stock index funds. A pilot program would add a $1,000 federal deposit for qualifying newborns.
Supporters of the program frame it as a patriotic tool to help families build wealth, but its limited tax benefits and narrow investment restrictions make it less generous than traditional 529 plans.
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How Trump Accounts Would Work
The proposed accounts would be managed by banks or investment firms, with ownership assigned to the child. Families could contribute annually, and the funds would remain locked until the child turns 18. Between ages 18 and 25, only half of the balance at age 18 would be accessible. Withdrawals would be allowed for college, vocational training, a first-time home purchase, or starting a business.
Unlike 529 plans, which allow for tax-free growth and withdrawals on qualified education expenses, the Trump Account earnings would be taxed at capital gains rates. Non-qualified withdrawals would face ordinary income tax and a 10% penalty. Any unused funds by age 31 would be considered distributed and taxed accordingly.
The proposed seed funding, a one-time $1,000 bonus for children born between 2025 and 2028, would not count against the $5,000 annual contribution limit. Eligibility criteria for this federal deposit have not been finalized.
Why House Republicans Are Making The Change
The name change itself, from a loosely acronymed MAGA label to a direct reference to the president, is likely to draw political attention.
Lawmakers have not indicated whether the renamed account structure has support in the Senate or from the President himself, though he's likely to be happy with the name.
House Republicans have recently introduced bills to put Trump on the $100 bill and rename Dulles International Airport after him. Those bills didn't go anywhere, and it will be interesting to see if this account goes anywhere.
Common Questions
What is a Trump account?
Trump Account is a potential new child savings and investment account that was renamed from the MAGA account.
Who qualifies for the $1,000 federal seed deposit for Trump account?
The details of who qualifies for the $1,000 federal seed deposit has not been announced yet.
What can be the funds in Trump account be used for?
Withdrawals would be allowed for college, vocational training, a first-time home purchase, or starting a business.
When will the person be able to withdraw from Trump account?
The funds inside the account would be locked up until the child is 18, they could then withdrawal half of the account between 18 and 25, and the remainder before 31.
Final Thoughts
The Trump Account structure shares features with both 529 plans and custodial accounts under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA).
Like 529s, the money is earmarked for specific future goals, but it lacks the tax benefits that 529s provide. Compared to UGMA/UTMA accounts, the Trump Account has more usage rules but better alignment with common milestones like education or homeownership.
However, other than the $1,000 baby bonus, the account itself is not that compelling of an alternative. And it will be seen if it makes the final budget.
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Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.