60 Million Kids Just Got a Trump Account. Here's What Grandparents Should Know.

Your grandchildren may already have an investment account they don't know about.

On Oct. 1, the Treasury Department finished automatically enrolling more than 60 million children in Trump Accounts, the new tax-advantaged accounts for kids created by last year's tax law. Every eligible child under 18 with a Social Security number now has one waiting.

Until now, families had to sign up on their own, and few did: only about 5% of eligible low- and middle-income families had opened an account. Treasury Secretary Scott Bessent said the change means "over 60 million more eligible children now have an account ready to be claimed."

The catch: someone has to claim it

An account nobody has claimed can't receive money. A parent or guardian has to claim it in the official Trump Accounts app (TrumpAccounts.gov has the details) by verifying their identity and their relationship to the child. Only then can the government's money, or yours, go in.

The free money

• $1,000 from the government for U.S. citizens born from 2025 through 2028, deposited once the account is claimed.
• $250 more from Michael and Susan Dell's $6.25 billion pledge, for the first 25 million children age 10 and under in ZIP codes where the median household income is below $150,000.

Neither counts toward the yearly contribution limit.

The rules, in plain English

• How much: up to $5,000 a year per child, combined from everyone: parents, grandparents, aunts, uncles and friends. It's not $5,000 per person. A parent's employer can also chip in up to $2,500 a year, inside that same cap.
• What it buys: only low-cost funds that track the broad U.S. stock market, like an S&P 500 index fund, with fees capped at 0.10% a year.
• Taxes: contributions aren't tax-deductible, but the growth isn't taxed along the way. When the money comes out, what you put in comes back tax-free; the earnings are taxed as ordinary income.
• When the child can touch it: not before 18. After that, it works like a traditional IRA, so withdrawals before 59½ generally face a 10% penalty, with exceptions such as college costs or a first home.

What it could grow to

A $1,000 seed growing 7% a year would be worth about $3,400 by age 18. Add the full $5,000 every year and the account could top $170,000 by then, before taxes. Those are illustrations, not promises: the account is all stocks, so it will rise and fall with the market.

Trump Account or 529?

For college, a 529 plan is usually the better tool, because withdrawals for school are completely tax-free. A Trump Account's earnings are taxed when they come out, even when the money pays for college. Its strength is time: decades of stock market growth toward retirement, plus the government's $1,000 head start. Many families will use both.

For grandparents: two things to know

• It's a gift. Your contribution counts toward the $19,000-per-grandchild annual gift tax exclusion for 2026 ($38,000 for a married couple). On its own, it doesn't require filing a gift tax return.
• Watch the 529 timing. If you "superfund" a 529 by putting in five years of gifts at once, do it in a different calendar year from a Trump Account gift. Doing both in the same year can pull the Trump Account gift onto a gift tax return.

The first step is simple: ask whether your grandchild's account has been claimed.