Overview

• The One Big Beautiful Bill Act took effect in early July, establishing tax-advantaged investment accounts seeded with $1,000 for U.S. children born between January 1, 2025, and December 31, 2028.
• Parents can contribute up to $5,000 per year post-tax and employers may add $2,500 annually tax-free, with all deposits required to invest in a diversified U.S. stock index fund.
• Account funds are locked until beneficiaries turn 18, then treated like traditional IRAs with tax-deferred growth, taxable withdrawals and a 10% penalty on distributions before age 59½ subject to limited exceptions.
• Critics argue that Trump accounts offer fewer tax advantages and less flexibility than established vehicles such as 529 education plans, Roth IRAs and custodial brokerage accounts.
• Key implementation details—automatic enrollment mechanisms, administrative oversight and the timetable for the accounts’ early-2026 launch—remain unresolved.