House Republicans’ “Big Beautfiul Bill” has more than 1,000 pages of provisions, with few touching on retirement accounts. But tucked inside the massive tax package is the creation of a different kind of investment savings account that promotes financial security for American children.

These savings vehicles, originally called Money Account for Growth and Advancement accounts, and renamed Trump accounts in a Wednesday amendment to the policy bill, are trust accounts for young children. Starting in 2026, funded by the Department of the Treasury, the federal government would contribute $1,000 to any child with an account, if they are a U.S. citizen born between January 1, 2025, and January 1, 2029.

To open an account, the beneficiary must be a U.S. citizen and at least one parent must provide their Social Security number, in part to show that the parent is considered eligible to work. For married couples, both parents must provide their Social Security numbers.

The funds in the account would be invested in low-fee, diversified U.S. equity portfolios with no leverage.

These accounts would be exempt from most federal taxes and designed to fund future education, homeownership and entrepreneurship.

Annual contributions would be capped at $5,000, adjusted for inflation, and beneficiaries could not withdraw funds until they turn 18 years old. Income earned in the account is taxed as capital gains if used for qualified expenses but would be penalized and taxed as ordinary income if used for other purposes.

However, contributions by tax-exempt entities, such as private foundations, would not be subject to the $5,000 annual limit, according to the bill crafted by the House Committee on Ways and Means. Additionally, the committee’s section-by-section breakdown of the bill lists private foundations as an example of tax-exempt entities that could contribute more than the $5,000 limit. A separate section of the same bill would create a tiered tax on private foundations based on their asset size.

Contributions to Trump accounts can only be made until the child turns 18.  

The accounts would be administered by a financial institution and overseen by the Department of the Treasury. Children born prior to January 1, 2024, and still younger than 8 would be eligible for accounts.

In a March paper analyzing the potential legislation, Robert Shapiro and Michael Piwowar of the Milken Institute stated that the $1,000 accounts would grow in value, on average, to $8,000 after 20 years, $69,000 after 40 years and $574,000 after 60 years, without any additional contributions, if invested in a broad-based U.S. equity index.

Despite acknowledging the legislation would help build wealth, Zach Buchwald, CEO of Russell Investments, said it did not go far enough, in a May 14 statement.

“The MAGA accounts proposal is an encouraging step—but it misses a critical piece,” Buchwald said in a statement. “If we want true financial security, we need long-term solutions that include retirement. Let’s give every young American a chance to build real wealth—not just a starter fund.”

The Joint Committee on Taxation estimates that the accounts, including the government contributions, would cost the federal government about $17.2 billion over the next decade.

Previous Proposals, Existing Programs

The Trump accounts may be presented as a new idea, but Congress has proposed several similar programs since at least 1998.

Senator Ted Cruz, R-Texas, introduced the latest proposal, called the Invest America Act, on May 12, one which closely mirrors the version the House Ways and Means Committee advanced into the larger tax bill.

One of the earliest versions of the bill was introduced in 1998 by a bipartisan group of senators as the Social Security KidSave Accounts Act, which would have given eligible newborns an initial $1,000 deposit and an additional $500 deposit for each of their first five birthdays. Other versions of the bill have been introduced and amended by Democrats and Republicans ever since.

In addition, at least 12 states have advanced similar legislation at the state level, according to the Milken Institute.

For example, in 2023, Connecticut launched the CT Baby Bonds program, which automatically deposits $3,200 into a trust on behalf of any child whose birth is covered by the state’s Medicaid program. Similar to Trump accounts, the funds can be used to buy a home, start a business or pay for education. One difference is the program also claims the funds can be used to save for retirement. About 15,000 to 16,000 Connecticut children are eligible for the program each year, which, unlike the Trump accounts, is more specifically geared toward newborns born into low-income households.

“The MAGA account proposal reflects a growing consensus: investing early in every child’s future is a smart and necessary step,” said Marisa Calderon, CEO of the national nonprofit Prosperity Now, in a statement. “We are encouraged to see lawmakers taking steps to reflect the principles of baby bonds.”

In a statement last week, the Investment Company Institute, said “The inclusion of the new ‘money accounts for growth and advancement’ would foster a culture of investing among young people. We are grateful to Chairman Smith and Senator Cruz for their leadership on these new accounts. The accounts will help put a generation of young Americans on track to a lifetime of financial security as they see the power of compounding first-hand. We recommend that Congress build on this provision and support allowing a range of investment strategies, to empower the next generation to better understand their investments and take ownership of their financial future.”