Invest America Accounts: Understanding the New Child Savings Accounts

A new type of savings account for children—often referred to as “Trump Accounts”—was created under the One Big Beautiful Bill Act of 2025. Officially known as Invest America Accounts, these accounts are designed to help children begin building long-term savings from an early age. While the concept is new, the goal is familiar: encourage investing and financial security for the next generation.

These accounts function somewhat like an IRA for minors. Contributions grow tax-deferred, meaning the investment earnings are not taxed each year as they grow. Taxes are applied later, when funds are withdrawn. Every U.S. citizen born between January 1, 2025, and December 31, 2028, will automatically receive a $1,000 deposit from the federal government to help jumpstart the account. In addition, philanthropists Michael and Susan Dell have pledged $6.25 billion to provide $250 deposits to an estimated 25 million children under age 11 who were born before 2025.

How Invest America Accounts Work

Funds in an Invest America Account must be invested in low-cost, diversified U.S. stock index funds. The program is structured to promote long-term growth rather than short-term spending. Parents, relatives, and even employers may contribute to a child’s account, with total contributions capped at $5,000 per year until the child turns 18.

State governments and charitable organizations may also contribute, and those contributions are not subject to an annual cap. However, withdrawals are not permitted until the child reaches age 18, reinforcing the long-term savings focus of the program.

Opening an Account and Contribution Timing

Parents will be able to open an Invest America Account by filing IRS Form 4547 with their tax return. Accounts are expected to become available in early 2026, with contributions beginning on July 4, 2026. Later in 2026, families will also have the option to open and manage accounts online through trumpaccounts.gov.

Because the accounts are tied to the tax system, opening one may naturally fit into your annual tax filing process. Many families may choose to coordinate account setup and contributions at the same time they file their return.

Tax Treatment and Control of Funds

While contributions grow tax-deferred, it’s important to understand how withdrawals are taxed. When funds are eventually withdrawn, earnings are taxed as ordinary income, not at preferential capital gains rates. At age 18, the child gains full control of the account, which may be a concern for families worried about financial maturity at that age.

At that point, the Invest America Account automatically transitions into a Traditional IRA, allowing the funds to continue growing within a familiar retirement account structure.

Is This the Best Option for Every Family?

Invest America Accounts offer a new savings opportunity, but they are not the only option. Other vehicles—such as 529 education plans or custodial investment accounts—may provide more flexibility or tax advantages for certain families, particularly when saving for education or maintaining parental control beyond age 18.

As with any financial decision, the right choice depends on your goals, your child’s future needs, and your overall financial situation.

Final Thoughts

Invest America Accounts represent a significant shift in how the federal government encourages saving and investing for children. For some families, the combination of government funding and long-term growth potential may make these accounts appealing. For others, they may serve as just one piece of a broader savings strategy.

If you have questions about how these accounts work or would like help opening one when you file your taxes, Two Teachers’ Tax Service is here to help. You can reach us at 269-449-8277 or by email at twoteacherstax@gmail.com to learn more about whether an Invest America Account makes sense for your family.

Two Teachers’ Tax Service

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