Created under President Donald Trump’s tax law and launched on July 4, the accounts provide eligible newborns with an initial government contribution and allow families to build additional savings over time. Advisors interviewed by Fortune say the accounts can benefit from decades of compound growth, though they also point to tax rules, investment uncertainty and the transfer of account ownership at age 18 as factors parents should carefully consider.
Children born between 2025 and 2028 qualify for a one-time $1,000 deposit from the U.S. Treasury. During the account’s growth period, which lasts until the year before the child turns 18, parents, relatives and other contributors may collectively deposit up to $5,000 each year in after-tax dollars. The annual contribution limit will be indexed for inflation after 2027.
Official Projections Highlight the Impact of Long Investment Horizons
The Trump Accounts app illustrates how contributions could grow over several decades. A yearly contribution of $250 is projected to reach approximately $19,000 by age 18 and about $878,000 by age 55. Contributing the annual maximum of $5,000 raises those projections to roughly $271,000 at age 18 and approximately $13 million by age 55.
According to Fortune, those figures are based on the historical annual return of the S&P 500, which has exceeded 10% over the long term. Morningstar expects lower U.S. stock market returns over the next decade, estimating an average annual return of about 6.3%.
Several advisors interviewed based their own calculations on a 7% annual return instead. Pam Krueger, founder of Wealthramp and a registered investment advisor, calculated that a family making the maximum annual contributions from birth through age 18, together with the government’s $1,000 deposit, would contribute about $91,000 in total. Using a 7% return, she estimated the account could be worth roughly $185,000 by age 18 and more than $1 million by age 45 if no withdrawals were made.
“But that child could have much more by the time he/she is in their mid 40’s,” Krueger told Fortune. “Time in the market is doing the heavy lifting. That’s the power of compounding growth.”
Advisors Say Time, Not Contributions, Drives Most of the Account’s Value
While contribution limits receive much of the attention, the financial planners interviewed agreed that the passage of time plays the largest role in building wealth.
Mitch Hamer, founder and lead advisor at Intersecting Wealth, modeled the account using his own five-year-old son’s situation. Assuming a 7% annual return, he estimated that maximum annual contributions could produce an account worth about $1 million by age 45 and approximately $3 million by age 60. Using an 8% return, those figures increase to around $1.4 million and $4.5 million, respectively. He noted that those projected balances would be generated from roughly $200,000 in total contributions by age 45.
Matthew Chancey, a certified financial planner and founder of Tax Alpha Companies, reached a similar conclusion. He estimated that a fully funded account earning a 7% annual return could grow to between $1.5 million and $2 million by age 55, while only about $91,000 would have been contributed directly by the family.
“The other $1.5 million or so came from time,” Chancey told Fortune. “That’s not a rounding difference, it’s the whole story.”
Krueger also said that, using a 7% return assumption, more than 90% of the account’s eventual value would come from compounded investment growth rather than deposits.
Taxes, Ownership and Other Savings Options Remain Part of the Decision
The advisors emphasized that future investment performance cannot be predicted with certainty. Krueger noted that even a one- or two-percentage-point difference in long-term returns could change the final account balance by hundreds of thousands of dollars.
They also highlighted the account’s tax treatment. Trump Accounts are tax-deferred rather than tax-free. Once the beneficiary turns 18, the account converts into a traditional IRA. Withdrawals are taxed as ordinary income, and distributions before age 59½ may trigger a 10% penalty unless an exception applies, including qualified education expenses or the purchase of a first home.
Another issue raised by every advisor interviewed was the transfer of control when the child reaches adulthood. At age 18, ownership passes entirely to the account holder. Chancey said parents no longer have legal authority over the account at that point. Hamer argued that financial education should accompany long-term saving, while Adam Vega, managing partner at Avance Private Wealth Management, described the transfer of control as the account’s biggest limitation because many people are not financially responsible at 18.
The advisors also discussed where Trump Accounts fit within a broader savings strategy. They recommended that workers first capture the full value of any employer 401(k) match. Krueger said families expecting to pay for college would generally prioritize a 529 plan because of its education-related tax advantages, then consider funding a Trump Account. She added that one advantage of the Trump Account is that contributions do not require the child to have earned income.
Fortune also reported that several employers, including Uber, Intel, IBM and Nvidia, have committed to contributing to employees’ Trump Accounts as a workplace benefit. Many of those programs provide up to $2,500 per year, with employer contributions counting toward the annual $5,000 contribution limit.
The advisors also identified situations where other account types may be more suitable. They said Trump Accounts may offer greater flexibility than a 529 plan for families uncertain whether a child will attend college. Once a teenager begins earning income, they noted that a custodial Roth IRA generally provides more favorable tax treatment because qualified withdrawals are tax-free. Vega also said he has modeled strategies in which a Trump Account is converted into a Roth IRA during early adulthood, when the account holder’s income and tax rate are relatively low.
