This was surprising to hear but there’s a good reason for it!
President Donald Trump is encouraging parents and grandparents to rethink how they give gifts to children — and he’s suggesting they skip toys altogether.
Instead of another short-lived birthday or holiday present, the Trump administration says families should consider investing directly in a child’s future through newly created “Trump Accounts.”
Treasury Secretary Scott Bessent explained the idea during an appearance on Fox & Friends, urging relatives to make financial contributions rather than buying toys that quickly lose value.
“Instead of a toy for a birthday or holiday, family members can put money into these accounts,” Bessent said, calling it a modern form of family philanthropy focused on long-term success.
The accounts — formally known as Section 530A accounts — were created under the One Big Beautiful Bill Act, signed into law by President Trump last July. According to the Internal Revenue Service, parents can open an account for any child who is under 18 by the end of the year the account is established.
To jump-start savings, the Treasury Department will automatically deposit $1,000 into accounts for children born between January 1, 2025, and December 31, 2028.
Beginning July 5, parents, grandparents, relatives, and even family friends may contribute up to $5,000 per year per child. That annual limit will rise with inflation starting in 2028.
Employers may also contribute up to $2,500 annually, while charitable organizations and state governments can add funds without counting against the yearly cap.
Money placed in Trump Accounts is required to go into approved mutual funds or exchange-traded funds that track the S&P 500 or other indexes focused mainly on U.S.-based companies, ensuring the investments support American businesses over time.
Parents open the accounts using IRS Form 4547, and children gain access to the funds on January 1 of the year they turn 18.
At a recent summit, Bessent said the goal is to turn modest contributions into life-changing opportunity — money that could help pay for college, buy a first home, or even begin retirement savings at an early age.
“These Trump Accounts are a generational down payment on the American Dream,” he said.
According to projections from the White House Council of Economic Advisers, even accounts that receive only the initial government deposit could grow to more than $5,800 by age 18 under average market conditions. With maximum annual contributions, balances could exceed $300,000, offering young Americans a powerful financial head start.