If you or someone you know has a baby or a child under 18, you’re likely wondering if they should get a “Trump Account.”

The U.S. government started giving babies born during President Donald Trump’s second term a US$1,000 gift on July 4, 2026. This money goes into the accounts, which are named after the president. To get the free money, the babies’ parents or guardians just have to submit the required paperwork.

I am a business school professor who studies wealth, savings and spending. Additionally, I am expecting another grandchild soon. While other members of our family are picking out decorations for the baby’s room, my task is deciphering Trump Accounts.

While these accounts clearly could help boost savings, they come with many restrictions that limit their usefulness for important expenses young Americans incur, such as paying for college and buying their first home.

IRAs for jobless babies

Trump Accounts are a traditional individual retirement account, or IRA, for children. Currently, all money deposited in these savings vehicles will be invested in State Street Bank’s SPDR Portfolio – which mirrors the S&P 500 stock index.

They will function somewhat like traditional IRAs for grownups, for which contributions can be deducted from your taxable income in the year they’re made. However, withdrawals before or after retirement are taxed.

These new accounts come with three small twists:

First, the government is kicking in $1,000 for babies born in calendar years 2025 through 2028. Congressional funding for this gift expires Sept. 30, 2034, so procrastinators have six years beyond 2028 to create an account for their kids.

Second, some states, big companies and foundations are pledging extra money to the accounts. Additional contributions from, say, a child’s grandfather, are limited to $5,000 a year; the employer of a child’s parent and........

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