Washington Gets One Right: The Case for Trump Accounts - Put Politics Aside and Let the Money Compound

Every once in a while, the federal government gets something right. I realize that sentence alone may cause a few readers to check whether this website has been hacked, but it is true. The 401(k), traditional and Roth IRAs, 529 college-savings plans and Health Savings Accounts have all encouraged Americans to save, invest and plan ahead. None is perfect—Congress apparently believes every good idea must be accompanied by several hundred pages of instructions and at least one form that requires professional translation—but these programs have helped millions of families build wealth. Trump Accounts may eventually belong on that list. No matter which side of the political aisle you occupy, we should be willing to give credit where credit is due.

So, what exactly is a Trump Account? It is a tax-deferred investment account that can be opened for a child under age 18 who has a valid Social Security number. Children who are U.S. citizens and were born from January 1, 2025, through December 31, 2028, are also eligible for a one-time $1,000 contribution from the U.S. Treasury. Parents, grandparents, relatives, friends and employers can contribute to the account, subject to an aggregate annual limit of $5,000, which will begin receiving cost-of-living adjustments after 2027. The money must be invested in low-cost funds that track broad U.S. stock-market indexes, and it generally cannot be withdrawn before the child turns 18. At that point, the account begins operating much like a traditional IRA, including the usual tax treatment and potential exceptions for expenses such as higher education or a first home.

In plain English, it is a starter investment account with three powerful ingredients: ownership, time and compound growth. Parents can now make contributions, and eligible children began receiving the federal seed money, following the program’s official launch on July 4, 2026. Families can begin the process by submitting IRS Form 4547 and activating the account through the government’s Trump Accounts system.

One of the principal architects behind the idea is Brad Gerstner, the founder and CEO of Altimeter Capital, a technology-focused investment firm that invests in both public and private companies. Gerstner grew up in Indiana, attended Wabash College and Oxford, earned a law degree from Indiana University and later attended Harvard Business School. Before founding Altimeter in 2008, he worked as a securities lawyer, entrepreneur and venture investor.

Gerstner subsequently created the nonprofit Invest America Foundation around a straightforward idea: every American child should begin life with an ownership stake in the American economy. His contribution was not merely designing another savings account. It was recognizing that ownership itself could become a form of financial education. It is one thing to explain the stock market to a 12-year-old. It is another thing to show that 12-year-old an account with his or her name on it and explain that they own a small piece of American business.

The concept also has roots on the Democratic side of the aisle. Senator Cory Booker has promoted federally funded “Baby Bonds” since 2018, proposing that children receive investment accounts at birth to improve economic mobility. Trump Accounts are structured differently from Booker’s original proposal, but the underlying objective—giving children assets rather than simply promising them future benefits—is closely related.

Booker has not allowed the Trump name to stop him from supporting the idea. In a joint letter with Republican Senator Ted Cruz, Booker urged Fortune 1000 companies to contribute to the accounts, calling them a “once-in-a-generation expansion of economic opportunity.” The senators argued that giving children ownership could help restore confidence in American capitalism. That is real bipartisan cooperation—not the Washington version where everyone appears on television together and then votes against each other five minutes later.

The Government Deposit Is Only the Beginning

The $1,000 Treasury contribution has received most of the attention, but the larger vision is for families, employers, states and philanthropists to build on that initial deposit.

Michael and Susan Dell have made the largest commitment to date, pledging $6.25 billion to provide $250 contributions to as many as 25 million American children. The gift generally targets children age 10 and under living in ZIP codes where median family income is below $150,000. Importantly, the Dell contribution is designed largely to reach children who were born before the federal government’s 2025 eligibility date and would otherwise miss the $1,000 Treasury deposit. Eligible families must still activate a Trump Account for the child to receive the money, and the commitment is intended for the first 25 million qualifying activated accounts.

Ray and Barbara Dalio have followed with a $75 million commitment for approximately 300,000 children in Connecticut. Their program will also provide $250 per eligible child, generally focusing on children under 10 in Connecticut ZIP codes with median incomes below $150,000. Dalio, who founded Bridgewater Associates, described the program as a way to provide children with both financial literacy and “a path towards financial independence.”

Other philanthropists and business leaders—including Brad Gerstner, Harold Hamm and Nicki Minaj—have announced support. Treasury has also launched a “50 State Challenge” intended to encourage wealthy donors to help fund accounts in their home states. The goal is to create a structure in which a philanthropist does not have to locate and fund millions of individual accounts manually. Instead, charitable organizations and government entities can contribute to a defined class of children, such as children of a certain age, children living in a state or children in qualifying communities. Those qualified charitable and governmental contributions may be made on top of the normal $5,000 annual limit.

Employers may become just as important. Companies including Dell Technologies, JPMorgan Chase, Bank of America, Charles Schwab, Visa, Mastercard, Nvidia, Intel, IBM, Uber, Comcast, Robinhood and many others have announced various commitments involving contributions, employee matches or account support. Employers may contribute as much as $2,500 per employee annually for a dependent child, with qualifying employer contributions excluded from the employee’s taxable income. Companies can also allow employees to direct pretax salary-reduction contributions through a cafeteria plan.

Someday, a Trump Account match may sit next to the 401(k) match on an employee-benefits sheet. That would be a meaningful development. A parent may not be able to contribute the full $5,000 each year, but a $500 employer contribution, a birthday gift from grandparents and a modest monthly contribution from the parents can add up surprisingly quickly.

What Happens After 2028?

This is the part that can be confusing. Trump Accounts themselves do not disappear after 2028. Under the current structure, an account can be opened for any eligible child under 18 with a Social Security number, and families, employers, charities and governments can continue contributing until the child reaches adulthood.

What is currently scheduled to end is the eligibility window for the federal government’s one-time $1,000 pilot contribution. As the law stands today, that Treasury deposit is limited to U.S. citizen children born from January 1, 2025, through December 31, 2028. A child born in 2029 could still have a Trump Account, but would not automatically qualify for the federal $1,000 seed unless Congress extends or modifies the program.

How does it continue? Congress would have to pass legislation extending the federal contribution to later birth years, making it permanent or changing the amount. States and private donors could also continue filling the gap for later generations, much as the Dells and Dalios are now doing for children who fall outside the federal window.

The four-year limitation was deliberately created as a pilot. That allows lawmakers to measure participation, administrative costs, investment results and whether families actually contribute after opening the accounts. Of course, it also means Congress will eventually have to revisit the issue. A sunset provision is Washington’s preferred way of scheduling the same argument for a later date.

My hope is that participation will be strong enough that allowing the program to lapse would become politically difficult for either party. The best way to preserve a good financial program is often to have millions of families using it.

What Could the Money Become?

The math is where this gets interesting. Assume an average annual return of 8%. That is not guaranteed, and markets certainly do not travel in straight lines, but it provides a reasonable illustration of the power of long-term compounding.

A single $1,000 deposit made at birth could grow to approximately $4,000 by age 18.

Add $100 per month, and the account could reach roughly $52,000 by age 18.

Contribute the current $5,000 annual maximum, in addition to the initial $1,000, and the balance could approach $191,000 by age 18.

If the child with the approximately $52,000 balance left it invested from age 18 until age 65 without contributing another dollar, it could theoretically grow to nearly $2 million. A $191,000 balance left untouched over the same period could theoretically exceed $7 million.

Even the Dells’ $250 contribution matters. Invested at birth and earning 8%, it could grow to roughly $1,000 by age 18. Left invested until age 65, it could become approximately $37,000.

These are illustrations, not promises. Returns will vary, fees and taxes matter, and future lawmakers will undoubtedly adjust some of the rules. Still, compound interest remains undefeated—and it does not particularly care whether the account holder is old enough to pronounce “diversification.”

There are legitimate criticisms. A $1,000 deposit will not eliminate childhood poverty or close the wealth gap. Families with greater disposable income will be able to contribute more, potentially widening the difference between well-funded and minimally funded accounts. An investment account is also not a substitute for good schools, stable families, affordable housing or sound economic policy.

The accounts will fluctuate with the stock market, and some children will turn 18 shortly after a market downturn. That is real risk. But perfection should not become the enemy of progress. Starting children with an account establishes a habit, creates a connection to the economy and gives families a reason to discuss investing years earlier than they otherwise might.

Bipartisan Support Without Pretending Everyone Agrees

The legislation creating Trump Accounts passed through a Republican-led reconciliation bill, not through a bipartisan congressional vote. However, support for using and expanding the accounts has become meaningfully bipartisan.

Governor Gavin Newsom’s administration has encouraged California families to claim both the federal Trump Account and California’s existing CalKIDS benefits. Newsom’s message has been straightforward: “Every child deserves a strong start.” California specifically points families toward the federal $1,000 as money that may eventually help with college, a first home or starting a business.

Vermont State Treasurer Mike Pieciak, a Democrat who is hardly confused with a member of the Trump fan club, reached an equally practical conclusion: “I wouldn’t leave free money on the table, I think that’s the bottom line.” That may be the most financially sound sentence uttered by a politician all year.

Democratic Senator John Fetterman has also urged parents to look past the branding. “Do not fall into that political trap,” he said. “This isn’t some radical thing. ... Do this for your child.” Fetterman has said that he and his wife plan to establish accounts for their own children.

Add Booker’s partnership with Cruz, and we have Democratic officials from New Jersey, California, Vermont and Pennsylvania encouraging participation in a program bearing Donald Trump’s name. In the current political climate, getting that group to agree on anything beyond the day of the week feels like progress.

Giving Young Americans a Stake in the System

Capitalism is an economic system, not a system of government, and it is certainly not perfect. Too many Americans have been left outside the ownership economy, watching the value of businesses, stocks and real estate increase without participating in that growth.

In my view, some of the rising attraction to socialism—particularly among younger Americans—is a product of that disaffection. It is easier to reject capitalism when you do not own capital. It is easier to believe the system is rigged when you have never had an account, never owned a share of stock and never experienced compound growth working on your behalf.

Trump Accounts will not put every child at the same starting line. But they can give every participating child something tangible: an account in their name, ownership in American companies and a personal reason to understand saving, investing, risk and economic growth.

Capitalism has shortcomings, but no other economic system has demonstrated the same ability to generate innovation, produce broad prosperity and create upward mobility at scale. The answer is not to abandon private ownership. It is to extend ownership to more people.

That may be the most important part of Trump Accounts. Instead of merely telling children that they have a place in the American economy, we can show them an account proving it.

In today’s calm, respectful and not-at-all-exhausting political environment, it is encouraging to see Republicans and Democrats supporting something intended to benefit the next generation. We should debate the details, monitor the results and improve the program over time. We should also push Congress to extend the federal seed contribution beyond 2028 if the pilot proves successful.

But we should recognize a good idea when one appears. Giving young Americans an ownership stake is good for families, good for financial literacy, good for capitalism and ultimately good for the country.

For parents with eligible children, participation deserves serious consideration. Free seed money, potential employer and philanthropic contributions, and decades of compound growth are not opportunities I would dismiss merely because Washington managed to attach a politician’s name to the account.

As always, if you would like to talk about how this may affect your portfolio, or how we are thinking about AI, infrastructure, software, and the companies powering this next wave, please give us a call. Your capital, our expertise, a bespoke creation.