In a move that could reshape how Americans invest in their children’s future, President Trump has introduced a proposal that he claims is designed to help children start building wealth from the moment they’re born. Unveiled during a high-profile roundtable at the White House, the “Trump savings accounts” promise to deposit $1,000 into an investment account for every US-born baby, beginning this year. The populist appeal of this proposal has led to it garnering a lot of attention in the days since it was first discussed, but financial experts and skeptics have shared some concerns about the implementation of the program, as well as the potential long-term ramifications.

President Trump’s “One Big Beautiful Bill,” which focuses primarily on stimulating and stabilizing the nation’s economy, has been at the forefront of the news cycle for the last several weeks. This aspect of that bill, the $1,000 baby bonus, has once again driven attention toward the President’s plans for America’s future.

The Basics

The announcement of MAGA accounts came during a roundtable discussion at the White House that featured some of the leading names in business. Joining President Trump were Michael Dell (Dell Technologies), David Solomon (Goldman Sachs), and Dara Khosrowshahi (Uber). During the discussion about the proposal, President Trump emphasized the importance of the program, referring to it as one of the most important parts of his second term.

The accounts are a key provision in the “Big Beautiful Bill,” which was passed by the House of Representatives last month. The bill, which now must pass the Republican-led Senate, would provide a $1,000 government-backed savings account for every baby born in the United States between January 1, 2025, and January 1, 2029.

Logistically, the proposal seems relatively simple on the surface. Each newborn will be automatically enrolled in the program, and parents or guardians will be allowed to make additional post-tax contributions to the account. Those contributions are capped at $5,000. Any money placed into the account will be invested in diverse index funds that track the U.S. stock market, with the aim of helping the accounts increase in value over time.

Should the bill pass as written, this would be a revolutionary investment in the financial stability of future generations. Whether you’re planning to have a baby or have had a child this year, these accounts have the potential to help alleviate some of the stress associated with college funds and other financial burdens.

When Can Funds Be Withdrawn?

One of the first questions that people had about the proposal involved when funds could be withdrawn. At their core, these accounts are designed to promote long-term investment and responsible usage. As they’re currently designed, beneficiaries would receive access to the funds in the account in three stages.

At the age of 18, up to 50% of the account can be withdrawn. This aspect of the proposal raised eyebrows, as legal adulthood in the United States begins at 18. Still, this partial access is designed to give young adults access to a financial cushion as they enter college or the workforce without depleting the entire fund prematurely. The goal is to teach fiscal responsibility and ensure that young recipients don’t squander the cash on short-term spending.

Seven years later, at the age of 25, additional funds can be withdrawn for qualified purposes. These approved purposes include opening a small business, pursuing higher education, purchasing a first home, or investing in vocational training. This stage aligns with a time when research shows that many Americans make life decisions that can have a major impact on their future. Ideally, access to these funds could reduce the reliance on student loans and high-interest credit. This phase of the rollout offers a more stable financial beginning.

Finally, the account holder gets full access to the account at the age of 30, when there are no restrictions on how the funds can be used. Whether it’s starting a family or investing the money into another index fund or some other income-generating account, the beneficiary can treat the account like any other asset.

It’s important to note that, unlike tax-advantaged accounts like 529 and Roth IRAs, withdrawals from the Trump savings account are taxable. Earnings will either be subject to long-term capital gains taxes or standard federal income tax, depending on how the funds were invested and how long they were held in the account. While this reduces the tax efficiency provided by other savings vehicles, proponents of the bill argue that the way it's structured encourages meaningful, phased use of the funds rather than impulsive spending.

The long-term goals of these accounts are twofold. First, they’re designed to build wealth. By giving children an account that will provide a return throughout childhood, the account will create a safety net that past generations did not have access to. Secondly, they’re designed to promote financial literacy and responsibility. Financial discipline and long-term planning are often considered skills that are lacking among many young adults.

MAGA Accounts Rebranded

Originally, the accounts were presented under the name “Money Accounts for Growth and Advancement, or MAGA, a clever play on President Trump’s widely recognized Make America Great Again slogan. However, Republican members of the House rebranded the accounts to “Trump Savings Accounts” just before the legislation passed. This was done in response to some critiques about the political overtones associated with the MAGA acronym. The shift retained the name recognition of President Trump while softening the framing associated with the acronym.

The rebranding is widely viewed as an attempt to make the proposal more palatable to moderate Republicans and Senate Democrats. Political analysts have noted that typing President Trump’s name into the savings program could work in multiple ways. They believe that it will help reinforce his economic agenda for his supporters while making the initiative a legacy-building component for his second term in office.

On the other side, critics argue that the rebrand doesn’t do anything about potential problems with the program’s structure or tax implications. Meanwhile, supporters insist that renaming the program makes it better align with President Trump’s broader economic vision.

Financial Expert Concerns

While the idea of giving every newborn a financial head start has drawn plenty of interest from the public, many financial experts are skeptical about the newborn savings plan. Primarily, doubters have shared concerns about the long-term value and structure of the Trump savings accounts. These concerns are magnified when compared to accounts like 529 and Roth IRAs.

According to Ann Reilley, CEO of Alpha Financial Advisors, the accounts are “not very attractive” for families looking to maximize their tax-advantaged savings. Reilley points to 529s, which allow tax-free withdrawals when used for educational purposes, as an example of how the system could be better structured. Additionally, since educational purposes are allowed in both, having the withdrawals taxed in the Trump savings account plan could make them less desirable.

Additionally, financial experts from multiple sectors have pointed to a lack of incentive when it comes to contributing to the accounts. While the $1,000 initial investment is certainly a welcome gift, there are no matching programs or tax incentives for ongoing contributions. Questions surround why everyday Americans would be motivated to put post-tax money into an account that their child will have to pay taxes on when the funds are withdrawn later. These issues, some claim, could make it cost-prohibitive for middle- and low-income families to add money to the accounts.

Ultimately, financial experts are encouraging families to view these newborn savings plans as a supplement instead of as a replacement. Until further clarity is provided on fees, fund options, and account management, many experts recommend continuing to prioritize proven plans that offer tax advantages and long-term benefits.

The Bigger Picture

The future of the Trump savings accounts hinges on the Senate’s approval of the “Big Beautiful Bill.” It’s worth noting that the Republicans control the Senate, so it’s very plausible that the bill passes without much resistance. Outside of a handful of moderate Republicans who have vocally opposed President Trump on other bills, it’s unlikely that the bill will face any pushback from the controlling party.

However, the plan’s success will depend on more than headlines. Instead, it will require sustained investment performance, clear tax guidance, and broad public engagement. If those things come together, the $1,000 baby bonus could go down in history as one of the most revolutionary economic policies to have ever been enacted in the United States.