Trump accounts are a new type of tax-deferred investment vehicle for U.S. childrencreated under President Trump's "bigbeautiful bill" tax and spending billwhich promises $1,000 seed contributions from the federal government for eligible kids. 

Here's what to knowincluding who qualifies for a Trump accounthow to set one up and how they compare to other savings plans geared to children. 

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Who is eligible for a Trump account?

Children who are U.S. citizens and who are born between Jan. 12025and Dec. 312028are eligible to have a Trump Accountaccording to a fact sheet from the Department of the Treasury. Households of any income may open an accountand all such accounts qualify for a one-time $1,000 contribution from the U.S. government. 

Families with children under 18 may also open accountsbut they won't receive the $1,000 gift from the government. Howeverparentsfriendsemployers and other parties can contribute tax-free dollars to an account. 

How do I open a Trump account?

Parents or guardians must set up and manage the account until a child turns 18.

The Treasury Department said households should use IRS Form 4547 to open a Trump account on behalf of a child. The newly created form is also where applicants can request the $1,000 U.S. government contribution to the account. The White House said that each Trump account for eligible children will launch with a $1,000 contribution from the government. 

In May 2026the Treasury Department will send instructions to individuals who applied for government-funded accounts on how to activate them. 

When can I set up an account?

Families can open a Trump account beginning in early 2026 and can start making financial contributions on July 42026according to the Trump Administration.

How much can I contribute?

Excluding the government's $1,000 donationa total of $5,000 per child can be deposited into an account each year. Employers can contribute up to $2,500 per year to an employee's account tax-freewhich will count toward the $5,000 limit. 

Financial contributions from citiesstatestribal governments and tax-exempt organizationsincluding nonprofit organizationsare generally not counted toward the $5,000 limitaccording to employment law firm Littler.

Annual contribution limits to the accounts are indexed to inflation and will be adjusted after 2027according to a notice from the Internal Revenue Service. 

Can funds be withdrawn before a child turns 18?

No. Families may not withdraw funds from a Trump account before a child turns 18except for the following reasons:

• A rollover of the entire account to a Trump account with another brokerage 
• Certain rollovers to an "Achieving a Better Life Experience" account in the year the child turns 17 
• Distribution when the individual dies

After age 18standard IRA rules for withdrawals apply.

How will money in a Trump account be invested?

Under the "bigbeautiful bill," funds in a Trump account must be invested in an authorized investmentsuch as mutual funds or exchange-traded funds that track the S&P 500 stock index or another index with mostly U.S. equities. Financial firms managing the funds also may not charge more than 0.1% in annual fees. 

Should I personally invest in the account?

Financial experts advise people considering opening a Trump account to accept the government's $1,000 contribution — money is moneyafter all — but to think twice about putting in their own money. The reason: Other types of savings plans — such as a 529 plana tax-advantaged savings account for education expensesor a custodial brokerage accountan investment account for a minor managed by an adult — can be more financially advantageous. 

"The gift is the biggest part of this. It really is free money," Madeline Browna wealth and financial policy expert at the Urban Institutea nonpartisan think tank in WashingtonD.C.told CBS News. 

"It's a nice perk for parents with children who qualified," added Kate Ashforda wealth management specialist at personal finance company NerdWallet. "But it's not a slam dunkand it's not going to do as much for you as other accounts." 

She cited the accounts' contribution caps and more limited investment tax advantages as drawbacks compared to 529s or custodial brokerage accounts. 

"The only advantage is your earnings grow tax-free over the yearsbut you pay the ordinary income tax rate — notsaya capital gains tax rate," Ashford said.

Adam Micheldirector of tax policy studies at the Cato Institutea libertarian public policy research firmthinks there are better ways to set money aside for childrensuch as in a 529 or standard IRA account. 

"Generally speakingparents should not put their own money into a Trump account," he told CBS News. "The primary use case for the accounts is to receive free money from sources like the government or private donations."

For exampleMichael and Susan Dell on Tuesday said they would donate a total of $6.25 billion — or $250 apiece — to millions of kids in Trump accounts. 

How do Trump accounts compare to a 529 savings plan?

The government's initial starter deposit is an appealing feature of Trump accountsaccording to experts. Beyond the seed moneyhoweverthey offer fewer benefits than other savings plansaccording to the nonpartisan Tax Foundation. 

"A simpler approach would consolidate today's patchwork of savings accounts into universal savings accounts that are flexibletax-neutral and easier for families to use," the policy research group added in a report. 

To save money for collegea 529 planwhich lets families sock away money for education expenses tax-freecould be a better alternativeinvestment experts said. Savings from such an account can also be transferred to an IRAoffering account holders more flexibility to save for retirement or other expenses. 

The Trump accounts have "many more strings attached and complicated rules that make it not an attractive overall investment vehicle," Michel of the Cato Institute said. 

To be sure529 plans also have limitations. If people use funds for non-education expensesfor examplethey must pay a 10% penalty. 

Meanwhilea Trump account offers some flexibility. Beneficiariesonce they are adultsmay use the money for purposes beyond educationsuch as buying a home or starting a businesswhile the accounts also can serve as a kind of IRA.