A new measure from the federal government promises to change the financial future of millions of children in the United States. It's an initial deposit of $1,000 that will be given to every baby born between 2025 and 2028. But there's a simple condition that parents must meet to access this benefit.
A seed fund that grows over time
Unlike other government aid, this money won't go directly into the parents' pockets. Instead, it will be deposited into a special investment account, managed by the Department of the Treasury. This account, nicknamed the "Trump Account", will be opened automatically in the baby's name and will function as a kind of "seed fund" for the future.
The goal is clear: to create a solid economic foundation for young people when they reach adulthood. At 18 years old, the account holder will be able to use the money for education, a first home, or transfer it to a Roth IRA account.
The only requirement: citizenship and a form
The program is designed to be easy to access. To receive the $1,000, parents only need to make sure they meet the following points:
- The baby must be born between January 1, 2025 and December 31, 2028.
- The baby must have U.S. citizenship and a Social Security number.
- One of the parents or the legal guardian must submit Form TX-BB to the IRS within the child's first year of life.
Once the IRS verifies the information, the Treasury makes the deposit into the investment account. There's no need to wait months: the process is fast and hassle-free.
An incentive that can multiply
Although $1,000 may not seem like an extraordinary amount, the power is in time. If it's left invested for 18 years, even with a modest rate of return (5% per year), it could grow to about $2,400. But that's not all.
Relatives, friends, and even employers can make additional contributions of up to $5,000 per year. If a family decides to contribute regularly, for example, $50 per month, the fund can exceed $30,000 or more by the time the young person reaches adulthood. A maxed-out account could even reach $150,000 in 18 years.
Assistance that adds to other benefits
This new program doesn't replace other existing aid, but rather complements them. For example:
- The Child Tax Credit of up to $2,000 per child.
- The EITC, which helps working families with low incomes.
- Programs like SNAP, WIC, or 529 education plans.
- Credits for dependent care and FSA accounts.
In summary, this $1,000 deposit is an initial boost that can grow over time and with family collaboration. It's one more step to reduce the economic gap and prepare the next generation with real financial tools.