Berkeleyside43%
What Berkeley families need to know about Trump Accounts for babies, kids 21%
By Lasherica Thornton27%
8/4/2026, 6:00:00 AM
BS Summary: This article contains 20 faulty reasoning types, including Optimism Bias, Negativity Bias, and Anchoring Bias, with Framing Effect as the most egregious example at 13.1% saturation with 193 hits. Analysis detected 1,133 faulty-reasoning hits from 1,473 analyzed words, generating a BS Score of 28.7% and a BS Rank of 21% (22,847 of 28,846 articles). This article is better (less manipulative) than 79.20% of the article peer group.
Students attend a financial literacy class at Berkeley High in 2023.
Credit: Ally Markovich/Berkeleyside
Editors’ note: A version of this story was first published on EdSource.
Government entities, philanthropies and employers are increasingly utilizing child savings accounts as a way to help families reduce future debt and build wealth.
That’s why the federal government recently launched Trump Accounts, joining states such as California that already operate child savings account programs.
Although Trump Accounts were created under the 2025 One Big Beautiful Bill Act, the federal budget and tax law that also reduced spending on several programs, the accounts offer California families another option to help save for their children’s future.
“We don’t want our families, especially our families that face economic uncertainty or disadvantages, to miss out on their child having that potential, regardless of anything around it,” said Cassandra DiBenedetto, executive director of the board that administers California’s tax-advantaged college savings plan.
“I feel strongly that any opportunity for a child in California is a good opportunity.”
California recently updated its tax laws to conform with the federal program, allowing families to receive the same tax benefits available elsewhere in the country.
Here’s what families in Berkeley and across California need to know about the Trump Accounts.
What is a Trump Account?
Trump Accounts are tax-advantaged investment accounts designed to help children under age 18 build long-term wealth.
Family members, employers, nonprofits and government entities can contribute to the accounts, which are intended primarily as retirement savings.
Who is eligible?
Any U.S. citizen under age 18 with a Social Security number is eligible to have a Trump Account.
Unlike some of California’s savings programs, the accounts are not available to children without legal immigration status.
An account may be opened at any time “on or before Dec. 31 of the calendar year in which the eligible individual attains age 17,” according to the Internal Revenue Service.
Who qualifies for free money in the accounts?
The U.S.
Treasury Department will make a one-time $1,000 deposit into accounts opened for children born between 2025 and 2028 who have a Social Security number.
Some California communities are adding to the federal seed deposit.
For example:
An anonymous $3.5 million gift will provide an additional $500 for babies born in San Francisco in 2026.
A foundation will provide an additional $1,000 for 500 eligible newborns in Kern County.
My child isn’t a newborn.
Are there any deposits available for older children?
Yes, some philanthropies, nonprofit organizations and companies are making contributions to older children who meet certain criteria.
Dell Technologies is contributing $250 for each of the first 25 million children under the age of 10 and residing in an area where the median income is $150,000 or less.
Families living in the 94710 West Berkeley zip code and the 94704 zip code, which covers downtown, Southside and Panoramic Hill, are eligible.
According to the U.S.
Census Bureau’s American Community Survey, 68% of California households had a median income less than $150,000 in 2024.
Micron, a global semiconductor manufacturer, is also funding $250 each for children living in Sacramento and Santa Clara counties in California and matching up to $1,000 in employee contributions to their kids’ accounts.
And the following are among the growing list of companies making contributions to the accounts for its employees across the country:
Acorns, Bank of America, Broadcom, Chime Financial, Chipotle, Comcast, Delta Airlines, Intel, JPMorgan Chase, Mastercard, Nvidia, Replit, Robinhood, SoFi, Uber, Visa and Wells Fargo.
Will the amount grow?
The deposits will grow over time because Trump Accounts are investment tools that will have annual returns, or income.
How does that money grow?
Is it invested somewhere?
Money in each account is invested in the stock market of the nation’s strongest companies, according to InvestAmerica, the initiative established alongside the accounts.
Without any additional contributions, the federal government estimates that a $1,000 deposit at birth could grow to about $6,000 by age 18, $15,000 by age 27 and $243,000 by age 55.
InvestAmerica also has a tool, predicting how much a newborn account will be worth by ages 18 and 60 with a monthly contribution, ranging from $0 to $100.
For example, InvestAmerica estimates that $25 in monthly contributions will get the account to over $22,000 by age 18.
Projections are based on stock market performance, meaning that earnings may be less if the stock market doesn’t do well, according to Joseph Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center.
How do I open a Trump Account?
Legal guardians, parents, adult siblings and grandparents can open a Trump Account by filing an IRS Form 4547 or through the trumpaccounts.gov app.
Families can use the app to track the account balance and investment growth.
What are the rules for contributing to a Trump Account?
Family members can add up to $5,000 each year.
Employers may contribute up to $2,500, which counts towards the $5,000 annual limit.
Tax-free contributions from nonprofit organizations and government agencies are not subject to a contribution cap.
The earnings grow without being taxed; withdrawals after age 18 will be taxed as income.
What happens to a Trump Account when my child turns 18?
The money belongs to the child.
Until the child turns 18, the account is managed by the parent or legal guardian.
At age 18, the child assumes full ownership and control of the account.
The Trump Account is an individual retirement account, or IRA.
How can the money be used?
Though a retirement account, the funds can be used early for higher education expenses, to purchase a first home or start a business.
The money would be taxed but will not face an additional tax penalty if withdrawn for those reasons.
Otherwise, the funds cannot be accessed tax-free until retirement age.
In fact, as a retirement account, the Trump Account is a long-term investment tool.
Do Trump Account funds affect financial aid eligibility for college?
Normally, assets — in this case, money in a Trump Account – can affect a student’s need-based financial aid.
However, the U.S.
Department of Education has not defined how Trump Accounts will be treated for students applying for federal financial aid.
What else should I consider before contributing my own money to a Trump Account for my child?
The program may benefit families differently.
The Trump administration says about 7 million Trump accounts have been created, including 1.7 million eligible for the $1,000 seed deposit.
The administration also reports that families have contributed millions of dollars to the accounts so far.
But some economists and policy experts say the program could widen wealth gaps between families who have the ability to invest in the accounts and the low-income families who could benefit but may not even be aware.
An Urban Institute analysis showed that higher-earning adults and those who already have at least $5,000 in savings were more likely to know about the federal program than those with lower incomes and savings.
The program has faced criticism from those who say it does nothing to help families in a child’s first years of life, when children are most likely to experience poverty, homelessness and hunger.
And the Republican bill that created the program also slashed funding for programs that are disproportionately used by children, including Medicaid and the Supplemental Nutrition Assistance Program.
Getting free money that grows
Experts who study children’s savings and wealth-building programs say the government’s $1,000 contribution and philanthropic donations can be meaningful even for families that never add their own money.
“For wealthier families with parents who can already afford to max out their retirement accounts and put aside money in a 529 (education savings account), Trump Accounts are essentially an extra tax benefit for their kids,” NPR reported.
“Lower-income families will primarily benefit from having that digital donation bucket that can accrue contributions for their kids.
Those children might be able to start their adult lives with thousands of dollars they otherwise wouldn’t have had.”
So, “take the Trump Account.
Take the federal money,” said DiBenedetto.
“You should do that.”
Consider your family’s financial goals
Before contributing your own money, DiBenedetto recommends thinking carefully about your long-term financial goals.
Although education expenses and first-time home buying is allowed, a Trump account is a long-term wealth and retirement tool, not an education savings tool such as 529 accounts, DiBenedetto said.
“As a family, if you’re going to invest your personal dollars into either one of those things, you need to be really clear about what the end goal is for your savings and whether or not you’re going to need to access that money,” she said.
“Those are the questions you need to ask yourself.
That’s the fine line that they’re walking.”
The Associated Press contributed reporting to this story.
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