Trump Accounts touted as wealth-building tool for next generation, measure against socialism

The new Trump Accounts for children could be transformative for the next generation and may help stem growing interest in socialism among young people, politicians and financial experts told The Lion.

Kevin O’Leary, known as “Mr. Wonderful” on Shark Tank, told The Lion’s Chris Stigall Wednesday that past leaders have “failed the country” by leaving many Americans financially illiterate and unprepared for retirement. The accounts, funded with $1,000 for every baby born in 2025 through 2028, will be invested in the stock market, creating wealth children can access at age 18 and beyond.

“This idea has a brilliant educational aspect to it, because when you open this account in an individual’s name, and as soon as they’re cognizant of money, at probably the age of 5 or 6, they’re going to be interested in what’s in there and they’re going to start to learn about how it works,” O’Leary said. 

The funds will be invested in the S&P 500, which historically averages 8% to 10% annual growth. 

“If you just start with the basics and put in the minimum amounts, you could be $50,000, $60,000, even $80,000 at 18 years old, which is a great anchor to start life with when you actually have to deal with educational costs and everything else,” O’Leary said. 

Parents may contribute up to $5,000 annually to the accounts, and employers may add up to $2,500. Those contributions would be tax-free. 

With maximum contributions, “a child born in 2026 would have over $300,000 when they are 18, and then by 28 it could be almost $1.1 million,” said Joe Lavorgna, an economist and counselor to Treasury Secretary Scott Bessent, who supports the program. 

“It’s compound interest and it’s financial literacy,” Lavorgna said. “People will see capitalism and the financial markets effectively working in real time, growing wealth, becoming a part of the system, being a stakeholder in the system. We’re democratizing capitalism and making an investment in the future.”

Sen. Ted Cruz, R-Texas, said the accounts could have far-reaching effects. 

“I think could well be the single most important part of The Working Families Tax Cut that we passed last summer,” said Cruz, who authored the provision and said it “is going to change the entire country.” 

“We’re going to create a whole new generation of capitalists,” he said. “Every child in this country will be an owner of the biggest employers in the country,” as reflected in the S&P index. 

“(We’ve) seen the sad statistics of all the young people that are losing faith in capitalism, that think socialism might be a good idea,” Cruz added. “Well, now every kid’s going to look at the economy and say, ‘Wait a second, I want the economy to succeed because I’m looking at my investments. I’ve got skin in the game.’”

The accounts are scheduled to be funded July 5, according to trumpaccounts.gov, though parents can begin registering their children by filing Form 4547 with their taxes, named for President Donald Trump’s two terms as the 45th and 47th president. Parents may also open accounts for children born before 2025, but those children will not be eligible for the $1,000 deposit.

O’Leary said the accounts should receive bipartisan support, calling them “even better than charity in some ways.” 

“This has very little cost associated with it,” he said. “It’s frictionless.”