How Can “Trump Accounts” Build Wealth for Low- and Moderate-Income Households?

A new federal program known as “Trump Accounts” has been signed into law, adding another savings option alongside existing 529 college savings plans. This Aspen Institute article examines how Trump Accounts will work alongside highlighting potential implications. While the program has clarified that account balances will not affect eligibility for safety‑net benefits like SNAP, a positive development for families, participation is not automatic. Families must actively open accounts through a tax form, with online enrollment expected in 2026. As highlighted in a PBS article, this requirement—along with the mandate that every child have a Social Security number—raises concerns that many eligible households may be excluded or fail to enroll.

Withdrawal penalties further limit how useful the accounts may be for some families. While the initial contribution of $1,000 (or $250 in certain cases) offers a meaningful starting boost, parents may still prefer 529 plans due to their greater flexibility, or high-yield savings accounts that impose fewer restrictions. In practice, penalties may not deter families from accessing the funds when unexpected expenses arise, potentially reducing the program’s intended long‑term savings benefit, or overall program uptake.