Babies born between January 1, 2025 and December 31, 2028, can receive $1,000 from the federal government.
Unfortunately for parents looking for a quick boost, the four-figure check won’t be going to diapers. The federal government will put the money into a new type of fund called a 530A account, named “Trump Accounts”.
Trump Accounts were authorized by the 2025 One Big Beautiful Bill Act (OBBBA), with $1,000 of seed funds for every child disbursed from the federal government. However, philanthropists across the nation have pledged to sweeten the pot.
For example, children in select Idaho counties will receive an additional $250 from the Micron Foundation. The Michael and Susan Dell Foundation has pledged $6.25 billion to 25 million American children, aged 10 and under, who live in ZIP codes with a median income below $150,000. Minnesota philanthropists looking for a good cause should consider this as a potential opportunity.
Given enough legislative interest, it’s possible that the federal grants could extend to babies born in 2029 or beyond.
The accounts function very similarly to a custodial IRA account. Funds cannot be withdrawn until the beneficiary turns 18 years old, after which the fund begins to function like a traditional IRA. Withdrawals made between ages 18 and 59 and a half incur an early 10 percent withdrawal penalty, unless the withdrawal is made for qualifying expenses like higher education or a first-time home.
Parents, philanthropists, and parental employers can make contributions towards the $5,000 annual maximum contribution. A child who only receives the $1,000 of federal seed money can expect to hold almost $6,000 in the account by the time they turn 18. However, if the account receives the maximum annual contribution of $5,000, the child can expect almost $304,000 once they become an adult. All account funds must be invested in low-cost index funds, meaning that growth projections are somewhat dependent on the market. Some high-wealth families might prefer 529 plans due to their stronger tax advantages.
Minnesota lawmaker Rep. Jim Joy (R-Hawley) attempted to ease any negative tax implications for account contributors with proposed legislation HF3754, but it went nowhere in the 2026 session. Minnesota lawmakers should consider revisiting this type of legislation in future sessions.
Even if parents don’t make a single financial contribution to the account, young children born between January 1, 2025 and December 31, 2028 have the opportunity to hold $6,000 in funds on their 18th birthday. For many young people, that amount of money is the difference between a frustrating start to life and a huge boost like a new home or a college education. New parents should consider filing the paperwork to help their little one start out strong.
Minnesotans should recognize the creation of this new type of fund as a vehicle for increased philanthropy, which can lead to economic prosperity. What if potential Minnesota newcomers learned that Minnesota babies receive $3,000 each in their account, funded by the federal government and philanthropy? How would that change migration? What if donors targeted their funds to the children most in need, transforming entire communities? Lawmakers can facilitate these gifts by passing legislation that makes it easy to give without negative tax repercussions.
These new accounts are an opportunity. Minnesotans should take it.