NEW YORK CITY, New York: As the debate intensifies over how best to help low-income families build long-term financial security, a new federal program, "Trump Accounts", is drawing both interest and skepticism.

The savings initiative, part of President Donald Trump's One Big Beautiful Bill Act, promises government-seeded investment accounts for millions of newborns, but experts say the program's real impact will depend on its design and execution.

"Overall, anything that pushes families to build savings early is useful in theory, but the mechanics matter more than the slogan," says Melissa Caro, a certified financial planner in New York.

The government plans to launch the program on July 4, 2026. Each child born between 2025 and 2028 with a valid Social Security number will receive US$1,000 in a U.S. Treasury-created investment account. The money will be invested in low-cost index funds, compounding tax-deferred until withdrawal, when income taxes will be owed.

Parents, guardians, employers, or other contributors can add up to $5,000 per year, though employer contributions are expected to be capped at $2,500 annually.

Entrepreneur Michael Dell and his wife, Susan, pledged $6.25 billion to deposit $250 into the investment accounts of 25 million children. A spokesperson said the funds will go to children living in ZIP codes with a median family income of $150,000 or less.

Joseph Lavorgna, counselor to U.S. Treasury Secretary Scott Bessent, told Reuters NEXT that the program will both boost U.S. investment and help Americans learn "how compound interest works," as families watch their children's accounts grow. He added that more donors are expected to join.

Financial planners note that Trump Accounts mirror custodial IRAs. "Trump Accounts are essentially a custodial retirement account, known as a Custodial IRA, overseen by a parent or legal guardian," says Alex Caswell of Wealth Script Advisors. At age 18, the account converts to a traditional IRA.

Withdrawals follow IRA rules, "including penalties for early or non-qualified use," explains John Iselin of Yale's Budget Lab. "Help is broad and shallow rather than targeted and large," he adds.

By comparison, 529 plans allow tax-free withdrawals for education expenses, and any remaining funds can be redirected to retirement.

Andrew Herzog, a certified financial planner in Texas, says even leaving the $1,000 seed alone for 28 years, assuming a 10 percent annual return, yields about $16,000. "For new parents, it's a deal to get $1,000 from the federal government, take it," he says.

If parents invest $100 monthly until the child turns 18 and let it grow for 10 more years, the balance could reach roughly $180,000. Maximizing contributions at $5,000 annually until age 18 and allowing another decade of compounding could grow the account to an estimated $698,000 by age 28.

Financial firms are already lobbying for a role. The Investment Company Institute urged the Treasury on October 29 to create "a robust and competitive marketplace for account trustees and custodians," rather than selecting a single provider.

"There are some teachable moments when kids have investments in their name," says educator Jackie Cummings Koski. Tomas Geoghegan of Beacon Hill Private Wealth agrees the real test will be whether families "develop the habit of contributing regularly."

Caro notes that automatic deposits and clear rules tend to work best for lower-income savers. "You put money in now and get the benefit at tax time," she said. "That's not how you move behavior for the families this is aimed at."

Families must first file IRS Form 4547. Starting mid-2026, accounts can be created online at trumpaccounts.gov.

Key details remain unresolved, including how accounts will affect federal student aid applications and how custodians will manage compliance and employer funding. As Geoghegan puts it: "Those operational details will determine whether the accounts feel straightforward or burdensome."