A new initiative tucked within last JulyS federal budget is gaining attention as billionaire Michael Dell and his wife, Susan, pledge $6.25 billion to “trump Accounts”-investment accounts designed to provide a financial starting point for young Americans. The program, offering a $1,000 deposit from the Treasury for children born between 2025 and 2028, alongside potential supplemental funds, aims to address wealth inequality, but experts caution that a key design flaw could significantly limit its reach. This report details the program’s structure,potential benefits,and the concerns surrounding mandatory parental enrollment.
Billionaire Michael Dell is spotlighting a little-known provision within the sweeping budget bill signed into law by former President Donald Trump last July: “Trump Accounts.” The initiative aims to provide a financial foothold for young Americans through investment opportunities.
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On December 2nd, Dell and his wife, Susan, pledged $6.25 billion to the program, designed to establish investment accounts for American children. The Dell’s donation will ensure that 25 million American children aged 10 and under, residing in the 75% of zip codes with the lowest incomes, each receive $250.
This contribution will supplement the $1,000 the U.S. Treasury will deposit, starting July 4, 2026, into accounts for all American children born between 2025 and 2028, provided their parents open one of these “Trump Accounts.” The initiative represents a novel approach to wealth building, particularly for lower-income families.
“This is a substantial amount of money,” said Michael Sherraden, co-director of the Center for Social Development at Washington University in St. Louis, referring to the Dell’s donation, which he believes could inspire other philanthropists. “I was really pleased to see that and congratulate Michael and Susan Dell. They have good intentions in trying to do something positive with their money.”
Sherraden also expressed optimism regarding the “Trump Accounts” themselves.
PHOTO BRIAN SNYDER, ARCHIVES REUTERS
Business executive Michael Dell and his wife, Susan
“This was never a partisan idea,” the emeritus professor stated. “So it’s not really surprising that Republicans have picked it up. We’re happy they have. We would just like the enrollment system to be a little better designed.”
Addressing Wealth Inequality
Sherraden pioneered the concept with the 1991 publication of Assets and the Poor, a book that inspired states including Maine, California, and Pennsylvania to create savings or investment accounts for children. A common goal unites those influenced by the core idea of the still self-described social worker: to reduce wealth inequality, which is greater than income inequality.
These accounts have yielded positive results, particularly for Black and Hispanic children enrolled in an experiment launched in Oklahoma 18 years ago.
“The overall picture is that the children [enrolled in the program] accumulate more money than children in the control group,” Sherraden summarized. “And there’s also a whole host of positive non-economic effects. Parents start to see education and their children’s potential differently. They start to adopt better parenting practices. Mothers have a somewhat more optimistic view of the future, and children have better social and emotional development.”
These outcomes explain why a social worker like Sherraden can view the Trump Accounts positively, with funds invested in diversified U.S. index funds.
However, a potential snag exists.
Unless a last-minute change is made, enrollment for eligible children will not be automatic, as it is currently in Oklahoma or Maine. Parents will be required, starting January 1, 2026, to complete a form from the Internal Revenue Service (IRS) to open an account.
Millions Potentially Excluded?
According to Sherraden and other experts, this is a mistake. The Washington University professor points to the experience in Maine, where a philanthropist pledged $500 to the state’s newborns for future education if their parents opened investment accounts. Only 40% took advantage of the offer, prompting the philanthropist to subsequently change the rule.
If enrollment is not automatic, the Trump administration will exclude millions of children, who will likely be from the poorest families.
Michael Sherraden, co-director of the Center for Social Development at Washington University
“The leadership and staff at the IRS agree with us on this point, as does Republican Senator Ted Cruz. But it seems the information isn’t getting up to the president,” Sherraden lamented.
This isn’t the only aspect of the initiative raising concerns among experts. Parents, philanthropists, or other donors will be able to contribute up to $5,000 per year to a Trump Account, but this money will not be tax-deductible.
And when beneficiaries reach age 18 and can finally access these funds, withdrawals will be taxed, unlike funds invested in other savings vehicles, such as 529 plans designed to cover future education expenses.
However, the enrollment issue is the most likely to undermine the good idea of Donald Trump, according to Sherraden.
“We have very clear data on this. As it’s currently designed, this policy will generate more wealth inequality. There’s really no doubt about that. That’s what’s so frustrating as a social science specialist.”
