A multi-billion dollar pledge from a leading tech magnate has thrust a controversial new policy, known as "Trump accounts", into the spotlight. Michael Dell, founder of Dell Technologies, and his wife Susan have announced a staggering $6.25bn donation to fund investment accounts for millions of American children.
What are Trump Accounts and Who is Eligible?
The scheme was established as part of a sweeping tax and spending bill signed into law by former President Donald Trump in July. The policy creates individual investment accounts for children. Every child born between 1 January 2025 and 31 December 2028 will receive a $1,000 initial deposit from the US government, with the money then being invested.
In a White House press conference focused on the Dell donation, Trump described the accounts as "the first real trust funds for every American child". More broadly, any child under 18 with a Social Security number can open an account, although the system will not go live until 4 July 2026. Parents or guardians are responsible for setting up and managing the accounts.
How Do Contributions and Withdrawals Work?
Beyond the government's initial $1,000, family members, friends, and employers can contribute up to $5,000 per year per child. Philanthropists, charities, and certain government entities face no contribution limits. The Dell family's enormous $6.25bn gift is specifically earmarked for children living in zip codes where the median household income is below $150,000, with each qualifying child set to receive approximately $250.
The funds will be invested in a diversified, low-cost stock index fund. Crucially, withdrawals are only permitted once the child turns 18, and even then, they function similarly to a retirement account, meaning early withdrawals could incur significant tax penalties. The White House has indicated there will be exceptions for higher education expenses or first home purchases.
Criticism and Wider Consequences
Despite the headline-grabbing donation, significant concerns persist. Critics argue the accounts will do little to immediately alleviate child poverty, especially as the Trump administration's accompanying bill enacted sweeping cuts to programmes like Medicaid and food stamps (SNAP). Experts fear these cuts will leave low-income families struggling to cover basics, let alone contribute extra to the investment accounts.
"As currently structured, these accounts will just become another tax shelter for the wealthiest," said Amy Matsui of the National Women’s Law Center ahead of the announcement. She added that many families will be "hard pressed to find the extra money" to grow the investment and that children in immigrant families are largely prevented from benefiting.
Further criticism centres on the policy's perceived pronatalist aims, with suggestions it is designed to incentivise having more children. The rollout of Trump accounts, buoyed by colossal private donations, continues to prompt intense scrutiny over its practical benefits and its role within a broader policy landscape of reduced social support.
