The recently proposed "Trump Accounts," included in the One Big Beautiful Bill Act, aim to give American children a head start on savings — but a closer look reveals a program that may benefit the wealthy far more than those who need it most.
Trump Accounts are tax-advantaged savings vehicles for children under 18, with annual contribution limits of $5,000 (inflation-indexed). A separate pilot offers a one-time $1,000 federal deposit for babies born between 2025 and 2028. Funds must be invested in low-cost U.S. equity index funds and are largely inaccessible until age 18.
There are a couple of problems. The first is clarity. The U.S. already has over a dozen tax-advantaged savings vehicles. Trump Accounts add another layer without meaningfully improving incentives — particularly for education savings, where 529 plans remain more flexible and tax-efficient.
The second one is as a Mainer, I've seen this story before. Maine's own Alfond Grant program (great story for another day) — which deposits $500 into a 529 scholarship account for qualified newborns — initially enrolled only 40% of eligible children under an opt-in model. It wasn't until the program shifted to automatic enrollment that participation meaningfully improved.
Trump Accounts repeat this same mistake. To claim the $1,000 federal deposit, families must file IRS Form 4547 — a barrier that disproportionately excludes lower-income households who don't regularly interact with the IRS. The likely result? The benefit flows primarily to the top 40% of earners who are already engaged with the tax system.
A Better Model Exists Connecticut's Baby Bond program offers a contrast worth studying: automatic enrollment, targeted at Medicaid-covered births, with a $3,200 deposit that can be used for housing, education, business, or retirement. It's not perfect, but it's designed to close the wealth gap — not widen it.
The Takeaway Maine learned the hard way that opt-in programs leave too many children behind. Federal policymakers should heed that lesson. A truly impactful children's savings program would combine automatic enrollment with income-targeted benefits — not a form-based process that recreates the very barriers it claims to eliminate.