President Donald Trump’s administration is launching Trump Accounts, a new savings tool for kids, on July 4. The program allows parents to open investment accounts for their children, with the government contributing $1,000 for newborns. The money will be invested in the stock market and can only be accessed by the child when they turn 18, for specific purposes like paying for a home or education.

How it Works

Parents can open an account for any child born during Trump’s second term, and the government will contribute $1,000. The accounts can also be opened for older children, but they won’t receive the $1,000 bonus. Private banks and brokerages will manage the money, which must be invested in U.S. equity index funds with annual fees of no more than 0.10%.

Parents can contribute up to $2,500 annually in pretax income, and employers, relatives, and philanthropic groups can also contribute. The yearly contributions are capped at $5,000, but contributions from governments and charities don’t count toward that total.

Support and Criticism

The program has received support from billionaires like Michael Dell and his wife, Susan, who have pledged $6.25 billion to the accounts of some kids who don’t qualify for the government’s $1,000. However, critics argue that the accounts do little to help children in their early years and may widen the wealth gap, as affluent families can afford to make the maximum pretax contribution.

Original reporting: NBC Connecticut (Hartford) — read the source article.