Trump Accounts, a new federal savings and investment vehicle for children under 18, went live on July 4. To date, more than 6 million Trump Accounts have been opened for children under age 18, according to the Treasury Department. Of those, 1.4 million will receive the $1,000 federal pilot contribution for newborns.

How Trump Accounts Work

Trump Accounts are IRA-style investment accounts for eligible children. They are like traditional IRAs in that money in the accounts will grow tax-deferred. But the rules for Trump Accounts differ during the so-called “growth period” – which encompasses the first 18 years of a child’s life.

The account belongs to the child, but the parent, legal guardian or other authorized adult who opened it will serve as custodian until the child is 18. Contributions from individuals must be made with after-tax money. Withdrawals, which generally may not be made until the year the child turns 18, will be taxed as ordinary income at the child’s tax rate – minus the portion attributable to after-tax contributions made over the years.

Eligibility and Contributions

Only children who are US citizens and have a valid Social Security number may have a Trump Account. And no child may have more than one. To qualify for the one-time federal pilot contribution, the child must be born between January 1, 2025 and December 31, 2028.

Family and friends: Parents, grandparents and other individuals may make contributions. But they will not get a deduction for their contributions. Employers: They may make pre-tax contributions to the account of an employee’s child. That money will be tax-free to the employee.

States, qualified nonprofits organizations and philanthropists: Their contributions must be made to “members of a qualified class” – that could mean, for example, all children of a certain age, or living in households below an income threshold.

Original reporting: KRDO (Colorado Springs metro) — read the source article.