Trump Accounts, a new federal savings and investment vehicle for children under age 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.

Key Features of Trump Accounts

They are IRA-style investment accounts for eligible children, with money growing tax-deferred. 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, and withdrawals will be taxed as ordinary income at the child’s tax rate.

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.

Contributions and Investments

Family and friends may make contributions, but they will not get a deduction for their contributions. Employers may make pre-tax contributions to the account of an employee’s child, with a limit of $2,500 per year per employee. States, qualified nonprofits, and philanthropists may also contribute, with their contributions made to members of a qualified class.

Contributions to Trump Accounts must be invested in low-cost, broadly diversified US stock index funds or exchange-traded funds, with an expense ratio of 0.10% or less. The default investment for all accounts will be the State Street SPDR Portfolio S&P 500 ETF (SPYM), which tracks the performance of the S&P 500.

Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.