Trump Accounts are now live. Here’s what you need to know

Key Points:

• Trump Accounts, a new federal savings and investment vehicle for children, launched on July 4, with over 6 million accounts opened so far, including 1.4 million receiving a $1,000 federal pilot contribution for newborns born between 2025 and 2028.
• These IRA-style accounts belong to children under 18 and are managed by a custodian until the child reaches adulthood; contributions grow tax-deferred and withdrawals after age 18 are taxed as ordinary income on gains.
• Contributions can be made by family, friends, employers (up to $2,500 annually per employee), and qualified nonprofits or states, with a combined annual limit of $5,000 from family, friends, and employers; government and nonprofit contributions do not count toward this limit.
• Funds must be invested in low-cost, diversified U.S. stock index ETFs with expense ratios of 0.10% or less, with Robinhood selected to hold and manage the accounts initially, offering a default investment in the State Street SPDR Portfolio S&P 500 ETF.
• While Trump Accounts can help build savings for children’s futures, experts caution they may disproportionately benefit wealthier families able to contribute regularly, and questions remain about how these accounts might affect eligibility for federal benefits like Pell Grants or SSI.