Trump Accounts launch July 4. Here's how they work.
Summary
Trump Accounts, new tax-deferred investment accounts for children, will start accepting contributions on July 4. These accounts allow parents and others to save and invest money for children born between 2025 and 2028, including a $1,000 government contribution, helping children build savings similar to retirement accounts.Key Facts
- Trump Accounts are for children born between January 1, 2025, and December 31, 2028.
- Each child who opens an account will receive a $1,000 contribution from the Treasury Department.
- Contributors can add up to $5,000 per year per child, with employer contributions capped at $2,500 counting toward this limit.
- Funds must be invested in mutual funds or ETFs that follow major market indexes like the S&P 500 during the account’s growth period (before turning 18).
- The accounts are managed initially by the Bank of New York Mellon with Robinhood as a partner but can be transferred to other institutions.
- Withdrawals before age 18 are generally not allowed except in specific situations; after 18, funds can be used for education, buying a home, or starting a business.
- Early withdrawals before age 59.5 for non-qualified reasons will incur a 10% penalty.
- Contributions are not tax-deductible, but earnings grow tax-deferred for the child.
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