New Trump Accounts Launch: What Parents Need to Know for Their Kids

On July 4, Trump Accounts were officially launched as a new federal savings and investment option for children under 18. Over 6 million accounts have been opened, with 1.4 million eligible for a $1,000 federal contribution for newborns. These accounts allow tax-deferred growth and are managed by a custodian until the child turns 18. To qualify for the federal contribution, children must be born between January 1, 2025, and December 31, 2028, and parents or guardians must claim them as dependents. Contributions can come from various sources, but there are specific limits and investment options available, primarily in low-cost U.S. stock index funds.

Key Details: • Accounts must be opened using Form 4547 to qualify for the $1,000 federal contribution. • Children must be U.S. citizens with a valid Social Security number to open an account. • Total contributions from family and friends cannot exceed $5,000 per year for a single account. • Investments will primarily be in low-cost index funds, with a default option of the SPDR Portfolio S&P 500 ETF. • Accounts will be managed through Robinhood's platform, allowing tracking via a dedicated app.