A new federal initiative, dubbed "Trump Accounts," is set to launch on July 4, offering eligible children a free $1,000 investment account that will be automatically invested in the stock market. The program is a collaboration between the U.S. Treasury Department, investment platform Robinhood, and financial services company Bank of New York Mellon.
According to treasury officials, nearly 6 million of the approximately 60 million eligible children have already enrolled or signed up in anticipation of the nationwide launch. Each eligible child will receive a one-time $1,000 government contribution, which will be invested in a low-cost exchange-traded fund (ETF) designed to track the broader stock market.
"Think of it as something that mimics the broader market, but in a very low-cost, diversified manner," said Steve Quirk, chief brokerage officer at Robinhood. Families, relatives, employers, and charities can contribute additional funds to the accounts. Parents and guardians can contribute up to $5,000 annually until the child reaches 18 years of age.
Robinhood will manage the investment platform, while Bank of New York Mellon will serve as the financial custodian. The accounts are available for children born between 2025 and 2028, allowing families to begin investing from birth. Enrollment will initially be conducted by completing IRS Form 4547 when filing federal taxes, with an online portal scheduled to launch in 2026.
Officials stated that contributions will be automatically invested in the program's default index fund unless further investment options become available. Financial advisors emphasize that the primary benefit of the program lies in the potential for long-term compound growth, even if no further contributions are made beyond the initial government deposit.
Program projections, based on historical stock market performance, suggest that the initial $1,000 could grow significantly over a child's lifetime, though actual returns are not guaranteed and will depend on market performance. Families who consistently contribute could potentially accumulate larger balances through sustained long-term investing.
While the government's $1,000 contribution makes opening an account an attractive proposition, financial planners advise families to consider their specific savings goals. "The question parents need to ask is: 'What is our objective?'" Timothy McGrath, a certified financial planner, told CNN. He noted that for college savings, a 529 plan might offer better tax advantages, while a custodial Roth IRA could be beneficial for children with earned income. Standard custodial brokerage accounts offer more flexibility for funds to be used for various child-related expenses.
Trump Accounts are primarily designed for long-term investment, with funds generally inaccessible until age 18, except in specific circumstances. Withdrawals before retirement age by an adult may incur taxes and penalties unless used for qualified purposes, such as purchasing a first home or funding higher education.
The program has garnered support from various corporations and notable figures. Several employers, including financial institutions and large public companies, have pledged to match employee contributions for eligible children. High-profile donors such as Michael Dell and Ray Dalio have also committed funds to support eligible children. Erika Kirk, the widow of conservative activist Charlie Kirk, and rapper Nicki Minaj are also listed as backers.
Experts caution against making decisions based solely on the initial $1,000. "My concern is people are going to be so excited about the $1,000 that they use this account when it might not be the best vehicle for them or their children on a long-term basis," McGrath stated. The recommended approach is to first determine the savings objective and then select the most appropriate financial vehicle.