US Treasury Launches Trump Accounts for Newborns

The United States Department of the Treasury launched Trump Accounts, a new custodial individual retirement account system for children under 18. As part of a pilot program, the Treasury is providing $1,000 in seed money for U.S. citizen newborns born between January 1, 2025, and December 31, 2028.

While the government automatically enrolls eligible children, parents or guardians must claim the accounts through a dedicated website or app to access the federal funds and make further contributions. The accounts allow for annual after-tax contributions of up to $5,000 from individuals and up to $2,500 from employers. Funds grow tax-deferred, though withdrawals are generally taxed as ordinary income and subject to early distribution penalties before age 59.5, unless used for a first-time home purchase or higher education.

Initial contributions are invested in the State Street SPDR Portfolio S&P 500 ETF, with additional low-cost index ETFs from Vanguard and BlackRock planned for the future. The program is administered by financial institutions including Robinhood Markets and Bank of New York Mellon. To facilitate the program, the Internal Revenue Service loosened gift-tax return filing requirements for those contributing to the accounts.