Overview
- The Trump Accounts program went live on July 4 and the Treasury reports more than 6 million accounts have been opened with roughly 1.4 million newborns eligible for the one-time $1,000 federal seed.
- Accounts are custodial until the child turns 18, convert into a traditional IRA at majority, generally bar withdrawals before 18, and allow up to $5,000 in outside contributions per child each year with employers able to add up to $2,500 tax-free per employee.
- The Treasury set a default investment in State Street’s SPDR Portfolio S&P 500 ETF with an annual fee cap of 0.10 percent and named Bank of New York Mellon and Robinhood as initial managers while Robinhood built the consumer app.
- Large private and corporate commitments are being deployed to extend reach, notably Michael and Susan Dell’s $6.25 billion pledge and company matching programs such as Micron’s, which officials say will target additional eligible children.
- Critics and some economists warn the accounts could mostly benefit families that can make regular contributions, could widen wealth gaps if take-up is uneven, and may concentrate decades of flows into a small set of index providers.