Trump Accounts for Children Launch on July 4 with 6 Million Opened

Trump Accounts, a new federal savings and investment vehicle for children, went live on July 4. To date, more than 6 million accounts have been opened for children under age 18, according to the Treasury Department. Of those, 1.4 million will receive the $1,000 federal pilot contribution for newborns.

The total number of opened accounts remains a fraction of the tens of millions of children under age 18 who may be eligible. The accounts function like traditional IRAs during a growth period that covers the first 18 years of a child's life.

U.S. citizens with a valid Social Security number may have a Trump Account, and no child may have more than one. To qualify for the one-time federal pilot contribution, the child must be born between January 1, 2025 and December 31, 2028. The account must be opened by an authorized individual on behalf of the child.

If the account opener is applying for the $1,000 seed money, that individual must be able to claim the child as a dependent for purposes of the child tax credit. If the child is not eligible for the federal contribution, the opener may be a parent, legal guardian, adult sibling or grandparent.

To open an account, parents or guardians fill out and submit Form 4547. The same form is used to elect the $1,000 pilot contribution for eligible newborns.

Family and friends may contribute after-tax money but receive no deduction. Employers may make pre-tax contributions up to $2,500 a year per employee, not per child. States, qualified nonprofit organizations and philanthropists may contribute to members of a qualified class.

Family, friends and employer contributions combined may not exceed $5,000 a year for a single account. Contributions from governments and nonprofits do not count toward the limit. By law, contributions must be invested in low-cost, broadly diversified U.S. stock index funds or exchange-traded funds with an expense ratio of 0.10% or less.