Trump Accounts launch July 4. Here's how they work.

Starting July 4, Americans can begin contributing to "Trump Accounts," a new type of tax-deferred investment vehicle designed for children under 18. These accounts, officially known as 530A accounts, aim to help young individuals build savings for their future, drawing a parallel to how adults use individual retirement accounts (IRAs) for retirement planning.

Created as part of last year's "One Big Beautiful Bill Act," Trump Accounts will receive a $1,000 contribution from the Treasury Department for children born between January 1, 2025, and December 31, 2028, who open an account. This initial government contribution will be invested in the stock market.

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These accounts are in the lane of helping children start to accumulate retirement assets from as early as possible.

Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center, explained that the accounts are intended to help children "start to accumulate retirement assets from as early as possible." U.S. Treasury Secretary Bessent has also promoted the accounts as a "rainy day fund" for young adults.

During the "growth period," typically until the beneficiary turns 18, contributions must be invested in mutual funds or exchange-traded funds (ETFs) tracking major indexes like the S&P 500, with fees not exceeding 0.1%. After this period, the account will function similarly to a traditional IRA. Bank of New York Mellon and Robinhood are partnering to administer the accounts, though they can be transferred to other institutions. Parents can set up accounts via the Trump Accounts app or website.

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rainy day fund