A new government-backed savings initiative for children in the United States is set to launch on July 4, offering families a structured way to build long-term wealth for minors.

Known as “Trump Accounts”, the programme introduces tax-deferred investment accounts designed to help children benefit from long-term market growth. Officials say the initiative aims to encourage financial planning from an early age, with contributions allowed from parents, relatives, employers and other eligible donors.

The accounts are expected to support future expenses such as higher education, buying a first home and starting a business.

What are Trump Accounts?

Officially called 530A accounts, Trump Accounts are government-backed investment accounts available for eligible children in the US.

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According to the Treasury Department, money deposited into these accounts will be invested in low-cost US equity index funds, allowing savings to potentially grow over time through market performance.

Who can open an account?

The scheme is open to US citizens under the age of 18 who have a valid Social Security number.

Parents or legal guardians will open and manage the accounts until the child reaches adulthood. While relatives, employers and other eligible contributors can add funds, only children born within a specified period qualify for the government’s initial contribution.

Government contribution and annual limits

Children born between January 1, 2025, and December 31, 2028, will receive a one-time $1,000 federal deposit. According to the Treasury Department, the amount will be invested in US equity index funds to support long-term growth.

Parents and other contributors can deposit up to $5,000 per child each year. The annual contribution limit is scheduled to be adjusted for inflation beginning in 2028. Certain employer, charitable and government contributions will not count toward this yearly cap.

How can the money be used?

Funds in Trump Accounts grow on a tax-deferred basis, meaning investment gains are not taxed while they remain in the account.

Once beneficiaries turn 18, they can use the money for approved purposes, including higher education, purchasing a first home or starting a business. Withdrawals for non-qualified expenses may attract taxes and penalties, while any unused balance can remain invested for future financial goals, including retirement.

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The Treasury Department has appointed the Bank of New York Mellon to administer the programme, per a report by Hindustan Times. Families will be able to manage their accounts through an official website or mobile app, while authorities have advised users to rely only on verified government platforms to avoid potential scams.

FAQs:

What are Trump Accounts?

They are government-backed, tax-deferred investment accounts for eligible children in the United States.

Who qualifies for the $1,000 government contribution?

Eligible children born between January 1, 2025, and December 31, 2028, qualify for the one-time federal deposit.