The US Treasury Department has announced the official launch of the Trump Accounts on July 4th. These are tax-advantaged investment accounts established for American children, designed to help the next generation build wealth through long-term stock market investment.

As per the Treasury's initial plan, all contributions to the accounts will be automatically invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM), which carries an expense ratio of just 0.02%, significantly lower than the 0.1% cap set by Congress. In the coming months, parents will also be able to choose their own investment allocations from four additional low-cost index ETFs:

iShares Core S&P 500 ETF (IVV)

Vanguard Total Stock Market ETF (VTI)

State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)

iShares Core S&P total U.S. Stock Market ETF (ITOT)

Under the law, newborns who are U.S. citizens born between 2025 and 2028 will receive a one-time $1,000 seed deposit from the government upon opening an account. Families can also contribute up to $5,000 in after-tax funds annually, and employer contributions are capped at $2,500 per year, counting towards that same limit.

Funds in the accounts are generally not accessible until the child turns 18. At that point, the account converts to a traditional IRA, and the funds can be used for qualified expenses such as education, a first home purchase, or starting a business. Early withdrawals are subject to taxes and a 10% penalty.

To date, over 6 million children have already registered for accounts, with 1.5 million of them qualifying for the $1,000 seed money. Several companies, including Bank of America, JPMorgan Chase, Intel, and Uber, have committed to matching the government's $1,000 contribution for their employees' children.