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Trump Accounts launch for US children, with $1,000 starter contribution
The accounts are tied to a low-cost index fund and allow up to $5,000 per child per year, but early withdrawals can face taxes and a 10% penalty.
The Trump administration has rolled out Trump Accounts, a new savings scheme intended to encourage investing among American children, with the launch marked by a high-profile Wall Street opening bell ceremony at the White House. The program is now available to US children under 18, with those born between 2025 and 2028 eligible for a $1,000 contribution to start savings, according to BBC Business.
Families can create accounts nationwide for any child under 18 with a valid Social Security number, using a parent app. Parents, as well as families, friends and employers, can contribute up to $5,000 per year per child, and the money must be invested in a low-cost index fund designed for long-term growth.
While the funds grow tax free, BBC Business reports that withdrawals are taxed and may trigger a 10% penalty if taken before age 59 and a half. The money can avoid that penalty if it is assigned to certain purposes, including higher education, buying or building a first home, or personal emergency expenses.
The White House says the program gives millions of children a path into US stock ownership, arguing that stock exposure has been uneven, particularly for younger and lower-income households. BBC Business notes that critics, including Tax Foundation chief economist Will McBride, say the scheme is too complicated to sign up for and could limit uptake.