With Trump accounts set to officially open on July 4, the U.S. Treasury Department is detailing where the money in these accounts will be placed.
At launch, all funds in a Trump account will automatically be invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM), which tracks the performance of the S&P 500 Index. This includes contributions from parents and others to the child’s account.
This fund was selected as a standard investment because, according to the Treasury Department, it is the lowest-cost S&P 500 ETF with an expense ratio of just 2 basis points while providing broad exposure to the U.S. stock market. The key factor in the Treasury’s selection of funds was that the vehicles represented the lowest cost to the public.
Other low-cost index ETFs eligible for Trump accounts include the iShares Core S&P 500 ETF (IVV), the Vanguard Total Stock Market ETF (VTI), the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), and the iShares Core S&P Total US Stock Market ETF (ITOT).
The Treasury says parents will be able to decide in the coming months how to allocate the funds across other investment options. Until then, all contributions will be invested in the State Street fund by default.
“Trump accounts will be invested in low-cost index funds,” Treasury Secretary Scott Bessent said on Fox. “Everyone will share in the American dream. I think we’re on the verge of a wave of innovation that we’re seeing here.”
Trump accounts, also known as 530A accounts, are tax-advantaged investment accounts for children designed to educate them about finances and build long-term wealth for college, home purchases or retirement planning. They offer children the opportunity to start early and learn how to invest in real life.
The accounts, created as part of the Working Families Tax Cut Act, include a one-time contribution from the U.S. Treasury of $1,000 for babies born from 2025 to 2028 – Trump’s second term.
Parents and their employers, family members and friends can contribute up to $2,500 per year starting July 5, with an annual contribution cap of $5,000.
Parents can deposit directly into their children’s accounts through an official app, without the need for an IRS form.
So far, more than 50 companies, including Bank of America, JPMorgan, Intel and Uber, have committed to contributions for their employees, while philanthropists have pledged their own donations.
Bessent also said 20 states could also contribute to Trump accounts as they work to meet the administration’s “50 State Challenge” and help fund the accounts.
Older children can also use the accounts, but are not entitled to the $1,000 starting capital. Certain other children may be eligible for a $250 donation from Dell Technologies founder Michael Dell and his wife Susan. The Dells provide a $250 contribution to eligible children under 10 who live in ZIP codes with a median income of $150,000 or less. The commitment is valued at $6.25 billion.
Trump said on Truth Social on Wednesday that Micron CEO Sanjay Mehrotra pledged $250 million to Trump Accounts. Hedge fund founder Ray Dalio and his wife Barbara also donated $250 each to about 300,000 children living in households with median incomes of less than $150,000 in Connecticut. Brad Gerstner, CEO of Altimeter Capital, said he would donate $250 to every child under 5 in Indiana with a Trump account. And rap artist Nicki Minaj has pledged $150,000 to $300,000 to the Trump accounts of her fans’ children.
According to the Treasury Department, over 6 million people have signed up for Trump accounts, with 1.5 million of them eligible for the initial $1,000 seed donation. 86% of Trump accounts opened are associated with families making less than $200,000 per year.
Nasdaq and New York Stock Exchange officials plan to ring the opening bell in the Oval Office next week to celebrate the launch of Trump Accounts.
Jennifer Schonberger is an experienced financial journalist covering markets, economics and investing. At Yahoo Finance, she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, economics, cryptocurrencies, and the intersection of Washington politics and finance. Follow her on X @Jenniferisms and further Instagram.
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