You can start contributing to a Trump Account starting July 4. Here’s what to know.

Americans have a new way to save for their children’s future with the launch of Trump Accounts on July 4. These tax-deferred investment accounts, also known as 530A accounts, are aimed at helping children born between 2025 and 2028 build savings similar to how adults use individual retirement accounts for retirement savings.

Under the One Big Beautiful Bill Act passed last year, Trump Accounts are designed to provide children under 18 with a head start in accumulating retirement assets. The accounts have been hailed as a “rainy day fund” that kids can use once they reach adulthood. Already, six million people have signed up for these accounts, according to a Treasury Department spokesperson.

Parents, guardians, employers, and other contributors can start depositing money into a child’s Trump Account starting July 4. Children who open an account will also receive a $1,000 Treasury Department contribution invested in the stock market. The accounts are managed by Bank of New York Mellon in partnership with online brokerage firm Robinhood, with the option to roll over to another financial institution during the “growth period.”

During the growth period, contributions to Trump Accounts must be invested in mutual funds or ETFs tracking large indexes like the S&P 500. After the beneficiary reaches age 18, the account will operate like a traditional IRA. The Trump Accounts app and website provide an overview of the portfolio and its performance.

Contribution limits for Trump Accounts are set at $5,000 per child per year, excluding government and charitable contributions. Employers can also contribute up to $2,500 per year, which counts towards the $5,000 limit. Philanthropists like Michael and Susan Dell, as well as companies such as Bank of America, JPMorgan Chase, and Micron Technology, have pledged financial support for Trump Account holders.

Withdrawals from Trump Accounts generally cannot be made before the beneficiary turns 18, except for specific circumstances. Once the child reaches 18, they can either keep the money in the account or use it for qualified expenses like education, home purchase, or starting a business. Early withdrawals before age 59.5 for unqualified reasons may incur a 10% penalty, similar to traditional IRAs.

Contributions to Trump Accounts are not tax-deductible, so parents and contributors do not receive immediate tax benefits. It’s important to consider how Trump Accounts compare to other savings vehicles in terms of tax advantages and restrictions. While Trump Accounts have contribution caps and limited investment tax benefits, other account types like 529 plans or savings accounts may offer different advantages.

Overall, Trump Accounts offer a new way for Americans to save for their children’s future, providing a unique opportunity to start building retirement assets from an early age. With the launch of these accounts on July 4, families can take advantage of this innovative savings tool to secure a brighter financial future for their children.