The U.S. Treasury Department issued finalized guidance on Thursday outlining the investment options eligible for Trump Accounts, a new type of tax-deferred savings account for children launched by the Trump administration in July. The rules establish a framework for long-term growth-focused investments while restricting eligible funds to low-cost options.
Key developments:
- The Treasury designated five specific low-cost index ETFs as the only eligible investments for Trump Accounts, including the iShares Core S&P 500 ETF, Vanguard Total Stock Market ETF, and State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF.
- The guidance requires eligible funds to track broad segments of the U.S. or global equity market using objective financial criteria and to maintain low expense ratios.
The Treasury stated the rules aim to maximize compound growth for children by minimizing fees. Treasury Secretary Scott Bessent emphasized in a press release that the accounts should prioritize long-term returns over unnecessary costs. “Every dollar in a child's Trump Account should be working toward that child's financial future, not diminished by unnecessary fees,” Bessent said.
Default and allocation details:
The State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF will serve as the default investment for all Trump Accounts. Parents and guardians will be permitted to reallocate funds among the five approved ETFs. The Treasury has pledged to deposit $1,000 into accounts for children born between 2025 and 2028.
Brokerage partnership and rollout:
The Treasury selected The Bank of New York Mellon Corporation (BNY) as the financial agent for the program, which partnered with Robinhood as the official broker. Robinhood CEO Vlad Tenev stated in a CNBC interview that the platform would focus on the S&P 500 to simplify investing for families. “We wanted to make it as easy as possible for every American, starting at birth, to get access to the great American economy,” Tenev said. He added that while the initial lineup is limited, discussions about expanding options may occur over time.
The accounts officially launched on July 4, with the Treasury framing the initiative as a way to promote early ownership of U.S. equities and compound interest benefits. The finalized guidance follows the Treasury’s April designation of BNY as the program’s financial agent and aligns with the administration’s broader push for accessible, low-fee investment vehicles.