The Internal Revenue Service announced new guidance involving the so-called Trump accounts, a new type of individual retirement account for eligible children.
The IRS said the federal government will provide a $1,000 contribution into eligible accounts for children born between Jan. 1, 2025, and Dec. 31, 2028.
The accounts are scheduled to launch July 4, 2026.
RELATED STORY | Michael and Susan Dell pledge $6.25 billion to launch Trump accounts for US children
No withdrawals can be made until Jan. 1 of the year the child turns 18. At age 18, the accounts will essentially become a standard IRA, subject to withdrawal taxes.
LEARN MORE ABOUT TRUMP ACCOUNTS
Officials said other individuals can contribute up to an aggregate limit of $5,000 per year. Employers can contribute up to $2,500 per person, but that amount counts toward the $5,000 annual limit.
The accounts will be invested in mutual funds or exchange-traded funds that track the Standard & Poor’s 500.
Parents can open an account on behalf of their children starting in May by using IRS Form 4547, the Trump administration said.
RELATED STORY | Here's how the $1,000 'Trump Accounts' for newborns will work
The accounts received a significant boost Tuesday after Michael and Susan Dell contributed $6.25 billion toward the program. The Dells said that in addition to children born between 2025 and 2028 receiving $1,000 deposits, they provided enough funds to give 25 million additional children accounts with $250.
“This automatic $1,000 deposit by the federal government gives every American newborn a transformative head start. These investment accounts are simple, secure and structured to grow in value through market returns over time. At age 18, these young Americans can have a financial foundation for continued education, job training, home ownership or future savings. It’s a simple yet powerful idea,” the Dells said in a statement.
