Trump Accounts launch, revealing how funds get invested

Trump Accounts, the new tax advantaged savings accounts for children, launch on July 4, and the Treasury Department has now confirmed exactly where the money will sit by default. Every dollar deposited will automatically go into the State Street SPDR Portfolio S&P 500 ETF (SPYM), a fund tracking the broad US stock market, until parents get the option to choose something else.

At a Glance

• Trump Accounts launch July 4, with contributions accepted starting July 5.
• Default investment is SPYM, an S&P 500 index fund with a 2 basis point expense ratio.
• Babies born from 2025 through 2028 get a one time $1,000 deposit from the Treasury.
• Parents, relatives, friends and employers can contribute up to $2,500 a year, capped at $5,000 total annually.
• More than 50 companies, including Bank of America, JPMorgan, Intel and Uber, have pledged employee contributions.

Why SPYM Got the Nod

The Treasury says cost was the deciding factor. SPYM charges just 2 basis points, making it the cheapest S&P 500 ETF on the market, and it still delivers wide exposure to large US companies. For an account meant to run for years before a child can touch it, shaving fractions of a percent off fees compounds into real money over time.

Officials were clear that low fees, not flashy returns, drove the pick. Every account opened at launch will hold SPYM by default, whether the money comes from the government's initial deposit or from a parent's monthly contribution.

Other Funds Waiting in the Wings

SPYM won't be the only option forever. The Treasury Department has already approved a handful of other low cost index funds that will become available once the government finishes building out the choice system. Those 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 (BITO39.SA).

Parents won't be able to pick among these right away. Until the Treasury rolls out that choice feature in the coming months, every contribution keeps flowing into SPYM regardless of which other funds appear on the approved list.

Who Can Put Money In, and How Much

Trump Accounts, formally called 530A accounts, were created under the Working Families Tax Cuts law. Babies born between 2025 and 2028, spanning Trump's second term, each get a one time $1,000 seed deposit from the federal government.

Beyond that, contributions can come from parents, relatives, friends, or employers, up to $2,500 per person per year, with a combined annual cap of $5,000 per child. Parents will make deposits through an official app rather than filing anything with the IRS.

Corporate interest has already shown up. More than 50 companies, among them Bank of America, JPMorgan, Intel and Uber, have said they will contribute to accounts for their employees' children. Some philanthropists have made similar pledges. Treasury Secretary Scott Bessent said on Fox that as many as 20 states might also chip in, part of what the administration calls its