At least two Wall Street firms have secured contracts to begin setting up and managing Trump Accounts, a new type of savings account created by Congress last year that would give parents a head start on their children’s investments.
Bank of New York Mellon has been tapped as the initial developer of Trump Accounts, which will work closely with Robinhood Markets to manage the accounts, the Treasury Department revealed on Monday. The announcement comes as banking firms elbow each other for a spot in the coveted program as the accounts could help the companies secure lifetime customers if their accounts are opened when they are young children or infants.
“Our task is clear: to provide the next generation of Americans with a world-class, intuitive platform to jump-start their financial future,” said Vlad Tenev, chairman and chief executive of Robinhood, told The Wall Street Journal, which was the first to report on the news.
Under the contract, BNY will manage the accounts and create a new Trump Accounts app, a secure platform for families to access and view their accounts. Robinhood will be responsible for brokering the accounts and creating an “intuitive user interface,” according to the Treasury Department.
The Treasury will maintain control over the app and how the accounts operate.
How Trump Accounts work
Trump Accounts were initially approved in President Donald Trump’s massive tax package last summer, and the program was heavily pushed by Utah Rep. Blake Moore, who had an early hand in the project.
The program would allow any parent to open a Trump Account for their child. For children born between Jan. 1, 2025, and Dec. 31, 2028, a one-time credit of $1,000 from the federal government will be deposited. Parents, friends and private organizations can then contribute up to $5,000 a year until the child turns 18.
Children who are eligible to receive additional money from the Dell family would see another $250 added to their accounts. That money will be available to children under the age of 10 who live in ZIP codes where the median income is less than $150,000.
The accounts would then be administered by a bank or other financial institution and be overseen by the Treasury Department. The contract announced on Monday gives BNY and Robinhood a head start on getting accounts established.
To be eligible for an account, the child must be a U.S. citizen with a Social Security number provided by at least one of the parents. The Social Security number must be considered “work eligible” in order for the account to be approved.
After the child is 18, the accounts will be treated like a traditional IRA, subject to existing rules and earned income requirements, according to the White House. Any withdrawals before the account holder turns 60 years old may be subject to an additional 10% tax, with exceptions for higher education expenses or first home purchases.
The accounts are expected to become available as soon as this summer.
