Treasury proposes low-cost investment rules for Trump Accounts
The Treasury Department has issued new Trump Account guidance, emphasizing low-cost investments.
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The U.S. Treasury Department issued proposed guidance on eligible Trump Account investments Thursday, establishing a framework for what products could qualify as additional investment options going forward.
The new tax-deferred investing accounts for children, also known as 530A accounts, are designed to jump-start long-term savings.
Under the proposed guidance, an eligible index must be designed primarily to measure the performance of a broad segment of the U.S. or global equity market using objective financial criteria, according to the Treasury Department. The guidance also limits eligible investments to those with low expense ratios, among other qualifiers.
"By emphasizing straightforward, low-cost investment options, the proposed guidance would allow children to benefit more fully from decades of compound growth and ensure that a greater share of investment returns remain in their accounts," the release said.
"Every dollar in a child's Trump Account should be working toward that child's financial future, not diminished by unnecessary fees," Treasury Secretary Scott Bessent said in a statement. "Under President Trump's leadership, Treasury is putting simple, commonsense protections in place to help families keep more of their investment returns."
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After opening an account, families can track account activity in the Trump Accounts app, which was designed in partnership with Robinhood.
"We wanted to make it as easy as possible for every American starting at birth to get access to the great American economy, to get ownership of these companies from birth and see the magic of compound interest," Robinhood CEO Vlad Tenev said Wednesday on CNBC's "Squawk Box."
"Over time, there's been discussion about more [investment] options, but I think the default of a diversified portfolio of the most prominent companies has been a great way to start and has been very effective," Tenev said.
