CNBC's Sharon Epperson breaks down so-called 'Trump Accounts' and what parents need to know about them.

Washington

A new tax law has established 'Trump accounts,' investment accounts designed to help families save for children under 18. Starting in July 2026, these accounts will allow annual after-tax contributions of up to $5,000, with parents, family, and employers eligible to contribute. 

A pilot program will provide a one-time $1,000 federal contribution for US citizen newborns born between 2025 and 2028. Philanthropist Michael Dell has pledged $6.25 billion to expand the program, and the funds will be invested in mutual funds or ETFs tracking major US stock indexes. The accounts will initially be managed by the Treasury's designated agent, with options to transfer to private brokerages later.

What parents need to know about 'Trump Accounts'

Getting access to $1000 in free money for your newborn is a no brainer, right? That's what a so called Trump account aims to do and why some financial advisors say it's important to check it out. Starting in July 2026, there will be another option to save and invest for children. A new tax law this year created a provision for Trump accounts. Now these are investment accounts that allow contributions of up to $5000 a year in after tax money for a child under the age of 18. Parents, family members and others can contribute and employers can too. Within the $5000 annual limit, a pilot program will allow newborns who are US citizens born from 2025 through 2028 to receive an initial one time contribution of $1000 from the federal government. And now there's an effort to bring more money into these accounts. Michael Dell says he will donate 6 1⁄4 billion dollars to expand the number of children who receive initial seed money and there are calls for more private contributions. Money in Trump accounts will be invested in a mutual fund or an ETF that tracks the S&P 500 index or another index of American stocks. And the Treasury Department says Trump accounts will be initially created and held with Treasury's designated financial agent. Then at a later date, parents or guardians will be able to transfer the full balance of a Trump account to their preferred brokerage firm through a simple trustee to trustee rollover. There's a lot more information about Trump accounts at trumpaccounts.gov, and if you want more information about saving and investing for your children, sign up for my free money. 101 newsletter. Use the QR code right there on your screen or go to cnbc.com slash money 101.

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Caracas

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Canberra

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Brussels

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Los Angeles

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Moscow

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Pokrovsk

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Breakdown