The U.S. Department of the Treasury announced proposed guidance on eligible investments for Trump Accounts, a new type of individual retirement account for children, focusing on low-cost options to maximize long-term growth.
The default investment for all Trump Accounts will be the State Street SPDR Portfolio S&P 500 ETF (SPYM), with four additional low-cost index exchange-traded funds available for selection by a parent or responsible party.
Treasury's proposed guidance would restrict eligible investments to choices with low expense ratios and exclude products with excessive fees or unnecessarily complex strategies. Eligible investments must track a broad segment of the U.S. or global equity market using objective financial criteria.
"Every dollar in a child's Trump Account should be working toward that child's financial future, not diminished by unnecessary fees," said Treasury Secretary Scott Bessent.
Investment fees and expenses can materially reduce account balances over time. By emphasizing straightforward, low-cost investment options, the proposed guidance aims to allow children to benefit more fully from decades of compound growth.
Frank Bisignano, chief executive of the Internal Revenue Service, said: "For a child investing over decades, even small differences in annual costs may have a meaningful effect on the amount available in adulthood."
The Treasury and IRS are seeking public comment on the proposed guidance.