But parents cannot decide where that money is invested right now. All funds will sit in one low-cost stock fund until the Treasury adds more options.
State Street Corp. won the role of default manager for the Trump accounts. An expense ratio is the annual fee the fund charges, shown as a percentage of your investment.
Think of the $1,000 deposit as a tiny acorn. With the right soil and low fees, it can grow into a mighty oak over a child's lifetime.
The Treasury also approved four other funds as alternatives, each with a 0.03% expense ratio. Among them are two offerings from BlackRock Inc.: the iShares Core S&P 500 ETF and a separate fund that tracks the entire US stock market. Vanguard Group Inc. contributes its Total Stock Market ETF. The fourth alternative fund is the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF.
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These four funds charge a slightly higher fee - 0.03% means you pay $0.30 per year for every $1,000 invested. Over 18 years that difference can add up. Parents will be able to move money among them once the Treasury adds the choice feature.
Anna Paglia, chief business officer at State Street Investment Management, said, "The company is excited to be the default." BlackRock CEO Larry Fink said: "Trump Accounts can help millions build long-term financial security, develop a greater stake in the future of the country, and share more directly in the growth and prosperity of the United States."
The Treasury statement said: "In the coming months, Treasury expects to make available functionality that will allow parents or guardians to choose how to allocate funds across the additional investment options." Until that happens, all new money stays in the State Street default fund. The accounts are named after President Donald Trump and were created by the One Big Beautiful Bill Act.
Through long-term growth, the government aims for these accounts to foster wealth accumulation and boost investment in the U.S. economy. By selecting a low-cost S&P 500 ETF as the default, the Treasury maximizes returns while minimizing fees for families who do not actively choose a different fund.
Established under the One Big Beautiful Bill Act, the Trump Accounts program aims to foster long-term saving habits and financial literacy among American families. Even for families that never select an alternative, the default's broad market exposure and low expense ratio provide a strong foundation. Starting with a $1,000 seed deposit, the account could benefit from decades of compounding and market growth, potentially delivering a meaningful sum when the child reaches adulthood.
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