Key facts
- US President Donald Trump has launched a new retirement investment scheme for children named Trump Accounts.
- Contributions are capped at $5,000 per child annually.
- Funds can be accessed by children from age 18.
- Withdrawals before age 59 and a half may be subject to taxes and a 10% penalty.
- The scheme aims to provide children with a financial head start.
US President Donald Trump has introduced a new retirement savings scheme for children, dubbed 'Trump Accounts,' which allows families, friends, and employers to contribute up to $5,000 per child annually. While the funds become accessible when the child turns 18, withdrawals made before the age of 59 and a half will be subject to taxes and a potential 10% penalty.
In the UK, parents Richard and Caitlin Brain are paying £50 a month into Junior Self-Invested Personal Pensions (SIPPs) for their two young children, aged 20 months and five months. These pensions, which allow a maximum annual contribution of £2,880 per child with government tax relief, mean the money is inaccessible until age 57. The couple also contribute £60 a month per child to Junior ISAs for potential university costs or other early-life needs.
Richard, who works in finance, believes these long-term savings are crucial for his children's future financial security. He noted that the family has made financial sacrifices, such as eating out less often, to fund these investments. Fidelity reports a significant increase in Junior SIPP accounts, with numbers more than tripling since December 2023.
Personal finance teacher Wally Luckeydoo, from Smyrna High School in Tennessee, has opened Trump Accounts for his own children, viewing it as a way to provide them with a financial head start and change their family's financial trajectory, influenced by his own experiences with financial struggle after his father's early death.