What to know about Trump Accounts and automatic enrollment

NEW YORK (AP) — Whether you realize it or not, your child may be enrolled in a “Trump Account.” Rolled out earlier this year, the Trump Accounts program allows parents to claim special investment accounts for children who are 18 years old or younger. And some babies and newborns are eligible to receive a one-time $1,000 contribution from the government. Now, due to automatic enrollment highlighted by President Donald Trump Wednesday, the Treasury Department says that every eligible child with a valid Social Security number has a Trump Account.

But parents and legal guardians would still need to formally activate the accounts if they haven’t already. Here’s what you need to know about the accounts. It’s a savings tool that invests money in the stock market on a child’s behalf.

The child can’t access the money until they turn 18 and can use it only for specific purposes, such as paying tuition, starting a business or making a down payment on a home. All Americans under age 18 are now being automatically enrolled in Trump Accounts. But parents and legal guardians still need to formally claim the accounts in order to activate them — by using the program’s website at trumpaccounts.gov or its mobile phone app.

Trump said Wednesday said that 70 million children will now be enrolled in the accounts, up from 8 million created since their launch in July. For some babies and newborns, the U.S. Treasury Department will make a one-time, $1,000 “seed” contribution once an account is claimed.

Other contributions will need to come out of pocket. Parents can contribute up to $2,500 annually in pretax income, much like they do for retirement accounts. But employers, relatives, friends, local governments and philanthropic groups can also pitch in.

Yearly contributions are capped at $5,000, although contributions from governments and charities don’t count toward that total. Private banks and brokerages will manage the money. When the accounts were originally conceived, investments were restricted to broader index funds.