WASHINGTON — Bank of New York Mellon and Robinhood will partner with the federal government to administer a new tax-advantaged savings program for children known as “Trump accounts,” the U.S. Department of the Treasury said.
The accounts are scheduled to begin accepting deposits in July. The Internal Revenue Service has enrolled approximately four-million children so far, with about one-million eligible for a $1,000 federal seed contribution.
Bank of New York Mellon, which operates under the BNY brand, will serve as the designated financial agent responsible for managing the initial accounts. The New York-based bank oversees roughly $60 trillion in assets as part of its custody business for institutional clients, noted the New York Times.
Robinhood will act as the brokerage and initial trustee for the accounts and will assist in developing the program’s mobile application. The company has grown rapidly as a platform for commission-free trading in stocks and cryptocurrencies, the Times report added.
Plans to Contribute to Employees
Treasury said both firms were among a group of employers that had previously indicated plans to contribute to the accounts on behalf of employees’ children. In a prior statement, BNY CEO Robin Vince said the initiative would help employees “give their children a head start toward a stronger financial future.”
As the CU Daily has reported, the accounts are designed as long-term savings and investment vehicles, with features similar to certain tax-advantaged retirement plans. Contributions may be made by parents, relatives, employers and other entities, subject to annual limits, and funds generally cannot be accessed until the beneficiary turns 18.
The Times noted industry groups, including the Investment Company Institute, have urged policymakers to make the accounts portable and to encourage competition among financial firms serving as custodians and trustees. Treasury officials have said the program could be expanded over time to allow for transferability.
The National Design Studio, a newly established federal unit focused on modernizing government technology, will work with Robinhood on development of the accounts’ digital platform, according to Treasury.
