Robinhood picked to run federal Trump Accounts for children

In short: The US Treasury has selected Robinhood and BNY Mellon to help run “Trump Accounts,” a new federal investing program for children.

What happened

“Trump Accounts” are government-backed investing accounts for minors. They are set up as custodial accounts, which means an adult manages the account until the child is old enough. The program includes a $1,000 government contribution for children born between 2025 and 2028.

Robinhood says it was chosen, along with BNY Mellon, to serve as the brokerage and initial trustee for the program and to help build and operate a dedicated Trump Accounts app. A brokerage is the company that places trades for you, like a ticket booth that helps you buy and sell seats. A trustee is a party responsible for overseeing the account under the program’s rules.

Robinhood and its CEO, Vlad Tenev, have emphasized that trades in these accounts will be commission-free, meaning there are no traditional per-trade fees. Tenev has also said the account is designed to convert into a traditional IRA at age 18, which is a retirement account with special tax rules.

Tenev has been open about the long-term business angle. He has said the partnership puts Robinhood in front of millions of future investors, and that this could be many people’s first investment account.

Why it matters

For families, this could create an automatic head start, like planting a small seed early and letting time do the growing. For Robinhood, it could turn a government program into a long-lasting relationship with young customers, starting at birth and continuing into adulthood.

Source: NYTimes