Treasury enrolls 60 million children in Trump Accounts

what happened

Barron's, whose report was carried by Dow Jones Newswires, says the Treasury Department is rapidly broadening Trump Accounts in two ways. On Oct. 1, the department said it had enrolled more than 60 million eligible children under 18 automatically. Roughly seven million other children already had accounts opened by their parents. The accounts are named for President Donald Trump. Parents must still claim their children's accounts through the official Trump Account app. Until that happens, the automatically enrolled accounts will be held in a collective master group trust.

Trump Accounts launched July 4. The federal government is putting $1,000 into accounts for children born from Jan. 1, 2025, through Dec. 31, 2028. Parents may add as much as $5,000 annually, while wealthy donors, including technology founder Michael Dell, have offered to help fund children's savings. Treasury Secretary Scott Bessent called the move “a transformative milestone” in the Trump administration's effort to give every American child an opportunity to build generational wealth and begin a stronger financial future.

Under the original law, account owners could buy only a narrow range of low-cost exchange-traded funds tracking U.S. stocks, including the State Street SPDR Portfolio S&P 500 ETF (SPYM). Rules issued by the Treasury in the Federal Register now permit donors to give individual shares to Trump Accounts. Children and parents cannot reject those securities, and the shares generally cannot be sold for five years. One limited exception is a qualified rollover to an ABLE (Achieving a Better Life Experience) account for people with disabilities. The Treasury and Internal Revenue Service are asking whether further exceptions are needed, including for cases in which holding a particular stock could create legal or ethical problems for a family.

The Treasury says the stock-donation rules could encourage more gifts through charitable foundations. The department said it had been told that several eligible donors who would not otherwise give cash were ready to contribute appreciated stock, but it did not identify them. According to the filing, donors hope the shares and five-year holding requirement will give children and parents a stake in the companies involved. Donors cannot select individual recipients: each contribution must reach at least 5,000 people grouped by criteria such as geography. A foundation, for example, could place one bank share in every Trump Account within a ZIP code. Trump Accounts are a form of Individual Retirement Account, or IRA. Parents also have alternatives such as 529 plans, whose qualified education withdrawals, including university tuition, are tax-free. Remaining 529 money can be rolled into a Roth IRA without tax, and Roth IRA retirement withdrawals are exempt from federal and state income tax.

why it matters

The rule change expands the securities that may enter the accounts from selected U.S.-stock ETFs to donated individual shares. The five-year sale restriction limits liquidity for those holdings.

instruments