The U.S. Treasury Department announced Thursday that more than 60 million American children under age 18 have been automatically enrolled in Trump Accounts, a new type of tax-deferred individual retirement account for minors. The enrollment, completed this week under newly proposed regulations, marks a significant expansion of the program launched July 4.
Key developments:
- Automatic enrollment has been implemented for all eligible children with a valid Social Security number, eliminating the prior requirement for parents or guardians to manually sign up.
- Stock donations are now permitted in Trump Accounts under temporary regulations, allowing donors to contribute individual stocks directly. Donated stocks must typically be held for five years before sale.
Treasury Secretary Scott Bessent stated in a release, "Millions of children have already enrolled in Trump Accounts. With automatic enrollment, over 60 million more eligible children now have an account ready to be claimed." The accounts, also known as 530A accounts, are open to any U.S. child under 18 with a Social Security number. Children born between 2025 and 2028 may also qualify for a one-time $1,000 government contribution under a pilot program.
How the accounts work
Trump Accounts function as tax-deferred retirement savings vehicles for minors. Contributions grow tax-free, and withdrawals are taxed at the child’s rate upon retirement. The Treasury’s update this week allows direct stock donations, a change from prior guidelines that restricted holdings to diversified, low-cost funds. Financial experts note this could incentivize large-scale private giving, as donating appreciated stock avoids capital gains taxes that would apply if the donor sold the stock first.
Participation challenges and responses
Despite the expansion, participation in Trump Accounts has historically been low. A study by the nonprofit Commonwealth found that only 5% of eligible low- to moderate-income families have opened a 530A account. Barriers cited include confusion over eligibility, tax implications, and complex contribution limits. Adam Michel, director of tax policy studies at the Cato Institute, noted in a policy analysis that the system’s complexity discourages participation, particularly among households with limited financial literacy or emergency savings.
Next steps for families
Automatic enrollment does not activate the accounts; parents or guardians must claim the accounts to begin contributions or investments. The Treasury has not yet released detailed instructions on the claiming process, though officials have indicated further guidance will follow.
The announcement comes as Republicans seek to highlight the accounts ahead of the midterm elections, positioning them as a tool to promote wealth-building for lower-income families. Democrats have not yet publicly commented on the auto-enrollment expansion.