- The Treasury Department is moving to automatically establish Trump Accounts for more than 60 million eligible children, expanding access to the new investment program without requiring families to initiate the account election.
The US Treasury Department will automatically establish Trump Accounts for more than 60 million children under age 18 beginning around Oct. 1, according to a new rule reported by _T_he Wall Street Journal. The change shifts the program from an initial sign-up model toward automatic account creation for eligible children who do not already have an account.
Under the new rules, Treasury will make an election to establish an account for each eligible individual who meets the requirements and does not already have one. The agency will subsequently make additional periodic elections for other eligible children.
Trump Accounts were created under the Working Families Tax Cuts as a new type of traditional individual retirement account for children. The IRS says an eligible child must generally be under 18 at the end of the calendar year in which the election is made and have a valid Social Security number.
The new auto-enrollment system does not mean every child will automatically receive the program's $1,000 federal contribution.
How Trump Account Auto-Enrollment Works
Before the change, parents, guardians, and other authorized individuals generally had to use Form 4547 to elect to establish a child's Trump Account. The form can also be used to elect the $1,000 pilot contribution for qualifying children.
The new rules allow Treasury to make the initial election itself for eligible children who do not already have an account. The Journal reported that the change could bring more than 60 million additional children into the program. The $1,000 pilot contribution has separate eligibility requirements. The IRS says it applies to qualifying US citizens born between Jan. 1, 2025, and Dec. 31, 2028, with a valid Social Security number.
The government contribution is also separate from regular contributions. Under the program, individuals and employers can make additional contributions, with authorized contributions generally subject to a $5,000 annual limit.
The accounts are intended for long-term investing rather than ordinary savings. During the growth period, eligible investments generally must be mutual funds or exchange-traded funds that track an equity index made up primarily of US companies, do not use leverage, and have annual fees and expenses of no more than 0.1% of the investment balance.
That includes broad market strategies similar to the long-term index funds and ETFs commonly used for diversified stock-market exposure. The IRS has also said that if an account beneficiary does not select an eligible investment offered by the trustee, the money can be placed automatically into an eligible investment selected by the trustee during the growth period.
What Families Need to Know About the $1,000 Benefit
Automatic account creation and receipt of the $1,000 federal contribution are separate steps. The IRS previously instructed authorized individuals to complete Form 4547 to establish an account and, where applicable, elect the pilot contribution. The new auto-enrollment rules establish accounts without requiring that initial election from the family.
The Journal reported that families will still need to claim their accounts to receive the government contribution and to make or receive additional contributions. The report also said the automatic-enrollment system is intended to expand the reach of private contributions, including a previously announced $6.25 billion pledge from Michael Dell.
Treasury and the IRS have separately created a framework for employers to contribute to Trump Accounts. Proposed rules issued in August would allow employers to contribute as much as $2,500 per year to an employee's or dependent's Trump Account, subject to the applicable rules.
The government has also addressed contributions from individual donors. An IRS safe harbor issued in June provides rules under which certain contributions to Trump Accounts can qualify for the annual gift-tax exclusion without requiring gift-tax reporting for the contribution.
For families, the immediate issue is therefore not simply whether a Trump Account will be created. They will need to determine whether the child qualifies for the $1,000 pilot contribution and complete the required election to receive it.
The automatic-enrollment system represents a significant expansion of the program's reach. Treasury's new rule establishes accounts for millions of eligible children who otherwise might not have had one, while the IRS continues to publish guidance covering how Trump Accounts work, contributions, and eligible investments.