What Trump Accounts Mean for Families With Children
Every eligible American child now has a Trump Account. For families already using 529 plans, custodial accounts and regular gifts, the question is how it fits.
A new account for children and grandchildren under eighteen
The Treasury has finished automatically enrolling eligible children in Trump Accounts, so in many families every child and grandchild under eighteen now has one. The accounts cover every eligible child under the age of eighteen with a valid Social Security number, the Treasury said. Each is a tax-advantaged investment account, and like any investment account its value can rise or fall. Family members, friends and employers can contribute only once a parent or guardian claims the account. Claiming matters most for the youngest children. Certain children born from 2025 through 2028 can receive a one-time $1,000 seed contribution from the Treasury, and it is paid only into accounts that have been claimed.
For families that already plan for the next generation, a Trump Account adds to what is in place; it does not replace it. Federal law created it as a type of traditional individual retirement account for a child, so it is built for the long term. A 529 plan, by contrast, is built around education. A custodial account is different again: gifts to it belong to the child and typically pass to the child’s control as a young adult. For grandparents who make regular gifts to grandchildren, a contribution here is one more gift to weigh alongside those already planned. Families that own a business face an open question, because the rules for employer contributions to these accounts are still a proposal awaiting a public hearing.
Before claiming an account or adding money to it, a few points are worth settling within the family. The first is who claims it, since the person who claims an account manages it. A parent or guardian can claim, and IRS rules also allow a legal custodian to do so. The second is how each account fits the plan for that particular child, since every eligible child has an account of their own. The third is timing: parts of the rules are still open for public comment, so details may change. Claiming an account does not commit anyone to contribute. Whether it deserves new money is a separate decision, best made alongside the family’s 529 plans, custodial accounts and gifting plan.
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