Trump Accounts are a classic win-win
by Editorial Board · The Washington TimesOPINION:
President Trump may have just done more for America’s children than any of his predecessors.
Mr. Trump said Wednesday that, starting Oct. 1, the Treasury Department had automatically enrolled 60 million youngsters in Trump Accounts, the president’s signature savings and investment platform announced in July, bringing the total number of enrollees in the tax-advantaged program to 70 million, calling the milestone “historic.”
It is historic indeed. Whether their parents took any action or not, every American younger than 18 who has a valid Social Security number now has a Trump Account.
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Children born Jan. 1, 2025, through Dec. 31, 2028, are also eligible for a one-time seed contribution of $1,000, courtesy of Uncle Sam.
Those born outside that window do not get the Treasury contribution, but family, friends and employers can contribute money to their tax-deferred brokerage accounts: up to $5,000 a year for family and friends and up to $2,500 a year for employers, subject to the overall $5,000-a-year limit.
The accounts must be claimed by legal guardians to be managed — and, for those eligible for the seed contribution, for the $1,000 to be deposited — but otherwise, they require minimal effort on the part of parents. This makes them an excellent way to secure children’s futures.
Thanks to a change announced this month, the money no longer has to be invested solely in low-cost index funds. Treasury is now allowing “large philanthropic contributions” of public company stock too.
Projecting average stock market returns, a baby born in 2026 will have a Trump Account balance of $303,800 by age 18 — and a balance of $1.09 million by age 28 if the maximum contributions are made each year, according to the White House Council of Economic Advisers.
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Dell Technologies CEO Michael Dell and his wife, Susan Dell, have pledged $6.25 billion to the program — specifically, $250 deposits into Trump Accounts for 25 million children ages 10 and under who live in ZIP codes with median household incomes below $150,000. SpaceX President Gwynne Shotwell and her husband have promised one share of SpaceX stock per child to more than 2 million children ages 11 to 17 in lower-income areas through the accounts.
Leave it to the left to find something to gripe about. On Thursday, The New York Times played the aghast fact-finder. “A far more divisive detail about the program [has] received less notice: a Treasury Department rule letting wealthy donors and corporations donate shares in individual companies to children’s portfolios,” the DealBook newsletter reported.
The administration hardly tried to hide this. Treasury issued a press release on the automatic enrollments and contributions rule change on Oct. 1.
“The most glaring concern,” The Times droned on, “is the potential for political maneuvering: distributing stock to children in specific municipalities could allow business leaders to curry favor with local policymakers. Since the shares are locked up for five years, parents might be financially incentivized to support those companies.”
Talk about looking for a problem.
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In addition to setting up children for success in their adult years — especially when the alternative for many children is likely no investment account at all — Trump Accounts encourage financial literacy.
They can also benefit contributors, in what Fortune magazine called “a new type of philanthropy” made “especially efficient” under the tax code.
Unfortunately for those with Trump derangement syndrome, Trump Accounts are a classic win-win.
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