Families weigh Trump Accounts after 6 million child sign-ups
Treasury says more than 6 million children were registered before the July 4 launch, as parents assess how the new 530A accounts fit their savings plans.
By Amanda Ross · Deals Correspondent
· 3 min read
Trump Accounts opened to families on July 4 after more than 6 million children were registered ahead of launch, according to the Treasury Department. The new tax-advantaged child savings and investment accounts give households another vehicle to consider alongside 529 plans, custodial brokerage accounts and retirement accounts.
The Treasury Department said about 1.4 million of the children registered are babies born from 2025 through 2028, a group eligible for a $1,000 federal seed contribution. Parents, grandparents and other loved ones can add as much as $5,000 a year to the accounts, which are also known as 530A accounts.
Employers can contribute as much as $2,500 per worker per year, according to CNBC, and those payments count toward the same $5,000 annual ceiling. Account assets generally cannot be accessed before the child turns 18. At that point, the account becomes a traditional IRA, shifting it into the retirement account system.
How families are using the accounts
Adam Bergman, founder of IRA Financial, told CNBC he wanted to open Trump Accounts for his two sons to use the tax-advantaged growth feature and to teach them about investing over long periods.
“It’s not just the number of dollars you’re going to have at the end of the day, but it’s hopefully opening people’s eyes to say, ‘Hey, this is what savings is. This is how it works,’” Bergman said. “It’s a very powerful tool.”
Bergman said he plans to contribute the maximum $5,000 a year for his sons before they reach 18. He and his wife, Jaclyn, are encouraging Aven, 15, and Ever, 12, to convert the accounts to Roth IRAs later, CNBC reported. With a Roth IRA, investment gains and qualifying retirement withdrawals are generally tax-free.
Aven told CNBC the account could help young people see how a portfolio changes over time. “I think it helps people want to invest,” he said. “It also teaches you that you could see the growth” in your portfolio.
Bergman described the family’s plan in ambitious terms. “We’re going to invest in it together,” he said. “They’re going to be tax-free millionaires.”
Other parents focus on grants and college savings
Will Matthews, a self-employed senior auditor in Columbus, Ohio, told CNBC that he and his wife are expecting a baby who would qualify for the federal seed money. The couple also opened Trump Accounts for their two young children.
Matthews said each child may qualify for a $250 charitable contribution from the Dell Foundation, which CNBC reported is available to children age 10 and under who live in qualifying ZIP codes.
“If it’s free money, we’ll take it,” Matthews said.
Matthews told CNBC he does not expect to add much beyond the grants. “These accounts don’t have that many crazy tax advantages for me to be gung-ho on putting all my eggs in this basket,” he said.
He said he is prioritizing 529 savings accounts to help pay for college. CNBC reported that experts have said 529 accounts, custodial brokerage accounts and Roth IRAs may also be considered in addition to, or instead of, a Trump Account depending on a family’s goals and time horizon.
This story draws on original reporting from CNBC.
