New Automatic Enrollment for Trump Accounts Proposed

The IRS issued draft regulations Tuesday that change some of the initial proposals for Trump Accounts and would enable the Secretary of the Treasury to automatically create an initial Trump Account, or 530A account, for eligible children without requiring a parent, guardian, or other adult to submit an enrollment election.

The process would enable an estimated 63.36 million accounts to be created, that qualifying U.S. children could later claim. Having automatically created accounts could make the program a near-universal child-savings and investment program.

The proposal also states that the Treasury Department would maintain account-level records; assets would be pooled for investment purposes through a master group trust and individual ownership records would remain separate.

Replacing some parts of regulations proposed in March, the new rules for the tax-advantaged investment accounts for qualifying children under the age of 18 say that creating accounts can be done by the secretary or by a parent or guardian.

In order to claim an automatically created account, the IRS says a parent, guardian or beneficiary would have to authenticate their identity to the Treasury. The proposal is also looking into how people could accounts that are never claimed.

Trump Accounts would still only be accessed by a beneficiary once they turn 18, but the proposal also adds that a beneficiary could roll an account—at age 17—into an ABLE [Achieving a Better Life Experience] Account, a savings vehicle only previously offered to people with disabilities.

The regulations did not clarify which data the Treasury or IRS would use to determine who would be eligible for an account.

There was also no further clarification about what would be “qualified general contributions” or “qualified stock contributions” for the accounts. In July, the Treasury had shared four exchange-traded funds that were preliminary default investment options. Industry advocates had previously asked that investment options be diversified.

The regulation also said that the IRS and Treasury were considering allowing “eligible donors” to offer contributions to accounts created in specific ZIP-code-based geographic areas, including areas with a “median household income below the threshold income for highly compensated employees.”

A pilot program included in the law that created Trump Accounts would provide a one-time $1,000 federal deposit to Trump accounts belonging to qualifying children born between 2025 and 2028.

The latest notice of proposed rulemaking will be published in the Federal Register on Wednesday, and public comments on the latest suggestions will be accepted through November 30.