4 Million Children Have Been Signed Up For Trump Accounts: IRS

Authored by Naveen Athrappully via The Epoch Times,

American taxpayers have signed up over 4 million children to the tax-advantaged Trump Accounts, and more than 1 million of those accounts have elected to receive the $1,000 pilot contribution from the government, the IRS said in a March 31 statement.

“Contributions to Trump Accounts can be made starting July 4, 2026. All eligible children may receive deposits from parents, relatives, friends, employers, state governments, philanthropic organizations, and individuals, subject to an annual limit,” the IRS said.

The Trump Accounts, formally the Invest America accounts, were established under the One Big Beautiful Bill Act signed into law by President Donald Trump in July last year.

Every child under 18 who is a U.S. citizen and has a valid Social Security Number is eligible to open a Trump Account. In addition, any child born between Jan. 1, 2025, and Dec. 31, 2028, can get an initial seed contribution of $1,000 from the government.

According to a March 9 proposed rule from the IRS published in the Federal Register, contributions to Trump Accounts are, in general, subject to an annual limit of $5,000.

Employers can contribute up to $2,500 annually to the Trump Accounts set up by their employees, which will count toward the $5,000 annual threshold. Contributions from the government and nonprofits made via the Treasury Department are not counted in the $5,000 limit.

The annual contribution limits will be indexed to inflation, with adjustments starting after 2027.

Generally, funds in Trump Accounts cannot be withdrawn prior to the child turning 18. After hitting this age, account holders can withdraw the funds for certain qualified purposes such as paying for tuition, purchasing a home, or starting a business.

Funds from the Trump Accounts can be invested only in certain “eligible investments,” such as a mutual fund or exchange-traded fund that tracks stock indexes composed mainly of American companies for which futures contracts are traded in the market. The accounts must avoid using leverage in investments.

The IRS determined that Trump Accounts for more than 4 million children have been opened based on Form 4547 filings made by taxpayers together with their individual tax returns.

“The IRS has been working closely with the Treasury Department to make the election process as simple and easy as possible by permitting taxpayers to fill out a one-page form when they file their tax return,” IRS Chief Executive Officer Frank J. Bisignano said.

“Families with eligible children born between 2025 and 2028 just need to check the box on a form to stake their claim for the $1,000 contribution. It’s that simple.”

Investments made in Trump Accounts grow tax-deferred, meaning no taxes are charged on the account proceeds until funds are withdrawn, according to investment management company Vanguard.

However, California’s Franchise Tax Board recently announced that it will not treat Trump Accounts as tax-deferred accounts for state tax purposes. As such, families in the state will have to pay taxes on the Trump Accounts’ investment earnings rather than the accounts being taxed during withdrawal.

‘Could Become a Cornerstone’

In a Sept. 3 post, State Street Investment Management said there were some “outstanding issues” regarding the Trump Accounts that needed to be addressed.

For instance, employer contributions must be monitored to ensure compliance, according to the post, and there must be mechanisms to enforce prohibition of withdrawals before children turn 18. The Treasury Department must also remain flexible when it comes to adjusting rules for the accounts to address any new challenges or opportunities.

“The successful implementation of these accounts hinges on the Treasury Department’s ability to address and resolve the outstanding issues outlined,” the post said. “With careful regulation and clear guidance, Trump accounts could become a cornerstone of financial security for future generations.”

A June 12 analysis published by the Tax Law Center at the New York University School of Law raised concerns about the fact that funds in Trump Accounts must be invested in corporate equities, which it said makes the investments “high-risk.”

In a March 6 IRS statement, Bisignano cited the benefits provided by these accounts, terming them a “pro-family initiative that will help millions of Americans harness the strength of [the U.S.] economy to lift up this generation and generations to follow and unlock the American Dream.”

In January, House Ways and Means Committee Chairman Jason Smith (R-Mo.) highlighted how Trump Accounts are positively transformative for American children.

“[In] my hometown that I still live in today, the average income for an individual is less than $26,000 a year. And so when you look at that, this is the opportunity for those kids,” Smith said.

“It doesn’t matter if you live on a city block or a county road, you’re going to have this investment, and it will be transformational,” the lawmaker said. “Americans’ lives are going to be affected in such a positive way for generations.”