Photo by Markus Winkler on Unsplash
Now before you say, okay Keith enough with the Trump Accounts already! Because, yes, last month we wrote about the relatively new Trump Accounts (or Section 530A Accounts, as I prefer to think of them), and gave our take on whether they're worth using.
Well... the same day we sent our article some new updates were published by the government. Gotta love that timing! So at the risk of overdoing a subject... let's discuss what changed with the Trump Accounts in the new updates and if it alters my opinion or not.
So, What Happened?
The Treasury Department released new rules that make some pretty significant changes to how these accounts work. Most notably, eligible children are now automatically enrolled in a Trump Account.
In other words, if you decided not to open one for your child (like I did), congratulations, the government may have opened one anyway.
So let's flesh this out a bit more and, more importantly, talk through whether you should do anything about it. If you'd first like to read our previous article that outlines what Trump Accounts are and the pros & cons of using them, click here for the article.
Wait, My Kid Already Has an Account?
Maybe!
Beginning October 1, 2026, the government automatically enrolled eligible children who have a valid Social Security number and won't turn 18 before the end of the year. The Treasury Department says the automatic enrollment added more than 60 million children to the program.
That doesn't mean you automatically have control of the account, though.
A parent or guardian still needs to claim the account before they can manage it and allow contributions from family, friends, or employers. Claiming involves verifying (a) your identity and (b) that you have the authority to manage the child's account.
So, basically:
The government opened the account. But you have no control over it until you claim it.
What About the Free $1,000?
This part is important.
Automatic enrollment does NOT automatically give every eligible child the government's $1,000 contribution.
That contribution is available to eligible U.S. citizens born from January 1, 2025 through December 31, 2028, but a parent or guardian still has to elect to receive it.
So if your child qualifies for the $1,000, don't assume that an automatically opened account means the money will magically appear.
Free money apparently still requires paperwork. Some traditions never die.
There's Another Interesting Change
Originally, Trump Accounts were designed to keep things pretty simple: Investments were generally limited to low-cost U.S. stock index funds. That was one of the positives of the accounts in my mind, the sheer investment simplicity.
But new Treasury rules now allow certain large-scale contributions to be made in the form of individual company stock.
And this isn't just theoretical. Elon Musk recently said he plans to give one share of SpaceX to every child in America next year. While Musk's announcement didn't spell out all the mechanics, Brad Gerstner, one of the architects of the Trump Accounts, has said the gift would be made through the Trump Account program.
Here's where it gets especially interesting: If qualifying stock is donated to a child's Trump Account under these rules, families generally can't refuse the shares and can't immediately sell them. The rules generally require the donated stock to be held until the earlier of five years or the end of the year in which the child turns 17.
So a Trump Account that was originally envisioned largely as a home for diversified index funds could now wind up owning shares of an individual company that the family never selected. That could be a nice surprise if someone is giving your child stock for free, but it also introduces some of the concentration risk that the original investment restrictions were designed to avoid.
Free stock? Hard to complain. Being told you have to hold it for years? That's where things get a little more dicey.
Now, there's no real promise that any contributions like this will actually happen, but it's an interesting possibility.
So... Should You Claim the Account?
This is where my opinion has changed a little.
In our previous Trump Account article, our general take was that these accounts were fine, but that 529 plans, Roth IRAs, and taxable brokerage accounts could be better depending on what you're trying to accomplish. And unless you qualified for some of the free money, we weren't particularly excited about opening another account just for the fun of having another account to keep track of.
To be honest, I still feel that way about putting your own money into the account.
But claiming an account that's already been created for your child is a different question.
What happens to the account if no one claims it? Well, it sounds like if one goes unclaimed and doesn't have funds in it, it may just be closed when the beneficiary turns 18. But if there are funds in an account when the beneficiary turns 18, it will stay open and essentially become like a Traditional IRA.
Reasons to claim it
Let's look at a few reasons why you might want to go ahead and claim it:
You take control of an account that already exists.
Even if you never contribute a dollar yourself, the account is already there. Claiming it gives you control over it.
It reduces the risk of someone else improperly claiming it.
There's the very real possibility someone else could claim the account if you don't. Now, that probably won't happen, but, hey, identity theft is obviously a real thing. So you may want to claim it first, even if you have no intention of funding it yourself.
And, of course, there's the $1,000.
If your child qualifies for the Federal contribution, we'd certainly take a hard look at getting it. It's hard to argue with a free $1,000.
Or, there might be a free $250 in there.
Not eligible for the free $1,000? Michael & Susan Dell have put $250 into the accounts of certain children born between 2016 and 2024. And it has happened automatically, with no forms to fill out. But it's only for children who live in a qualifying zip code, based on the median family income of that zip code. Does your zip code qualify? Find out on the official Invest America Charitable Foundation website.
Reasons not to get too excited
Claiming the account doesn't suddenly fix the drawbacks we discussed in the previous article.
The money still has significant restrictions. The account is geared toward very long-term savings, and other options can still offer advantages depending on the goal. For example, I generally prefer 529 plans when the goal is education, taxable brokerage accounts when flexibility is important, and Roth IRAs when a child has earned income and the goal is retirement.
And, yes, claiming the account means one more financial account to keep track of.
The Bottom Line
My opinion hasn't changed dramatically. I still don't necessarily think Trump Accounts aka Section 530A accounts are the best place to contribute your own money simply because they exist.
But now they exist whether you asked for one or not.
That changes the equation a bit.
For parents of eligible children, I think there's now a pretty good argument for claiming the account. And that's doubly so if your child qualifies for the free $1,000 or $250 contributions.
But claiming it and funding it yourself are two separate decisions.
And as always, where your money should go should depend on what you're actually saving for.
(Note: Wondering how to claim it? See our previous article here.)
Where I Landed
So what did yours truly end up doing? I had previously decided not to open the accounts for my kids. But with these changes, especially due to the risk of an account being improperly claimed, I decided to move forward and claim them.
I don't plan on adding any additional money for now, but I decided I wanted the peace of mind of making sure I had control over them.