Nearly every child in America now has a new savings account with their name on it, as well as someone else’s: President Trump’s. The Treasury Department said on Thursday that it automatically enrolled more than 60 million children into Trump accounts, the tax-deferred savings vehicles also called 530A accounts that were introduced in July. The 530A accounts are essentially starter individual retirement accounts: Parents, guardians and others can contribute up to $5,000 annually.
The Treasury Department created Trump accounts for all eligible children who didn’t already have one — or those who have Social Security numbers and who will not have turned 18 before the end of the calendar year. Before this week, parents or guardians had to sign up their children completely on their own. Though more than seven million children had been enrolled as of late July, that represents only about 10 percent of all eligible American children. Just 5 percent of low-income families had opened 530A accounts for their children, according to a survey published in September by Commonwealth, a nonprofit.
Parents and guardians do not need to do anything to claim contributions from philanthropic groups. With an open account, children can automatically capture anything they may be eligible for. But parents will need to take action — and claim the account — to make their own deposits and to receive matching contributions for employers. During that process, they must also elect to receive the federal government’s seed deposit of $1,000 for eligible children born in 2025 through 2028.
The tech billionaire Michael Dell and his wife, Susan, will contribute $250 to many children. To be eligible for a Dell gift, the children need to have been born in 2016 through 2024 and live in a ZIP code where the median household income is below $150,000. With automatic enrollment, the deposits will go first to the children in the lowest-income areas, until they reach 25 million children.
Source: New York Times Business · Summarized by HeadlinesBriefing