The Treasury Department transformed the Trump Accounts program, shifting from optional index-fund investments to a universal child investment vehicle where millions of kids receive donated stocks in individual companies they cannot reject or sell for five years. Before the change, Trump Accounts had about seven million sign-ups, with government seeding of $1,000 and donations from employers and philanthropists like Michael and Susan Dell. Now, after auto-enrollment and stock donation rules took effect, the government created more than 60 million new accounts.
The administration allowed stock donations to encourage large contributions, with several people poised to make multibillion-dollar gifts. Charities controlled by wealthy people, with Treasury Department approval, can put stocks into accounts of groups of at least 5,000 children sorted by age or geography. Other contributions must be cash invested in low-cost index funds, while stock donations generally cannot be sold for five years. Gwynne Shotwell, president of Space X, announced the first major donation of over two million shares to children aged 11 to 17 in lower-income areas.
Congress, which created Trump Accounts in last year's tax-and-spending law, intended investments only in low-cost index funds, but Treasury officials argue stock donations are exempt. Critics like Adam Michel of the Cato Institute say allowing stock gifts contradicts congressional intent. Treasury defends the policy, stating it encourages more donations and strengthens ties between kids and corporations, though parents and children cannot refuse donations, although comments on opting out are being considered.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing