More than 60 million children were automatically enrolled in Trump Accounts this month, lifting the number of accounts to nearly 70 million. At the same time, the Internal Revenue Service and the U.S. Treasury Department have proposed allowing donors to contribute individual stocks to large groups of children's accounts. The proposal leaves open questions about holding periods, administration and how the stock donations would affect beneficiaries.
Treasury officials said about 7 million children had already joined the program before the automatic enrollment. President Donald Trump and Treasury Secretary Scott Bessent presented the automatic-enrollment arrangement at the White House on October 7.
Automatic enrollment expands access, not balances
Trump Accounts are tax-advantaged individual savings accounts for children. Account holders gain control of the accounts when they turn 18. Eligible children under 18 with valid Social Security numbers can have an account opened automatically, but a parent or guardian must claim the account before managing it or making permitted contributions.
That process differs from automatic enrollment in contribution-based retirement plans such as 401(k)s. Trump Accounts are created for eligible children; money is not automatically deducted from wages or other income. The account count can therefore rise sharply without a corresponding increase in funded balances. Whether an account receives money will depend on later contributions or donations.
Adam Bergman, founder of IRA Financial, said automatic enrollment could give families that were unaware of the program or had not taken the initiative to apply at least a starting account for their children. AJ Kletkin, a New York-based private wealth adviser with Private Advisor Group, said the arrangement could broaden participation and allow saving to begin earlier. For children, he added, a longer investment horizon could provide decades for compound growth to accumulate.
Proposed stock gifts would generally require five-year holdings
The current investment menu for Trump Accounts includes some low-cost index funds. Rules proposed by the IRS and Treasury on September 30 would create a new channel for individual-stock donations. Under the proposal, donors could contribute stocks to a group of accounts covering at least 5,000 children, with the beneficiary group located in an eligible state or geographic area.
For donors, giving appreciated stock could provide a way to support children while potentially avoiding the capital-gains tax that might arise from selling the shares first. The proposal generally requires account holders to keep donated stock for at least five years. The agencies are seeking public comment, with submissions due November 30.
Brian Boswell, co-founder and senior wealth adviser at The Retirement Studio, said the arrangement is unusual because children may be unable to diversify individual-stock holdings on their own. He suggested that the five-year holding requirement could be intended to reduce the risk of large numbers of accounts selling shares at the same time after the stock is distributed, potentially affecting the share price. Concentrated selling could still occur when the holding period ends, he said.
Investment choice and large-scale administration remain unresolved
Christine Benz, Morningstar's director of personal finance and retirement planning, questioned on the social platform X whether children holding a single company's stock selected by neither the child nor the parent would be better served than by an S&P 500 index fund. Her comment highlights a practical issue with the proposal: the performance of an individual stock depends on the company involved, while beneficiaries may have no say over which security they receive.
The way donations would be allocated and administered at scale also remains unsettled. Bergman said he believed the number of people who would ultimately consider donating to Trump Accounts could be relatively small, perhaps involving only several hundred Americans. Joseph Medina, a Washington partner at EY Private, said the Treasury Department might initially hold the assets in a large pooled account and divide the interests when individual accounts are claimed.
The nearly 70 million accounts therefore represent a rapid expansion in the program's potential reach, not an equivalent number of children with deposits or individual-stock investments. The stock-donation plan is still subject to public comment, and the final rules, asset-allocation process and investment choices available to account holders have yet to be determined.