IRS changes course to allow automatic Trump account enrollment

Treasury and the IRS issued temporary regulations (T.D. 10056) and proposed regulations (CC-00226466-26) Tuesday to automatically enroll eligible children in Trump accounts after developing a structure they said overcame barriers that previously made automatic enrollment impractical.

Treasury estimated that the regulations could increase the number of children with Trump accounts in 2026 by more than 60 million and said the rules could affect about 73 million children in 44 million families.

The regulations permit Treasury to establish accounts for eligible children who do not already have Trump accounts and to make the elections necessary to provide the program’s government contribution. The regulations continue to recognize a “responsible party” acting on behalf of the child.

In February, the AICPA urged Treasury and the IRS to automatically enroll eligible children in Trump accounts, saying some families might otherwise be unaware of the program or fail to make the necessary election. The AICPA said automatic enrollment would promote equitable access and reduce procedural barriers.

Under H.R. 1, P.L. 119-21, commonly referred to as OBBBA, eligible children may receive a $1,000 federal contribution through the Trump account pilot program. The accounts are a new type of individual retirement account for minors.

Treasury and the IRS said earlier proposed guidance assumed automatic enrollment was not feasible because of legal and administrative constraints. They later developed a structure using a master group trust that allows automatic enrollment while avoiding disclosure of taxpayer information.

Experience from a grant program in Maine suggested enrollment could have remained around 50% if parents were required to take action to open accounts. By contrast, the agency estimated that nearly all eligible children will have Trump accounts when Treasury creates the accounts automatically.

The regulations also establish rules governing qualified stock contributions to Trump accounts. Treasury said the provisions are expected to facilitate billions of dollars in additional annual contributions.

Treasury highlighted a $6.25 billion pledge by the Michael and Susan Dell Foundation to qualifying children and said other donors have expressed interest in making similar contributions through Trump accounts.

The regulations address a variety of operational issues, including account administration, automatic enrollment procedures, qualified investment options, stock contributions, and Treasury’s role in establishing accounts for eligible children.

“The major areas of discretion in the temporary regulations require the [Treasury] Secretary to create Trump accounts for eligible children, allow contributions to approved classes to receive the same treatment as contributions to qualified classes, and allow general funding contributions to be made with stock of publicly traded domestic corporations,” the preamble said. “All of these decisions increase the appeal of funding contributions to classes of Trump account beneficiaries and are expected to result in billions of additional dollars per year in general funding contributions, which will be allocated across the Trump accounts of tens of millions of children.”

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.