Trump Accounts have auto-enrolled more than 60 million children, Treasury says

More than 60 million American children under age 18 have been automatically enrolled in Trump Accounts, the U.S. Department of the Treasury said Thursday in an announcement exclusively provided to CNBC.

The Treasury proposed regulations on Tuesday to begin the auto-enrollment process for millions of children this week. By Thursday, the process had been completed, according to the agency.

Trump Accounts, also known as 530A accounts, officially launched on July 4 and are open to any U.S. child under 18 with a Social Security number. Children born from 2025 through 2028 may also claim a one-time $1,000 pilot program contribution from the Treasury.

"Millions of children have already enrolled in Trump Accounts. With automatic enrollment, over 60 million more eligible children now have an account ready to be claimed," Treasury Secretary Scott Bessent said.

The Treasury will also allow stock donations to Trump Accounts, which could boost "large-scale private giving," according to the temporary regulations published this week.

"Wealthy founders and shareholders have been pushing to donate stock directly" because it skirts the capital gains taxes triggered by selling and gifting cash, said Ben Henry-Moreland, a certified financial planner with advisor platform Kitces.com.

Notably, the update allows Trump Accounts to hold donated individual stocks, a change from previous guidelines that only allowed diversified, low-cost funds. Donated stocks generally must be held for five years before being sold, according to the Treasury.

The latest Trump Accounts news comes roughly one month before the midterm elections as Republicans fight to defend slim margins in the House and Senate.

Automatic enrollment alone will not trigger the $1,000 deposit. Families must still elect to receive the government's seed money if their children are eligible, according to the regulations published Tuesday.

"Kids who are eligible for the $1,000 government pilot contribution won't receive that contribution automatically," Henry-Moreland told CNBC.

To claim the account, parents or guardians should download the Trump Accounts app, verify their identity and relationship to the child, review the account information and accept the account terms, according to the Treasury.

Eligible children must have their account claimed to enable contributions from family members, friends and employers, and to receive the Treasury Department's one-time $1,000 seed contribution.

Other Trump Account funds may also be available, depending on certain criteria. Tech CEO Michael Dell and his wife, Susan, committed $6.25 billion to provide an additional $250 for children born between 2016 and 2024 who live in ZIP codes where the median income is $150,000 or less. Those funds are specifically aimed toward lower-income children. 

"The rulemaking essentially introduces the idea of auto accounts, created for every child under 18 with a Social Security number," said Madeline Brown, senior policy associate at the Urban Institute, a Washington-based think tank. "This means that children won't miss out on philanthropic gifts, like money from the Dells, or growth on those gifts, even if an account has not been activated for them."

However, "it will still require families to ultimately claim their children's accounts, and we don't have many details on how that process will go," she added.

Because Trump Accounts previously required families to "opt in," widespread participation was challenging, particularly among lower-income households, according to Brown.

"The proposed regulations indicate an important step towards automatic enrollment, bringing the design of the accounts closer to the evidence base to increase participation," she said. "This shift is particularly important given the low participation rates we have seen so far under the opt-in structure."

As of mid-September, about 7 million to 8 million American children had been signed up for Trump Accounts, Bessent said at a hearing held by the House Financial Services Committee.

The new national auto-enrollment policy, paired with significant federal and private funding, has created "a window of opportunity," said Timothy Flacke, CEO of the national nonprofit Commonwealth.

Before the automatic sign-up provision, just 5% of low- and moderate-income families had opened a Trump Account, according to Commonwealth's recent report.

Commonwealth's survey, which polled nearly 1,100 low- and moderate-income parents of children ages 10 and under, found that concerns about tax implications, impact on public benefits and an inability to contribute to the new investment accounts were key obstacles. 

For Commonwealth's analysis, low- and moderate-income households are those earning up to $80,000 annually, a threshold below last year's median household income of $87,460, according to the Census Bureau's latest data. The Commonwealth survey, which was fielded in July, had a margin of error of plus or minus 3%.

For some families, questions about eligibility, contribution limits and withdrawal restrictions were likely to discourage participation, "particularly among households with limited time, low financial literacy, or insufficient outside savings for emergencies," according to a June 9 policy analysis by Adam Michel, director of tax policy studies at the Cato Institute, a Washington-based libertarian think tank.

"The result is a system used primarily by those best equipped to navigate it," he wrote.

Lower earners often face barriers to government programs, Omeed Firouzi, a practice professor and director of the low-income taxpayer clinic at Temple University's Beasley School of Law, told CNBC.

Many lower-income households "don't have time and resources to hire people to navigate all this stuff for them," he said.

Roughly 14.4 million children across income levels in the U.S. born between 2025 and 2028 are projected to qualify for the $1,000 federal seed funding, according to the research by Commonwealth. Of those, 5.8 million are from low- and moderate-income households.

Based on historical takeup rates for the federal earned income tax credit, an estimated 20% of eligible babies may not claim their $1,000 deposit, Commonwealth found.

The earned income tax credit, or EITC, is designed to support low- and moderate-income families by reducing the amount of tax they owe. Because it is a refundable tax credit, eligible taxpayers may receive a refund even if they owe little or no federal income tax.

But many filers don't claim it due to "complicated rules" that can be "restrictive and cumbersome," among other reasons, according to Temple University's Firouzi. Nearly 1 in 5 eligible taxpayers missed the EITC, which averaged $2,916 for 2024 returns among those who claimed it, the IRS said earlier this year.

For Trump Accounts, a similar takeup rate would amount to about $2.88 billion in federal seed dollars that children living on low and moderate incomes risk missing out on during the pilot phase, according to Commonwealth's analysis.

However, "part of the value here is not just the money," said Commonwealth's Flacke; it is "the power of knowing that money is there, watching it grow and carrying around the sense there is some financial future."

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