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What's the Potential. This is our rough cut—other sources will give you additional thoughts and context. About 14 million kids are likely to be eligible for pilot contributions of $1,000. Assuming no further contributions and market investments, these accounts could be worth about $5,800 at age 18. We’re guessing that in 2043 when this starts to look real, lots of families who didn’t do it sooner are going to try to backward-claim their 530A accounts. If everyone claims and establishes accounts, aggregate assets across these pilot children could be north of $81 billion.
That won’t happen. The claiming number will be lower. But the system will also be aided by supplemental contributions and the establishment of voluntary accounts.
For 25 million kids born between 2016 and 2024 who are eligible to establish an account and who live in LMI zip codes, the Michael & Susan Dell Foundation has pledged a $250 contribution into established accounts. For this gift, LMI zip codes are defined as those with family incomes averaging $150k or less. This pledge will certainly be followed by more from titans of industry and others—likely including unique definitions of eligible children. A number of states, including Texas, are considering programs that line up with Trump accounts and provide supplemental funding.
Including pilot program children, some 36-40 million children in the US will be under 18 and eligible for voluntary account contributions over the next decade. As you can imagine, potential account balances at age 18 vary widely—from the $5,800 we reference above, to over $700,000 with maximum contributions and high market returns. Experts estimate narrower ranges of $10,000 to $100,000 for the average kid.
Will it make a difference. Yes, it will. You will find good arguments for voluntary savings to go into other account types for kids. For education savers, 529 accounts offer higher annual contribution caps and more flexible access. For emergency fund savers, straight savings accounts are going to provide the day to day access they need. However, we love birth- and kid-based savings that goes directly into an IRA without child income requirements—and there’s not other way to do this today.
As semi-realists, if we had to sum up human behavior and likely outcomes, we’ll go here:
1 – starting in 2043 we’ll probably see a rash of account liquidations—even with the 10% extra tax due—from folks who suddenly realize they have access to an account they don’t have a very big emotional investment in.
2 – we’ll also see a lot of inertia—folks who’ve forgotten these assets, and/or who have to take active steps to use or manage their accounts. These assets will continue to grow—somewhere. They’ll be remembered and found again at a future, useful date—it could be for trade school or college, a home, a new child. And for many, it could absolutely be to fund a more secure retirement.
3 – and, like a version of #2 on steroids, we will see families and kids take active charge of their accounts—contributing when they can—seeking out employer contributions and matches—and making very thoughtful decisions about the use of funds saved. How many? This is a giant experiment - we can't wait to see.
4 – with estimates ranging from $150 billion to $1.2 trillion held in Trump Accounts by 2046—it’s hard to pin down retirement and economic impact in advance. But we do think the net benefit, including to retirement assets for the next generation, is going to be significant.
Jump here for more info—what Trump Accounts are, how they work, and what folks are saying.
The facts (credit for this summary to our friends at the Aspen Institute):
1 - Trump Accounts allow the federal government, organizations, and families to make contributions into IRA accounts for child beneficiaries
2 – As a third form of IRA (Traditional, Roth, Trump), these accounts have special rules covering:
A – taxation: the account becomes a traditional IRA in the year a child achieves age 18, and withdrawals are taxed accordingly. Contributions by employers are tax-deductible; contributions by individuals are not.
B – withdrawals: not allowed before age 18. Taxed at a higher rate if not used for qualified expenses such as the purchase of a first home, post-secondary education, birth/adoption of child, and more.
C – contribution limits differ from traditional and IRA limits at present. Investments are restricted to market investments that track a qualified index like the S&P 500. Initially, accounts will be held by custodian/recordkeeper(s) selected by the Treasury. Account beneficiaries may transfer accounts to the provider of their choice in the year they turn 18.
3 – Accounts are expected to go live in 2026 for two sets of beneficiaries:
A – Pilot program kids – those born in the years 2025-2028—who will receive a $1,000 federal contribution. And who are eligible (registered SSN). And whose parents and guardians file IRS Form 4547 to claim the accounts.
B – All other kids under age 18—for whom voluntary accounts can be established beginning July 4, 2026.
Retirement security matters! / Lisa
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