Trump Accounts can be "transformational" for wealth-building — if families opt in

If you’ve got a kid who’s 18 or under and has their own Social Security number, you can now sign them up for one of the IRA-style investment accounts that were part of last year’s major tax bill. The so-called 530A accounts — also known as Trump accounts — offer tax advantages, and if the kid happens to have been born this year or last, the account is eligible for a $1,000 contribution from the federal government.

But some critics are worried that the kids who need the accounts most may never end up getting them.

The accounts have the potential to be the most significant wealth-building policy for children in U.S. history, according to Jin Huang, co-director of the Center for Social Development at Washington University in St. Louis.

“This could be transformational, but only if the design works,” he said.

Huang is worried that the design won’t work. “The policy says ‘every child.’ The design says ‘opt in.’ Those two things are in direct contradiction.”

Parents have to opt in to open the accounts for their kids, even though all American kids under 18 with Social Security numbers are eligible. And the only way for them to opt in — at least right now — is by filing their income tax returns along with the brand new IRS Form 4547.

The choice to link enrollment primarily to tax filing “leaves out children who will need this program the most,” said Madeline Brown, a senior policy associate at the Urban Institute, “because a substantial share of our low-income households owe no federal income tax, right, and so a lot of them don’t file at all.”

Another problem? Right now, it seems awareness of the accounts is pretty low.

Denise Ocaña at the United Way of Greater Los Angeles runs a tax prep site for people with low incomes, disabilities, and limited English skills. “For the most part, a lot of folks don't know,” she said.

The IRS has provided materials and training to explain the new accounts, said Ocaña, and the $1,000 for babies born between 2025 and 2028. A lot of her clients (once they know about the program) are choosing to enroll their eligible kids; she sees a potential upside to the opt-in design.

“It also is, like, a good safety for people who genuinely might be really scared and just don't want anything to do with this,” Ocaña said — in other words, people in immigrant communities who might be worried that the IRS would share their information with Homeland Security.