New Trump Accounts could benefit 2 million NC children

Parents in North Carolina and across the US have a new way of helping provide for their child’s financial future.

The Trump 530A Accounts, a custodial-style traditional IRA, which are set to launch on July 4, came about under the One Big Beautiful Bill Act last year.

Babies born from Jan. 1, 2025, to Dec. 31, 2028, will get $1,000 from the Treasury Department. All other children under the age of 18 can receive $250.

According to IRS.gov, parents and other people are also able to make contributions up to $5,000 per year. An employer may contribute up to $2,500 per year (which counts against the $5,000 annual limit) under an employer’s Trump Account contribution program, and the contribution will not count toward the employee’s taxable income.

The annual contribution limits are indexed to inflation and will adjust starting after 2027.

Many companies like JPMorgan Chase, Intel, and Steak ‘n Shake said they will match government funds or make contributions on behalf of their employees, while philanthropists, like Michael and Susan Dell, who donated more than $6 billion, have also made supplementary donations.  

Once a child turns 18, they can withdraw it to use as they wish, whether that be for going to college, starting a business, or buying a home. The account would be treated like a traditional IRA and would be subject to the same rules, including taxation. Or, the funds can be left to accumulate, which, according to trumpaccounts.gov, at age 55, can grow to $243,000 without contributions to as much as $13 million with contributions of $5,000 a year.

Currently, about 6 million children have been signed up, and millions more are eligible.

North Carolina State Treasurer Brad Briner said at a recent Council of State meeting that 2 million children in North Carolina are eligible for the accounts.

“Trump Accounts empower families to jump-start a child’s financial future by providing an early opportunity to save, invest and build long-term wealth,” he said in a recent emailed statement to Carolina Journal. “They offer an important financial literacy lesson by helping young people understand that wealth is built over time through patience and the power of compound growth. Even modest investments made early in life can grow significantly during your child’s adolescence and generate additional earnings year after year, demonstrating how time can be one of the greatest advantages for building financial security.”

The creation of the 530A Accounts is also being looked at as a way for Trump to encourage families to have more children, as the birth rate in the US continues to steadily drop.

“I think it’s a realization that the economic growth, continued prosperity, and the success of the country relies upon a growing population, and one of the things that we’ve realized in the last few years is that US birth rates, which were very high by in the context of the developed world, have now plummeted below what the Europeans and Japanese have had for some time,” Andy Taylor, a political science professor at NC State, told Carolina Journal in a recent interview. “We now have an administration that has a pretty aggressive policy towards immigration. Obviously, the president’s focus is largely on illegal immigration, but it’s also led to reduction in legal immigration and through policies like the 100K H-1B Visa policy and things like that.”

He said people, especially on the center right, think the population needs to grow, and with the immigration policy most likely not changing until 2029, this may be a way in doing that. But, the question is, will it work?

“It’s a novel policy experiment, and then there’s some people, I think who would say this is good,” Taylor said. “I’m not sure whether it will have that kind of material effect on birth rates. Then you could say, well, does it actually help the children, make them more successful as adults, but that’s a long way off. We’re a long way off from being able to see whether that’s the case.”

As far as tax advantages for parents, he told CJ that he really doesn’t see any with the accounts, and that tax breaks like the Child Tax Credit, 529 Plans, and help defraying the medical cost of having a baby may be better options for parents.

Despite it being a “pretty innovative” idea according to Taylor, people may politicize the financial opportunity for children because of the Trump name.

“Whether the ability to take the opportunity, it’s not an onerous bureaucratic exercise one suspects, and this is sort of one of the problems with our current polarization,” he told CJ. “People make decisions based upon who’s in office and they like those people or not, rather than the merits of the policy. One would suspect there might be a lot of parents who are Democrats that will say, well, we’re not doing that.”

But there may be some hope for bipartisanship in looking at the broader issue. Pennsylvania US Sens. Dave McCormick, a Republican; and John Fetterman, a Democrat, recently came together at a youth basketball event in Philadelphia promoting the accounts, noting that politics or the Trump name have nothing to do with helping secure a child’s financial future.

“The (accounts) are a way to make sure everybody takes advantage in the growing economy, and so it’s a great step forward for our country,” McCormick said at a press conference. “It’s not a partisan issue. In other words, there’s no politics — the idea is to create opportunity for every single person.”

Fetterman agreed.

“(McCormick) and I are on different teams,” he said. “He’s a Republican, I’m a Democrat, but we’re here today because we want all of you one day to be millionaires, and we want you to have your financial security in life. Let’s be frank: Sometimes politics get involved… These are very simple, and this has nothing to do about politics or the name… It’s about your futures.” 

“New Trump Accounts could benefit 2 million NC children” was originally published on www.carolinajournal.com.