Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children

The Treasury Department will begin automatically opening Trump Accounts for tens of millions of children as soon as Thursday, according to new temporary regulations it handed down to help expand the program.

The change is expected to bring the government-seeded investment initiative close to universal coverage less than three months after it launched.

Under the temporary regulations scheduled to be published this week in the Federal Register, the Treasury secretary is authorized to open accounts on children's behalf. That's set to happen on or about Oct. 1 for every child under 18 who has a Social Security number and no existing account.

Treasury projects the procedural change will add more than 60 million accounts this year and roughly two million per birth-year cohort after that, vastly accelerating adoption from the more than 6 million signups reported shortly before the program's July 4 launch.

Treasury Secretary Scott Bessent previewed the move at mid-September hearing with the House Financial Services Committee, according to CNBC. At the time, he said 7 to 8 million American children had signed up so far, and that Treasury anticipated that "within a month we will have 70 million because we will go to auto-enroll."

The Treasury department said that before July 30, it had reportedly processed about 5.6 million electronic Forms 4547, less than a tenth of the roughly 73.4 million children said to be eligible for a Trump Account. Officials estimated an opt-in system would have stalled near 50% enrollment.

Read more: More than a quarter of moms are planning to opt out of Trump accounts, survey finds

Initially, a broad auto-enrollment process had been ruled out because of legal and operational hurdles "including the need to prevent the unauthorized disclosure of return information." To work around that, the temporary regulations would provide for the establishment of a master group trust. Each child has a separate account held for his or her benefit, but the assets are pooled and invested collectively, so the trustee can trade without handling individual tax data. Treasury acts on the account until a parent or guardian claims it.

The so-called auto accounts provided for under the regulations can receive only two kinds of deposits: contributions funded by governments or charities, and the $1,000 pilot payment for children born from 2025 through 2028. Because Treasury cannot make the pilot election for a family, a parent still has to file for the $1,000.

Deposits from parents, relatives or employers also require families to claim the account through a Treasury app or webpage. A guardian must verify their identity and legal authority. The balance then moves by trustee-to-trustee transfer to a claimed account or to a rollover Trump account at another custodian.

The temporary rules also let charities and governments donate publicly traded U.S. stock. The shares must be held for five years or until the growth period ends, whichever comes first. Donors can target groups of at least 5,000 children defined by birth year and geography. Treasury cited the Michael & Susan Dell Foundation's $6.25 billion pledge as a model.

Trump Accounts, which were created by the One Big Beautiful Bill Act, function as traditional IRAs for children. Until the account holder's 18th year, money must go into U.S. equity index funds charging no more than 0.1% a year. Contributions are capped at $5,000 annually, and up to $2,500 of that can come from employers tax-free.

Read more: Treasury unveils Trump Accounts fund lineup led by BlackRock, Vanguard, and State Street

Even after the launch, the program has continued to face questions from different corners of the industry. In a September 25 letter addressed to the IRS, the Investment Company Institute said an August proposal by the agency "does not address the mechanics of how employers will send contributions to the Trump accounts of their employees."

The ICI also raised concerns about how it defined "dependent" for the purposes of employers making contributions to accounts where the beneficiary is an employee's dependent, noting that divoced parents may alternate claiming their child as a dependent from year to year.

"Many employers, particularly those that have announced matching programs, are eager to implement their Trump account contribution programs quickly," the ICI letter said. "The Trump account program has moved from enactment to implementation at an unprecedented speed, and inadvertent mistakes and foot-faults are likely."