Key Takeaways:
The Trump administration will let individuals and corporations donate shares of stock to government-backed newborn investment accounts, expanding a program set to launch July 4.
The Treasury Department will allow stock donations to "Trump accounts," the government-backed newborn investment accounts created under President Donald Trump's tax and immigration law, officials said Thursday, broadening the funding sources beyond cash contributions.
"This opens a new channel for families and philanthropists to build long-term wealth for the next generation," a Treasury official familiar with the policy said.
The accounts, launching July 4, provide $1,000 in seed money from the government for every child born during Trump's second term — from Jan. 1, 2025, through Dec. 31, 2028. Parents can contribute up to $2,500 annually in pretax income, with total yearly contributions capped at $5,000. The Treasury has selected BlackRock and Vanguard exchange-traded funds as the underlying investment vehicles, with fees capped at 0.10 percent annually.
The stock donation feature could channel significant new capital into U.S. equity markets through a broad base of newborn accounts, reinforcing the administration's pro-investment stance. Billionaires have already pledged billions: Michael Dell and his wife Susan committed $6.25 billion, Ray Dalio pledged $75 million for Connecticut children, and Brad Gerstner offered $250 per child under age 5 in Indiana.
The ability to donate shares of stock, rather than cash, allows donors to transfer appreciated securities without triggering capital gains taxes, potentially increasing the size of contributions. The accounts must invest in U.S. equity index funds tracking the stock market, and money cannot be withdrawn until the child turns 18 except for specific purposes such as college tuition or a home down payment.
Several major companies have added Trump Account contributions to their benefits packages, including Uber Technologies Inc., Intel Corp., International Business Machines Corp., Nvidia Corp. and Steak 'n Shake. The Dell donation will provide $250 in seed money for children age 10 or under in ZIP codes with median family income of $150,000 or less who are too old to qualify for the government's $1,000.
The program's rollout has drawn criticism from House Democrats, who released a report Thursday accusing consultants tied to Trump of financial fraud by diverting donations intended for the bipartisan America 250 Foundation to a rival group set up by the administration. The report, based on interviews by Democratic staffers of the House Committee on Natural Resources, suggested donors seeking to celebrate the nation's 250th anniversary may have fallen for a bait-and-switch that could violate criminal statutes.
The Treasury has not commented on the allegations. Families can sign up for the accounts at trumpaccounts.gov. Assuming a 7 percent annual return, the $1,000 in government seed money would grow to roughly $3,570 over 18 years, according to the Treasury Department's projections.
This article is for informational purposes only and does not constitute investment advice.
