Treasury, IRS Hear Case for Trump Account Auto-Enrollment

Witnesses at a virtual hearing Thursday urged the Department of the Treasury and the IRS to simplify enrollment in Trump Accounts, to enlist state governments in administering them, and to resolve operational questions, warning that millions of eligible children could otherwise miss out on federal seed money.

The July 16 public hearing concerned proposed regulations for the new child investment accounts also known as 530A accounts, which formally launched July 4. 

Automatic Advantages

Jin Huang, a researcher at Washington University in St. Louis who has studied children’s savings programs for nearly two decades, said during his testimony at the hearing that enrollment design would determine whether Trump Accounts reach eligible families. He cited an Oklahoma experiment in which automatic enrollment produced participation of nearly 100%, contrasting it with programs that required parents to check a box or take other affirmative steps.

Under the proposed rules, Huang said, a parent or guardian may need to act once to open the account and again to claim the $1,000 federal pilot contribution for qualifying children born from 2025 through 2028. He urged Treasury to make the contribution automatic when an account is established and clarify that enrollment through hospital birth-registration forms will use an opt-out structure, rather than simply offering another checkbox.

“These designs will leave millions of eligible children behind,” Huang said of systems requiring families to complete multiple steps.

Previous IRS guidance indicated that auto-enrollment was not feasible, but the Social Security Administration recently created an approach to update guidance provided to hospitals to include Trump Account enrollment information for newborns to be enrolled upon birth. 

Nina Olson, executive director of the Center for Taxpayer Rights and a former national taxpayer advocate, also made universal participation the focus of her testimony. She argued that Treasury has sufficient legal discretion to deem the required election made for eligible children, allowing the government to create accounts and deposit the $1,000 pilot program contributions without waiting for parents to act.

Olson also raised concerns about conflicting rules over which adults may control an account, mandatory arbitration provisions, a lack of transparency surrounding charitable contributions, and misleading claims about how the money can be used. Withdrawals for purposes such as starting a business, she noted, could be taxable and subject to penalties.

Larger State Roles

Pennsylvania Treasurer Stacy Garrity—currently the Republican nominee for Pennsylvania governor—and Deputy Treasurer Julie Peachey proposed at the hearing a larger administrative role for states. Garrity pointed to Pennsylvania’s experience managing 529 education accounts, ABLE accounts and Keystone Scholars, an automatically enrolled program that provides $100 for children born to Pennsylvania families.

Garrity said state treasuries already possess investment infrastructure, customer service operations and relationships with families that could increase participation while reducing duplication. Peachey proposed a two-stage model: Families would initially have time to open an account through the federal process, but states could automatically establish one for children still unenrolled at least 12 months after birth, subject to notice and an opt-out period.

That approach, Peachey said, would give families from 12 through 23 months to enroll voluntarily while ensuring that children do not permanently lose the federal contribution.

Kansas Treasurer Steven Johnson emphasized financial education and long-term engagement. He urged federal officials to work with states to keep families connected, to prepare teenagers to assume control at 18, and to address accounts that may eventually become unclaimed property.

Kansas Assistant Treasurer Tom Treacy suggested incorporating Trump Accounts into high school financial literacy classes. Students could use their own accounts to learn about investing, compound growth and federal savings incentives, he said, potentially receiving small account credits for completing educational modules.

Treacy compared the concept to wellness incentives associated with health savings accounts and said the goal should be to create “not only lifelong savers, but lifelong learners.”

Todd Lloyd, of the Annie E. Casey Foundation, focused on children in foster care, arguing that success should be measured by whether young adults leave care with a meaningful asset—not merely by the number of accounts opened.

Lloyd recommended enrollment within 30 days of a court-confirmed foster care placement, automated data-sharing among public systems, and protections preventing account balances from reducing eligibility for Medicaid, food assistance, housing or education benefits. Child welfare agencies should identify eligible children, he said, while state treasuries or financial institutions handle investments and administration.

“If this program will require foster children to navigate government systems, we will have designed it backwards,” Lloyd said. “Government should do the navigating.”

Professional Advice Access

Lisa Davis, testifying for the financial services trade association Finseca, urged regulators to preserve access to professional advice and make account transitions automatic. She supported automatic conversion to a traditional individual retirement account when the account’s initial growth period ends, while retaining options for Roth conversions.

Davis also asked the IRS to clarify that the program’s investment-fee cap does not prohibit parents from separately paying advisers for broader financial planning services. She supported defaulting to electronic disclosures, arguing that paper requirements would add expense and friction.

Rosemary Wilson, representing SAP America Benefits, identified an immediate payroll problem. She said SAP had developed a system allowing workers and employers to designate payroll contributions, but there was not yet a mechanism to transfer the money to the account provider for investment.

Wilson asked when employers could begin submitting funds, what identifying information payroll files must contain, how contributions for multiple children should be allocated, and whether employers would be notified when an account reaches its annual limit.

Without those answers, she warned, contributions can be deducted, but not put to work: “There is currently no mechanism to transfer those contributions to the account provider, preventing the funds from being invested.”