The Treasury Department said it automatically enrolled more than 60 million children in Trump Accounts while opening a pathway for publicly traded companies to donate shares. The Internal Revenue Service released a rule on Sept. 30 establishing procedures for those contributions.
The stock donation option marks a shift from the index fund only investment policy initially announced for the accounts. The idea had been floated in July, before the accounts launched.
In a prelaunch announcement, Treasury Secretary Scott Bessent said the option would make it “easier for philanthropists to help American children build long-term financial security.” He also said, “Treasury is creating a practical pathway for large-scale private giving to support the next generation.”
Under the new rule, companies or charities established by stockholders may donate shares to Trump Accounts. The contributions must be distributed within “a qualified geographic area” to at least 5,000 accounts, and recipients must hold the donated stock without selling it for five years.
The rule does not allow a relative or another individual to donate highly appreciated stock directly. Donations from family members, friends or an employer must instead be made in cash.
SpaceX President Gwynne Shotwell wrote on X.com that she and her husband would each give one share to the Trump Accounts of more than 2 million children. The planned recipients are children ages 11 through 17 in lower income households, with “a bit more emphasis” on those living near the couple’s central Texas home.
One share might not transform a child’s finances, but it can introduce that child to stock ownership and investing. The value may come from watching a holding change over an extended period and learning how markets and compounding work.
“What excites me most isn’t one free share of stock. It’s putting millions of kids into the ownership economy early,” Dave Perez, an enrolled agent and founder of Tax Maverick, told Yahoo Finance.
Perez added, “If that gets a child thinking about investing, compounding, and building wealth at 12 instead of 32, that’s where this could have a much bigger impact.” He said owning even one share gives a child an opportunity to watch an investment grow over time.
The central risk is concentration because a single stock does not provide the broader exposure of a diversified fund. Its value could rise significantly, but it could also move sharply in the opposite direction.
“One stock can go up significantly, but it can also go the other direction,” Perez said. “I wouldn’t confuse receiving a donated stock with having a diversified investment strategy. Take the gift, but diversification still matters.”
Parents making annual contributions can use the account to demonstrate that distinction. Cash contributions are invested in diversified, low cost index funds, allowing the account to hold those funds alongside any donated company shares.
Large stock donations may also offer an attractive tax strategy for wealthy donors holding highly appreciated shares. Donating stock can potentially avoid the capital gain that might arise from selling the shares first and then contributing the resulting cash.
“Instead of selling the stock, potentially creating a capital gain, and then giving away the cash, appreciated shares can potentially be donated while also generating a charitable deduction, assuming the requirements are met,” Perez said.
Total contributions from family, friends or an employer are limited to $5,000 annually and must be made in cash. Contributions can be completed using a debit card or an ACH transfer, while a code generated through the app can be shared with people wishing to contribute directly.
Families can download the Trump Account mobile app through the Apple App Store or Google Play, or use TrumpAccount.com. Those tools allow parents and guardians to create and manage a child’s account.
A Trump Account is essentially a tax deferred Individual Retirement Account for children. Money can be accessed without penalty when the child reaches 18, but only for qualified expenses such as education or the purchase of a first home, and withdrawals are taxed as ordinary income.
All U.S. citizens under age 18 with a valid Social Security number are eligible for a Trump Account, also known as a 530A. Parents or legal guardians must open and manage the account for the minor beneficiary.