So far, 530A tax-advantaged investment accounts for kids, also known as “Trump accounts,” have had a successful debut.
As of July 27, just over three weeks after the accounts went live, Treasury Secretary Scott Bessent reported that 7 million children under 18 are enrolled, and 86% of them come from families with annual incomes of less than $200,000.
The House Committee on Ways and Means stated that the high percentage of accounts belonging to families earning less than $200,000 is “proof that this investment is reaching the families who need it most.”
Earlier this week, the Treasury Department proposed further guidance for these accounts that would allow families to invest up to $2,500 pretax annually through payroll deductions, similar to 401(k) contributions. Under the existing guidelines, parental contributions are not tax deductible.
From the beginning, these accounts have allowed private employers to contribute up to $2,500 annually to their employees’ Trump accounts. In conjunction with the Treasury’s announcement this week, more than 50 major private employers have committed to contributing to employees’ Trump accounts.
Unfortunately, all of these developments have reinforced my original concern: that Trump accounts would become a way of widening the wealth gap rather than bridging it. In theory, providing every child with an investment account offers opportunities for upward mobility—but the implementation matters.
Here’s what’s worrisome about the rollout, the Treasury’s proposed rule, and the contribution commitment from those major employers.
‘The families who need it most’
As I’ve mentioned before, one of the greatest benefits of the Trump accounts is their ubiquity. An account that is available to every single American citizen younger than 18 offers a special opportunity for investment education. You can access reliable information about these accounts and the investment opportunities within them through a simple Google search. That’s an excellent first step in leveling the investing playing field.
But as anyone who has ever tried to design a program can tell you, simply providing information is never enough. In the case of Trump accounts, finances are a major stumbling block—one that the program itself claims to solve.
Which is why it feels disingenuous for the Ways and Means Committee to describe the 86% of enrolled families with household incomes of $200,000 or less as “the families who need [these accounts] the most.”
Here’s why: As of 2024, which is the most recent year for which the information is available, only 16% of American households earned $200,000 annually. The Census Bureau reports that the median household income in the U.S. was $83,730 in 2024.
In 2026, $83,730 is just about 250% of the federal poverty level for a family of four, which the federal government has set as $33,000.
Considering that an annual income of $200,000 is about 60% higher than the median household income, and the fact that 84% of American households bring in less than that, it’s an oddly high bar for determining whether Trump accounts are reaching the “families who need it most.”
Pretax payroll deductions
Allowing employees to contribute pretax dollars to investment accounts via payroll deductions should theoretically be a win-win scenario. Employees reduce their tax burden for the year and payroll deduction ensures they actually follow through. We’ve seen this work well for employer-sponsored defined contribution plans, such as 401(k) accounts.
But extending this kind of contribution rule to Trump accounts for kids ignores one of the big problems with defined contribution plans: Even employees with access don’t participate.
The U.S. Bureau of Labor Statistics found that among private industry workers with access to a 401(k) or similar plan, only 53% actually make contributions. The 47% of employees who don’t contribute to their retirement typically don’t have sufficient income to cover their bills and put money aside for retirement.
Parents hoping to set aside the full $2,500 per year in their children’s Trump accounts via payroll deduction must find a way to free up just over $200 per month to make it happen. This may be doable—though likely a serious challenge—for households earning the median income of $83,730 per year, which works out to $6,977.50 per month.
But with grocery prices predicted to rise faster than usual, the ever-increasing cost of homeownership, and college expenses gleefully outrunning inflation, reducing your paycheck by 200 bucks a month is a big ask for the families who most need the Trump accounts. Especially considering the fact that households in the bottom quintile of income, defined as those making $34,510 or less annually, have an average debt-to-income ratio of nearly 120%.
Employer sponsorship
Vanguard, Visa, Kraken, Chime, and ADP are among the more than 50 private employers that have committed to making contributions to Trump accounts on their employees’ behalf. The Treasury will allow employers to contribute up to $2,500 per employee, and that money is excluded from the employee’s taxable wages.
This kind of corporate buy-in has made a huge difference to 401(k) and other retirement plan participation. When employees are offered matching contributions by their employer, their own contributions go up.
Of course, there’s a catch. Not all employees have access to employer-sponsored retirement plans, let alone matching contributions. In fact, of the workers who earn $27,400 or less per year, only 21.3% have access to a retirement plan through their workplace. And of that percentage who do have access to a plan, only 17.9% of those workplaces offer matching contributions.
In other words, workers have to make a decent income to gain access to retirement plan benefits, not to mention matching contributions. There’s no reason to assume access to employer-sponsored Trump account contributions will be any different.
The 50 private companies committed to making Trump account contributions on their employees’ behalf may well employ lower-income workers who will benefit from the commitment. But it’s more likely that this benefit will go to employees who may not “need it the most.”
How not to help
From Bessent using $200,000 in annual income as a benchmark, to rolling out tax-deferred payroll deductions and employer sponsorships, every new detail about the Trump accounts for kids makes it sound like a program for wealthy families to safeguard their wealth, rather than a tool for upward mobility.
It’s easy to point out the flaws in a huge federal program (I didn’t even have to stretch beforehand), and any program that aims to help 73 million American children is bound to leave some unintentional gaps. But other than the $1,000 of seed money for newborns that Trump accounts provide, they don’t appear to target low-income families effectively.
The question is whether that’s a feature or a bug.
