The Trump administration announced plans to allow child welfare agencies to elect to open a Trump account for children in foster care. The move comes after commenters raised concerns about access to Trump accounts — a new type of tax-favored account established by the One Big Beautiful Bill Act (OBBB).
First Lady Melania Trump and Treasury Secretary Scott Bessent unveiled the initiative on June 11. Treasury said the option is available where a state, territorial, or tribal government agency is the legal guardian of a child who has a Social Security number.
Trump account basics
Trump accounts are traditional IRAs created for the exclusive benefit of eligible individuals under age 18, with special rules applying before the beneficiary turns 18. Accounts may be funded via nonprofit and government qualified general contributions, employer contributions, qualified rollover contributions, and contributions from the accountholder’s parents or others. A $1,000 federal contribution is available for eligible U.S. citizen children born in 2025 through 2028. Contributions cannot be made before July 4, 2026.
The IRS issuedNotice 2025-68 in December and released a proposed rule in March laying out initial guidance on Trump accounts. It received a flurry of comments on both pieces of guidance, with several commenters focusing on how to ensure children in foster care can benefit from the program.
Automatic enrollment rejected
After the December guidance, one theme that emerged in multiple comment letters is that automatically establishing Trump accounts for eligible children is the best approach to ensure maximum participation.
The Aspen Institute cautioned that the policy goals behind Trump accounts can only be achieved if “every eligible child in the United States has access to an account.” The group recommended Treasury consider “backstop enrollment” where the government opens an account for a child after 12 months.
“[P]erhaps the group of children who would most benefit from making the policy ‘opt-out’ are those in foster care,” said the Aspen Institute. “Without automatic enrollment, this policy could leave behind tens of thousands of young people who are eligible for the $1,000 deposit and potentially additional philanthropic and government-provided contributions, but who are most likely to lack a guardian who will open an account on their behalf.”
The American Institute of CPAs (AICPA) also called for automatic enrollment, saying this would “promote equitable access to the program.” It suggested a pathway for automatic enrollment via coordination with the Social Security Administration (SSA) when Social Security numbers are issued at birth.
State agency authority to open accounts
Another recommendation running through comment letters is that a state, territorial, or tribal government agency serving as legal guardian of a child in foster care should be able to elect to open a Trump account on that child’s behalf.
The Youth Law Center suggested “augmenting the list of authorized individuals” who can create a Trump account for a child, to ensure children in foster care are not excluded.
The Annie E. Casey Foundation cautioned that the IRS’ proposed approach for opening Trump accounts “may not function as intended for children in foster care.” Short of automatic enrollment, the group suggested the IRS include state child welfare agencies in its list of those authorized to open an initial Trump account.
More recently, the Louisiana Department of Children and Family Services, in a June 10 comment on the proposed rule, called on the IRS to authorize state agencies to elect to open a Trump account for foster care children in their legal custody where no “higher-priority individual” has made the election. Louisiana DCFS suggested state agencies be permitted to serve as a Trump account “responsible party” only during the period when the child is in state custody, and that account funds not be used to offset the state’s care costs.
Fostering the Future Account
Treasury declined to provide for any form of automatic enrollment in its proposed rule. It explained that the Treasury secretary “would be unable to fulfill certain requirements to open and operate a Trump account without disclosure of taxpayer information,” in violation of IRC § 6103.
It did, however, take up the suggestion of allowing state agencies to elect to open a Trump account when serving as a foster child’s legal guardian.
On June 11, the first lady unveiled the Fostering the Future Account, which she described as “a dedicated savings and investment vehicle” for children in foster care. She also shared that effective immediately, “the Treasury will let state child welfare agencies and foster youth representatives set up Fostering the Future Accounts for children in foster care.”
Bessent, in a statement the same day, described the move as an extension of the Trump account program. “This initiative will expand access to Trump Accounts for youth in foster care and provide states with new flexibility to direct existing resources toward their future,” he said.
Treasury added that child welfare agencies will need to follow “state-specific procedures” when completing Form 4547, Trump Account Election(s), to elect to open an account for a foster child. “The Internal Revenue Service Office of Governmental Liaison will work directly with each state to provide guidance and ensure agencies have the necessary information to successfully complete this process,” reads Treasury’s statement.
Agencies are directed to contact IRS Governmental Liaison or their assigned liaison for support with the process. “The Trump Administration will provide guidance and a dedicated helpline designed specifically to assist States in setting up these accounts for children and youth in foster care,” per the White House’s press release.
For more on Trump accounts, see Checkpoint’s Federal Tax Coordinator 2d ¶ A-4650.
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