I’ve been writing about Trump Accounts for much of the last year, and I’ve been asked by many people if I think they’re a good thing—and if they should open one for their kid.
Well, this month, the Treasury Department took care of question number two and went ahead and auto-enrolled 60 million children in Trump Accounts. That means if you weren’t planning to open one, too bad! They already took care of it for you.
(You will still need to claim the account by downloading the Trump Account app on your phone and proving your identity and your child’s by sharing Social Security numbers.)
Auto-enrollment actually isn’t a terrible thing. In fact, it’s been instrumental in getting millions more Americans to invest in their retirement savings. Following the passage of the Secure Act 2.0 in late 2021, employers are now required to auto-enroll employees in retirement plans, and as a result, more Americans are saving for their future. When I interviewed economist Kathryn Anne Edwards for the Family Money podcast, she said she hoped the Treasury Department would eventually roll out auto-enrollment for Trump Accounts as a way to ensure everyone gets access.
But there’s a second piece of news about Trump Accounts that’s been swirling this month that I frankly don’t like. And it’s making me rethink how I’d answer the first question: Are Trump Accounts a good thing?
Originally, the money in a Trump Account was only supposed to be invested in index funds. These investment vehicles are generally lower cost and lower risk than stock picking. But the Treasury Department has created a loophole that allows wealthy philanthropists and companies to donate individual shares of their stock to these accounts. According to the new rules, the shares must be held for five years before they can be sold and the money re-invested in the index funds. Parents also can’t refuse the donations!
There’s all kinds of reasons why this is problematic. For starters, there’s the potential that billionaires and corporations could use donations to Trump Accounts to try to curry favor with politicians in certain municipalities. That’s not the thing that bothers me the most, though. There’s plenty of ways for companies and billionaires to try to sway elections these days without dropping stocks into kids’ Trump Accounts.
My bigger problem is that holding individual stocks is way riskier than being invested in diversified index funds. Also, this new rule provides an incredible tax advantage for billionaires.
Everyday Americans do not get a tax deduction when they contribute to their child’s Trump Account. But these billionaire donors are able to treat their contributions as charitable donations. First, their money goes to a qualified charity (most likely their personal foundation), and then it’s donated to Trump Accounts.
When you make a donation of a stock to a qualifying charity, you avoid paying the capital gains tax you would be levied if you sold the stock for cash and made a profit. The charity, assuming it’s a 501(c)(3), also doesn’t have to pay capital gains tax when they turn around and sell the stock and use it for their organization. Plus, the donors get to take a tax deduction for the donation. Tax savings all around!
But our children are not 501(c)(3)s. And the way that Trump Accounts are set up now, our kids will pay taxes on any charitable contributions made to their accounts by benevolent billionaires. When it comes time for Freddy to withdraw money from the Trump Account I set up for him, he’ll pay ordinary income taxes on the $250 donation from the Michael and Susan Dell Foundation, as well as on any earnings made on that investment.
And you know what? That really pisses me off! These donations are being presented as generous gifts from philanthropic rich dudes, but at the end of the day, ordinary Americans are just picking up their tax bills! Doesn’t that figure?
OK, you might be thinking, “Lindsey, how much is Freddy actually going to pay in ordinary income taxes on a $250 donation.” And maybe it’s negligible, but that’s not really the point, now is it?
(And also, if you’re like, I have no idea what you’re talking about, it’s OK! Our U.S. tax code is confusing on purpose! Katie Gatti Tassin does a good job of explaining the capital gains nonsense here. And Tracy Hume discussed it in a Weekly Roundup for The Purse earlier this year.)
When I was taking classes to become a certified financial planner, I was struck by how much of the education focused on helping the very rich keep their money. My estate planning, tax planning, and even retirement planning classes were all primarily focused on how to help the very wealthy avoid paying taxes via different strategies that aren’t really available to the hoi polloi. Most of us don’t stand to inherit so much money that we need to worry about federal estate tax, for example.
Trump Accounts evolved out of a proposal for baby bonds that was first proposed by economists Darrick Hamilton and William Darity Jr. in 2010. (I wrote about these in more depth earlier this year.) The goal was to provide investment accounts to low income families in hopes of closing the wealth gap—it would give these children a financial head start that allows them (in theory) to keep up with their wealthier peers.
In reality, Trump Accounts seem like just another financial instrument designed to help the rich get richer. Wealthy donors can avoid capital gains taxes and enjoy charitable tax deductions. Plus, they’re more likely to have the wherewithal to understand how to maximize the tax advantages of these accounts for their own children, contributing up to the limit each year and then rolling it over into a Roth IRA when the child turns 18.
Although Trump Accounts have a name that makes me cringe, I had hopes for the program. Sure, the accounts aren’t perfect, but I was optimistic that maybe they would evolve over time, the same way 529s have become even better investment vehicles for saving the future.
Why am I surprised that this administration would fuck it up in favor of their rich friends? Of course they’ve taken something meant to be useful and made it bad. And to make things even worse, DealBook reports there’s a good chance that the move to allow donors to contribute individual stocks to these accounts may “invite legal challenges that could hamstring the initiative.” What a waste!
-Lindsey
What else we’re reading, watching, and listening to
- Insurance has been on my mind lately, but I didn’t expect to get completely sucked into Heather Boneparth’s recent Joint Account newsletter about why we all should be reviewing our insurance policies. This is on my to-do list! (And yes, that’s two Joint Account links in two weeks. What can I say? Heather has been killing it lately!) -Lindsey
- Justin Fox has an interesting column in Bloomberg dispelling the myth that millennials were ungrateful job hoppers early in their careers. They actually job-hopped less than prior generations, and Gen Z is continuing that trend. “Young Americans have become more risk-averse than previous generations and that this is holding them back,” he writes. We can think of a few reasons why they are! -Alicia
- Journalist and author Brigid Schulte wrote a moving piece for The Persistent about spending the summer with her 94-year-old mother and all the work (and some joy!) that comes with caregiving for aging parents. -Lindsey
- I don’t care about the Kelly Clarkson–Brooklyn shop feud! Enough!! -Alicia
The Purse classifieds
- The Purse is now offering classified ads in our Friday newsletter for $150 an ad! Email classifieds@thepurse.co for more info.
- Interested in sponsoring a whole newsletter? Reach out to partnerships@thepurse.co.
What’s on our radar
- Alicia and I spent Wednesday morning visiting the Fearless Girl statue and taking a tour of the New York Stock Exchange with a very cool crew of people. The whole thing was hosted by Dolly Meckler of Scrollodex, State Street, and one of our favorite PR mavens, Alex Daly of Daly. I was telling Freddy about it, and he said, “That sounds like a field trip for grownups!” And that’s exactly right, but with way better goody bags than anything I ever got in school. -Lindsey
- Alicia is looking for one more member of Gen Z to (anonymously) tell her what they spent on their last date, for a story for Yahoo. Give her a shout at alicia@thepurse.co if you’re interested!
- Lindsey is still looking for someone to talk to about returning to work after a career break. She’d especially love to chat with a man about his experience. You can shoot her an email at lindsey@thepurse.co.
TikTok of the week
@aliciaadamczyk_ October 10, 2026: The Trump administration auto enrolled 60 million kids into Trump accounts *and* said companies and wealthy individuals would be able to donate individual stock to them. Parents wouldn’t be able to reject the individual stock contributions. Even Trump’s own Treasury Department says the change will make it so account holders “bear some additional risk.” #economy #investing #trumpaccounts
♬ original sound - Alicia Adamczyk
What else we published on The Purse this week
For paid subscribers: Our latest edition of Meal Plan is the tastiest yet!
Alicia Adamczyk
Why does talking about private vs. public school make everyone so stressed?
Lindsey Stanberry
If you’re interested in more classic personal finance advice, we are publishing it on Tuesdays.
Alicia Adamczyk
Alicia wrote about her feelings about women’s earnings tending to peak a decade before men’s.
Alicia Adamczyk
Best money we spent this week
- Chris’s birthday is next week, and I bought him a cozy gift I can’t disclose just yet! ($50) -Alicia
- Ken and I got Covid and flu vaccines last weekend (free, thanks to our insurance). This is your friendly reminder from the oldest daughter of an infectious disease doctor to get vaccinated! -Lindsey
