At a press conference on Tuesday, April 6, California Governor Gavin Newsom announced: “California is launching an unexpected partnership, and we want to bring you in on it. We’d love to see you invest in the future with the State’s CalKIDS accounts AND Trump’s Invest America accounts.” The Governor’s support demonstrates the power of blending important policy initiatives, but it also shows that forward thinking States may have a role with Trump Accounts in the future.
Let’s take a step back. H.R. 1, The Budget Reconciliation Act of 2025 (also known as “One Big Beautiful Bill” and the “Working Families Tax Cuts”) created Section 530A of the Internal Revenue Code, which authorizes accounts to provide the opportunity for children under the age of 18 to accumulate funds for their future (commonly known as “Trump Accounts,” “Invest America Accounts,” or “Section 530A Accounts”). The US Treasury announced on April 6 that The Bank of New York Mellon Corporation (“BNY”) has been selected to act as its financial agent, and that Robinhood Markets Inc. (“Robinhood”) will serve as brokerage and initial trustee while also providing customer service to account owners. While the Accounts won’t be available for funding before July 2026, according to Treasury Secretary Bessent, approximately five million have already been opened.¹
Our February Insight described the federal government’s Pilot Program, in which the Treasury will contribute $1,000 to a Trump Account for every child born between January 1, 2025 to December 31, 2028 with a Social Security number. Even if a child is not eligible for a Pilot Program contribution, parents may open an Account for a child who is a US citizen before the year in which they turn 18. Before the child turns 18, a $5,000 annual contribution limit applies.
While anyone can contribute to the Account for a single beneficiary, we have already seen significant philanthropic and corporate commitments for a broad cross section of children. On the corporate side in particular, a wide variety of businesses have announced matching contributions to Accounts established by their employees.² For initial contributions, including the $1,000 Pilot Program funding, the Account must be established by a parent or other designated party with BNY / Robinhood. After these first-time contributions have been made, we understand that an Account could be considered for a rollover to a new Account, whereupon the original Account would be closed.
For us, this begs the question of where a new Account could be held. In our view, the answer would provide an interesting opportunity for States to consider.
State entities that oversee or manage Section 529 Education Savings Plans (“529 Plans”) and Child Savings Account Programs (“CSAs”) have direct experience administering distinct investments for multiple student beneficiaries. Consolidating the reporting and tracking of multiple investments provides a streamlined service to families, enabling them to focus more directly on an overall set of financial goals for their children. We also note that States have made strong advances in financial empowerment and education. If entrusted with administration of Trump Accounts alongside 529 Plans and CSAs, we believe that States would bolster the important policy goals of all these investments.
How to do it? We believe that if States could become non-bank trustees, they would have a direct pathway to tackle the administrative challenges.
This is not to say that Trump Accounts are a replacement for 529 Accounts. On the contrary, we see these Accounts as a viable means for a child to accumulate wealth in conjunction with 529s. Recent changes to Section 529 provide beneficiaries with more ways to apply 529 assets; Trump Accounts represent an added vehicle for wealth building. Since States administer 529 Plans and CSAs, Trump Accounts would become another tool families can use to help jumpstart their children’s future.
The IRS recently issued Notices of Proposed Rulemaking covering Trump Accounts, including both the Pilot Program and the broader concepts related to opening and closing of Accounts, contribution guidelines for individuals and corporations, and requirements for non-bank trustees. While the Pilot Program comment period ended on April 8, comments may be submitted through May 8th on the broader concepts. We encourage States to consider submitting comments, particularly regarding non-bank trustees. In our view, the role for States should be clear cut.
In closing, we echo Governor Newsom: families should invest in their children’s future. We firmly believe that States can help make that happen.
¹Trump Accounts for kids now total 5 million, Bessent says
²Employer contributions are limited to $2,500 per employee and will count against the allowable $5,000. We note that neither the $1,000 seed funding nor philanthropic contributions will count against the $5,000.