IRS ISSUES EXPANSIVE RULES FOR $1,000 PAYMENTS TO TRUMP ACCOUNTS

(Bloomberg) -- Parents would have up to 17 years to claim $1,000 government payments to tax-advantaged savings accounts that Donald Trump’s tax law grants to most children born during the president’s second term under rules proposed Friday.

The Internal Revenue Service proposed rules for the program that seeks to maximize the window of time parents can claim the new benefit. Caregivers can sign up as soon as a child receives a Social Security number up until the end of the year the child turns 17 under the proposal.

Only children born between the start of 2025 and the end of 2028 are eligible for the $1,000 government contributions to the savings accounts, which can grow with taxes deferred until the money is withdrawn. Parents can create accounts for children born earlier but those accounts don’t receive a government contribution. 

The Trump administration has thrown its weight behind promoting the tax-advantaged children’s savings accounts and named them after the president. The accounts have been a central featured in Republican efforts to pitch the tax law to middle-income voters.

The accounts, which can start receiving contributions after July 4, have been the focus of several high-profile promotional events hosted by the administration, featuring business leaders, philanthropists and rapper Nicki Minaj. 

The proposed rules primarily deal with the $1,000 federal payments children born between 2025 and 2028 can qualify for. Parents must still wait for answers on bigger questions related to the accounts, including who will act as the designated financial agent, details on the tax treatment of some withdrawals and how the accounts interact with the annual gift tax exemption. 

The Treasury Department will distribute $1,000 into an eligible child’s account as a tax refund, under the proposed rule.

Treasury Secretary Scott Bessent said nearly 3 million children have been signed up for the accounts through the first half of February. The proposed rules for the $1,000 pilot program are expected to affect 15 million children in 12 million families, according to the IRS. Based on historic trends, the IRS estimates $1,000 invested in a broad index fund at birth could reach between $2,980 on the low end and $13,800 on the high end by the time a child turns 18. 

The accounts are locked until a child turns 18, at which point they operate similarly to an individual retirement account. Account holders can withdraw money to cover education, birth and adoption expenses, and down payments for first homes up to a certain amount without penalties. Other withdrawals would incur a 10% penalty before the age of 59-and-a-half. 

The accounts must invest in mutual or exchange-traded index funds that “primarily” hold US stocks.

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2026-03-06T17:16:35Z