A few weeks ago, I wrote about the new 530A (aka Trump) accounts for kids. And guess what? There are already changes, contradictions, and confusion.
Before: Parents or guardians had to actively open an account for the child.
After: 530a accounts are automatically opened for all eligible children under age 18 with a Social Security number.
Before: Parents chose whether to participate in the program.
After: Parents cannot opt out of having an account or close an unwanted account.
Before: Children needed an open account to receive qualifying charitable contributions.
After: All eligible children now have accounts and can receive qualifying charitable contributions.
Before: Contributions could only be invested in eligible low-cost US stock index funds or ETFs. This would reduce the risk of investing the accounts in a single company.
After: Certain charitable donors can contribute individual company stock into accounts. Donated individual stock must be held for at least 5 years. Parents cannot reject or sell the donated stock during that period. So, back to single-stock risk.
Before: Parents initiated the opening of the accounts and established control.
After: Parents must claim their child’s automatically opened account and verify their identity to control the accounts and make additional contributions.
Before: At age 18, accounts that were opened by parents generally would transition to an IRA account.
After: Unclaimed accounts with no money will close when the child turns 18. Accounts with money will remain open and transition to an IRA when they are claimed.
So, there you have it: Like it or not, parents of minors are getting Trump Accounts. Might as well claim them after opening.
