Fostering the Future Powered by Trump Accounts

Fostering the Future Powered by Trump Accounts

Trump Accounts represent a promising tool to improve long-term financial security for children and youth in the United States by enabling structured savings and asset protection.

Through the leadership of First Lady Melania Trump and her Fostering the Future initiative, children and youth in foster care now have a pathway to benefit from Trump Accounts. Within the foster care community, these accounts may be referred to as “Fostering the Future Accounts,” reflecting on Mrs. Trump’s commitment to helping youth in foster care build a stronger future. 

The Trump Administration’s goal is for all States to open Trump Accounts for eligible children and youth in foster care by December 2027. Achieving this will require proactive state action to:

• Ensure all eligible youth in foster care are enrolled in Trump Accounts.
• Develop policies and systems that safeguard these accounts during changes in legal custody. 

FAQs

What is a Trump Account?

• Trump Accounts are federally backed, tax-advantaged savings accounts for children.
• Trump Accounts are traditional IRAs with special rules designed to help children break intergenerational cycles of poverty.
• Distributions are generally permitted and taxed as ordinary income at age 18.
• Distributions prior to age 59½ are subject to an additional 10% tax unless an exception applies, such as using the distribution to pay for education expenses or purchasing a first home.
• The official Trump Accounts website provides detailed information on eligibility, contribution limits, tax advantages, and guidance for families and organizations interested in supporting these accounts.

How can a state child welfare agency open a Trump Account for a foster child?

• A state child welfare agency may open a Trump Account for any eligible child who is in its legal custody and has been issued a Social Security Number and does not already have an account.
• Child welfare agencies will need to follow state-specific instructions on how to complete, sign, and submit a Form 4547 to elect to establish an initial Trump Account for an eligible child.
• The IRS Governmental Liaison will work directly with the child welfare agency to deliver the state-specific instructions.
• The IRS Governmental Liaison will ensure that the child welfare agency has all necessary information to complete and submit an election on Form 4547 to establish an initial Trump Account.
• Agencies can contact the IRS Governmental Liaison using their assigned governmental liaison or at pgld.glds.gov.liaison@irs.gov.
• States are encouraged to ensure policies explicitly authorize the agency (or its designee) to act on behalf of children in their care, and proactively open accounts for youth who do not already have one. 

How is a Trump Account transferred when custody changes?

• A child’s Trump Account is owned by the child and managed by an adult “Responsible Party.”  A representative of the state child welfare agency may be the “Responsible Party” for an eligible child in its legal custody.
• When a child turns 18, the child will obtain control of the Trump Account.
• When a child exits state custody for any reason other than the child turning 18 (e.g., reunification, adoption, or guardianship), the state agency or individual serving as the Responsible Party should resign as the Responsible Party and designate the child’s new legal guardian as the successor Responsible Party. If the Responsible Party fails to resign and designate a successor, then the child’s new legal guardian should petition the Trump Account Trustee to serve as the successor Responsible Party. Both these actions can be accomplished on the Trump Accounts App.
• States should establish clear procedures for transferring account authority upon custody changes both into and out of foster care.

Can federal survivor benefits be deposited into a Trump Account?

• Yes. States may deposit federal survivor benefits into a Trump Account. Such deposits count towards the annual contribution limit of $5,000 per account.
• Depositing these funds into Trump Accounts helps preserve resources for the child’s future needs and would generally be accessible starting the year the child turns 18. 

Can Unobligated Temporary Assistance for Needy Families (TANF) funds be deposited into a Trump Account?

• Yes. States may use unobligated TANF or Maintenance of Effort (MOE) funds to contribute to Trump Accounts when the expenditure is reasonably calculated to meet one or more of TANF’s four statutory purposes and is described in the state’s TANF State plan.

Can states claim administrative costs related to Trump Accounts under Title IV-E?

• Yes. States may claim allowable administrative costs under Title IV-E for activities related to Trump Accounts, to the extent those activities are necessary for the proper and efficient administration of the Title IV-E program.
• Allowable administrative activities may include case management and support functions, such as assisting with account setup or coordination.
• All such costs must be:
  • Included in an approved cost allocation plan, and
  • Supported by appropriate documentation demonstrating that the activities are allowable Title IV-E administrative functions.

Do Trump Accounts count toward the $10,000 asset limit for Title IV-E eligibility?

• For children under age 18, Trump Accounts are not counted toward the asset limit, as the funds are protected and not readily accessible until the child turns 18.
• For youth age 18 and older, Trump Accounts are handled similarly to traditional IRAs when determining eligibility.
• For a child who is eligible for and has an Achieving a Better Life Experience (ABLE) account, the Responsible Party can request a direct rollover of the entire balance of the Trump account to the child’s ABLE account in the year in which the Trump Account beneficiary turns age 17.

For more information on Fostering the Future through Trump Accounts:

• For questions specific to the creation and administration of accounts, contact the IRS at (833) 872-4547.
• For questions specific to Title IV-E and child welfare considerations, contact ACF at (202) 205-8618.