Trump accounts may allow street stock donations: Reports

With less than two months until the official launch of Trump Accounts, there are reports that business leaders and philanthropists may, at some point, donate stock to fund grants in the new tax-deferred accounts for children.

“We all want to grow multi-billion dollar gifts into children’s acts and the gifts can be cash/shares!” Altimeter Capital CEO Brad Gerstner, who helped lead the Trump administration’s new savings plan, wrote in a post to X on Wednesday.

Gerstner’s post came in response to a DealBook report on Wednesday, which said there had been discussions about changing the rules to allow direct stock offerings.

CNBC could not independently verify the report by DealBook, which did not identify its sources. DealBook reported that White House and Treasury Department officials have discussed funds that could be raised in Trump Accounts to accommodate stock donations.

“The Trump administration is always open to finding new ways to build greater success for Trump accounts and help the next generation of America’s children build wealth,” a White House official said in an email in response to CNBC’s question about direct stock investments. “However, there are no new updates to share at this time.”

Gerstner and Invest America, the nonprofit advocacy group that has been promoting Trump’s accounts, did not respond to CNBC’s requests for comment.

As it stands, guidance from the Treasury Department states that parents and guardians, employers, qualified charities and state and local governments can contribute cash to Trump accounts, and the money will be invested in “a broad range of US equity index funds.”

There was also talk this week about Trump’s employer account contributions.

Daniel Aronowitz, head of the Department of Labor’s Department of Employee Benefits, said Tuesday at an event in Washington, hosted by the law firm Mayer Brown, that EBSA is working with the Department of Finance to increase contributions to the accounts.

These efforts are all part of a larger administration campaign to help fund Trump accounts, also known as Section 530A accounts, earlier and encourage more families to sign up.

Allowing businesses and philanthropists to make stock donations doesn’t mean account holders will receive shares in those companies, experts say. Although DealBook said children may increase exposure to individual stocks, in his X book, Gerstner said the report is “misleading.”

“100% of all $$ in @TrumpAccounts will be in a free index fund that tracks the S&P 500. No trading. No buying individual stocks. Period,” he wrote.

In another X post on Wednesday, Invest America wrote, “Wouldn’t it be great if every child in America got a share of SpaceX or Berkshire Hathaway or OpenAI?!”

While the purpose of Trump Accounts is to kickstart wealth-building opportunities, experts say allowing them to acquire and hold individual stocks will also increase the risk of loss.

“The whole point of the requirement to hold low-index funds is to avoid speculative investing in a single stock, and changing that rule will encourage speculative risk-taking aimed at consistently accumulating retirement savings,” said Ben Henry-Moreland, a certified financial planner with the advisory platform Kitces.com.

Donating profitable stocks to charity is a popular strategy among the wealthy who want to support a cause and claim a donation deduction.

In general, donors see a greater tax break for donating appreciated stocks held for more than one year than cash. Plus, they can skip the federal capital gains tax of up to 20% and a 3.8% surcharge on top earners.

For example, if Elon Musk wants to donate the amount of $ 1 billion Tesla stock in the Trump Accounts, under the current rules, he will need to first sell this asset, which will bring a huge profit, said Henry-Moreland.

But because it’s not possible for philanthropists to make a gift directly to Trump Accounts under current law, Congress may need to amend Section 530A to allow for absentee donations, said Henry-Moreland, referring to the Internal Revenue Code accounts.

Trump accounts are available to all US children with a Social Security number, and children born between 2025 and 2028 are eligible to receive an initial $1,000 deposit from the Treasury.

A growing number of companies have pledged to match $1,000 account deposits at the Treasury, and philanthropists in many states have committed to providing accounts for eligible families.

Earlier, Treasury Secretary Scott Bessent said the goal was to have philanthropists, charities or local governments in every state contribute funds as part of the “50 state challenge.”

Most recently, in late April, the state of Oklahoma approved a one-time Trump account donation of $250 for deserving children in the state, in addition to a $1,000 Treasury deposit.

The new accounts were officially introduced on July 4, and so far, an estimated 5.5 million children have registered, according to the latest figures from the Ministry of Finance.

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