Treasury Secretary Scott Bessent on Wednesday discussed how the newly introduced “Trump Accounts” could serve as “a rainy day fund” for the children when they reach adulthood.
Bessent Dismisses Wealth Gap Concerns
Critics have warned that Trump Accounts could widen the U.S. wealth gap, as wealthy families can contribute the full $5,000 annually while lower-income households may struggle to save.
However, Bessent, in a conversation with CBS Saturday Morning co-host Kelly O’Grady, dismissed the concern, arguing the program targets middle- and lower-income families.
He said critics are “out of touch,” emphasizing that many Americans can't afford even a $500 emergency expense, making claims about "only $5,000" unrealistic and politically motivated.
He also mentioned that philanthropists could direct their donations to lower-income areas, and also choose by school districts or economic quintiles, potentially mitigating the wealth gap issue.
Despite these concerns, Bessent emphasized that the accounts have already garnered 600,000 sign-ups in the first week.
The Trump Accounts program, included in the "big, beautiful bill" tax and spending law, will create tax-advantaged investment accounts for about 25 million children born between Jan. 1, 2025, and Dec. 31, 2028. Each eligible child will receive a $1,000 government-funded investment in the stock market. Families can also open accounts for children under 18, but without the initial $1,000. Annual contributions are capped at $5,000 per child.
JPMorgan, Bank of America Rally Behind Trump Accounts
On Wednesday, Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) announced they will match the government's $1,000 contribution for employees who open a 503A Trump Account. Bank of America added that it will also allow eligible workers to make pre-tax contributions to their children's “Trump Accounts.”
Meanwhile, Grammy-nominated rap artist Nicki Minaj also committed to contributing between $150,000 and $300,000 to fund her fans' Trump accounts.
In December, Founder of Dell Technologies, Inc. (NYSE:DELL) Michael Dell and his wife Susan pledged $6.25 billion to the Trump Accounts, followed by Ray Dalio of Bridgewater Associates.
Earlier this month, SoFi Technologies, Inc. (NASDAQ:SOFI) CEO Anthony Noto, have lauded it as a powerful step towards financial inclusion and announced that it would match the government’s $1,000 seed contribution for the Trump Accounts.
Bessent launched "The 50 State Challenge" to encourage philanthropists to match or contribute to increase the starting capital for the next generation. Charles Schwab Corp. (NYSE:SCHW), BlackRock, Inc. (NYSE:BLK), Bank of New York Mellon Corp. (NYSE:BK) and Charter Communications, Inc. (NASDAQ:CHTR) are some of the listed companies that have contributed to the Trump Accounts so far.
However, personal finance expert Dave Ramsey has dismissed the idea of “Trump Accounts” as a political stunt and told those seeking advice that there are other ways to save. "It’s not as revolutionary as the original Roth was. It’s not as revolutionary as the 529 is,” said Ramsey.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
