U.S. foster care agencies expand Trump Accounts as access and benefit rules draw scrutiny

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Trump Accounts for foster care

Highlights

Twenty-five states have agreed to open Trump Accounts for eligible foster children, allowing up to $5,000 a year in after-tax contributions per child as of July 4.
Michael Dell, Susan Dell, Ray Dalio, Barbara Dalio, Brad Gerstner, and Micron Technology have pledged a combined $6.25 billion with $250 contributions for qualifying foster children by ZIP code or geography.
Twenty-eight states now agree not to intercept Social Security survivor benefits for foster youth, up from 11 last year, but unresolved federal guidance and annual caps may limit benefit deposits.

State rollout and account mechanics

As reported by CNBC, citing U.S. Health and Human Services Department, 25 states have agreed to open Trump Accounts for eligible children in foster care under an initiative announced in early June by First Lady Melania Trump with the U.S. Treasury Department.

The tax-advantaged investment accounts launched on July 4 and allow parents, guardians, grandparents and others to contribute up to $5,000 a year in after-tax dollars until the year before the beneficiary turns 18. Babies born between 2025 and 2028 who have an account receive a $1,000 initial deposit from the Treasury Department.

Employers can also contribute up to $2,500 per worker annually within the overall $5,000 cap. Qualifying charities, along with state and local governments, may add money without it counting toward that annual limit.

For children in foster care, states would open the accounts as legal guardians. Advocates say the accounts could become a destination for grants and donations from outside groups, while potentially holding certain federal benefits received by a smaller share of foster youth.

HHS data shows an estimated 331,747 children are in foster care in 2025, with about 15,000 aging out of the system that year. Supporters say the accounts could complement existing transition support such as housing assistance and workforce training vouchers.

Benefit access and long-term policy concerns

Advocates say the main concern is whether the money will be usable when foster youth most need it. Trump Account assets generally cannot be accessed before age 18, and withdrawals may face ordinary income tax and a 10% early withdrawal penalty before age 59½ unless an exception applies.

Those exceptions include higher education costs, up to $10,000 for a first home purchase, $5,000 for the birth or adoption of a child, $1,000 a year for personal emergencies, certain medical expenses and health insurance premiums during unemployment. Child welfare specialists say penalties on nonqualifying withdrawals could reduce what may be one of the few assets a former foster youth owns.

Philanthropic commitments are also emerging around the program. Michael Dell and Susan Dell have pledged $6.25 billion, with eligible children born between 2016 and 2024 receiving $250 if they live in ZIP codes with median income of $150,000 or less; Ray Dalio and Barbara Dalio have made a similar $250 commitment for qualifying children in Connecticut, while Altimeter Capital CEO Brad Gerstner has pledged $250 for qualifying children under age 5 in Indiana and Micron Technology has pledged $250 per account in communities where it operates.

Another unresolved issue is how Social Security survivor benefits and Supplemental Security Income may be handled. Treasury Secretary Scott Bessent said on June 11 that states would be able to direct survivor benefits or SSI to Trump Accounts, but experts note many state child welfare agencies have historically used those funds to reimburse their own costs.

According to information provided by HHS, 28 states now agree not to intercept survivor benefits, up from 11 states with preservation policies last year, while only a few states do not take SSI. If survivor benefits are deposited into a Trump Account, they count toward the $5,000 annual cap, meaning excess funds would need to be held separately, and Treasury has not yet released guidance on how SSI would be treated.

Our earlier article reviewed how persistently high inflation and uneven price pressures across states are keeping living costs a central concern for U.S. households. We highlighted which states rank as the most affordable and explained why lower costs can shape worker relocation, employer expansion decisions, and overall state competitiveness.

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