Compliance: Looking at Trump Account requirements
With new “Trump Accounts” giving consumers another way to save, America’s Credit Unions’ compliance team examined existing statute and where credit unions fit in a recent Compliance Blog post.
Created in H.R. 1, a Trump Account is a tax-deferred account which can be established on behalf of a child under the age of 18. Contributions up to $5,000 a year are allowed. Potential contributors can include the child’s parents, the parents' employers, the government, and even the child.
H.R. 1 also establishes a pilot program that will deposit a one-time grant of $1,000 if the child for whom the account is established is born between Jan. 1, 2025 and Dec. 31, 2028. Once the child has turned 18, they may withdraw funds from this account for educational expenses, home ownership, entrepreneurship, and other designated purposes.
The balance must be invested in an "eligible investment,” which for credit unions, means they will have to work with a credit union service organization or third-party to access those investments.
The new blog entry also examines the Internal Revenue Service’s recent guidance and draft form for opening the accounts, and notes America’s Credit Unions’ efforts to ensure credit unions can be authorized providers of Trump Accounts.
The Compliance Blog publishes every Tuesday and Thursday. Other recent entries force-placed mortgage insurance, the use of signature cards, and more.