Could Trump Accounts Auto-Enrollment Build a Nation of Future Homeowners?

Millions of American children could be automatically enrolled in Trump Accounts beginning as early as Oct. 1, under new rules announced by the Treasury Department on Tuesday.

The president's eponymous tax-advantaged investment accounts, which officially launched on July 4, are designed to give children an early foothold in the stock market—and, potentially, a pool of money they can eventually use to pay for college, start a business, or buy a home.

Until now, though, families were required to opt in by submitting a form with their tax return or on TrumpAccounts.gov.

So far, enrollment has been lackluster. Just 7 million to 8 million children had accounts as of mid-September, Treasury Secretary Scott Bessent told the House Financial Services Committee on Sept. 15. But with automatic enrollment, Bessent said the Treasury expects that number to reach 70 million.

The change could address one of the chief criticisms of Trump Accounts: that they disproportionately benefit families who are already well-off. But giving every child an account is not the same as giving every child an equal financial head start.

Auto-enrollment could close one gap

Even before Trump Accounts officially launched, there was a significant divide in who knew about them.

Adults with higher incomes and more than $5,000 in savings were significantly more likely to have heard of Trump Accounts than people with lower incomes and savings, according to research from the Urban Institute.

And among low- and moderate-income parents earning between $30,000 and $80,000 annually, just 5% had opened an account as of July, according to research from the nonprofit Commonwealth. Meanwhile, 38% said they intended to open one but had not yet done so.

Automatic enrollment provides an obvious solution by giving every eligible family an equal chance at opening an account. And that could matter when today's children eventually enter a housing market where family wealth already plays an enormous role in who can buy.

“Down payment savings, or the lack thereof, can be a major difference maker for many households as they contemplate buying their first home,” Danielle Hale, chief economist of Realtor.com®, said when the accounts were first unveiled. “Having funds can mean getting into your own home years sooner than if you have to save up for a down payment.”

It’s part of the reason that inheritance plays such a large role in the housing market. 

Research has shown that households that receive an inheritance of at least $5,000 are about 2.5 times as likely to become homeowners as those who do not. For Black and Hispanic households, receiving such an inheritance makes them over 5 times and 7 times more likely, respectively.

By that measure, a Trump Account could work like an inheritance at birth.

The next divide: Who can afford to contribute?

But while auto-enrollment solves one problem, it doesn't resolve the question that could ultimately determine whether Trump Accounts narrow existing wealth gaps or reproduce them: Who can afford to contribute?

While the accounts are seeded with a $1,000 investment from the Treasury Department, families can contribute up to $5,000 more each year, with those funds growing tax-deferred.

Brad Gerstner, CEO of Altimeter Capital and one of the architects of the initiative, has emphasized the effects of decades of compounding. With $750 in annual contributions, he has estimated that an account could grow to roughly $50,000 by age 18, $175,000 by age 30, and $1 million by age 50.

“A one-time seed, or just opening an account and donating to it once, is going to make these accounts more symbolic than transformational,” Evan Mills, a financial adviser at Scholar Advising, told Realtor.com in July. “The transformation comes from the ongoing contributions and letting it grow.”

But not every family has $750—let alone $5,000—to set aside each year for a child.

In fact, a quarter (25%) of low- and moderate-income parents surveyed cited an inability to afford contributions as a barrier to participating in Trump Accounts, according to the research from Commonwealth.

So compounding acts like a double-edged sword: It magnifies the divide between families who could afford to contribute often and early, and those who couldn't.

A Realtor.com analysis shows just how large that gap could become. A child whose family consistently maximizes contributions could reach adulthood with nearly 60 times as much as the child whose account receives only the government's seed money—and more than five times as much as one whose family contributes $1,000 annually.

“The free $1,000 matters, but it’s a rounding error next to what disciplined annual contributions and compounding can do,” Hannah Jones, senior economist at Realtor.com, said. “Turning 18 with $4,000, $44,000, or $238,000 isn’t a difference in degree. It’s the difference between a nice bonus and a genuine launching pad.”