Foster children are getting their own version of 'Trump accounts,' but major questions remain

By Beth Pinsker

States will be responsible for the sign-up process, but it's unclear what happens after that

First lady Melania Trump said that 23 states had signed up to participate in the program.

Starting in July, some 330,000 foster children in the U.S. will be eligible for a "Fostering the Future account," a version of the "Trump account" for children. At the announcement ceremony on Thursday, first lady Melania Trump said that 23 states had already signed up to participate.

"Let's elevate America's children above politics," she said. "We can make sure foster youth enter adulthood with assets, opportunity and a stronger path to independence."

Treasury Secretary Scott Bessent said that foster children who are born between January 2025 and December 2028 and who have these accounts would be eligible for a $1,000 contribution each from the Treasury, while other children may be able to get other contributions from states, private organizations and employers. Oklahoma said it would give $250 to every eligible child in the state.

The accounts for foster children - which would be set up by the agency that oversees the child's care - would be similar to the "Trump accounts," which are investment accounts for minors available to all U.S. citizens under age 18 with a valid Social Security number and which must be set up a by a parent.

The U.S. government has pledged to deposit $1,000 into accounts set up for children born between 2025 and 2028. Parents and other entities can also contribute funds, including for children who do not qualify for the initial deposit. Children gain access to the funds in these accounts, which can grow tax-free, when they turn 18. At that point, the accounts are treated like an individual retirement account, and withdrawals are taxed as ordinary income.

In a statement, Arnold Eby, executive director of the National Foster Parent Association, said: "NFPA is thrilled that the well-being of children in foster care and the families that support them are once again in in focus. We eagerly anticipate additional information on how foster youth will be able to accrue and access these funds."

Bessent said that a $1,000 seed contribution for a newborn could grow to half a million dollars by the time that child reaches retirement age. That's "demonstrating that assets of life-changing scale can begin with small steps," he said.

But that is based a high projected rate of growth, and possibly additional contributions along the way. For foster kids, that may not be the normal assumption. At 18, most foster children are aging out of the system and facing an uncertain financial future. As Bessent noted, "One in five ... will become homeless after aging out of the system, while only half will obtain gainful employment by the time they turn 24."

"The new Foster the Future Accounts ensure that children in foster care - the nation's most vulnerable - can access the same opportunities as their peers," Linda Spears, president and CEO of the Child Welfare League of America, said in a statement. "Too many young people aging out of foster care lack the resources needed to succeed. We strongly support this initiative, which enables states to create and grow accounts for young children that can grow through contributions from families, agency programs, survivor's benefits, and other resources. We encourage states to explore the opportunity that these accounts provide to better support youth in foster care."

How will the new accounts help? For one thing, they automate the sign-up process somewhat, or at least it put it into state hands to complete. That may lead to participation rates that are higher than among the population as a whole. So far, only about 6 million children have been signed up for Trump accounts, out of about 73 million eligible children under the age of 18 in the U.S.

The money in the accounts may also help foster children when they reach adulthood. A newborn in the foster system who gets the $1,000 seed contribution could have roughly $4,000 in pretax dollars in their account at age 18. This could be used for rent or put toward college tuition at a crucial time. For an older child who might get $250, compound growth may also provide a little boost. If that amount was invested in an index fund that grows by an average of 8%, in five years they would have nearly $400 in pretax funds that they would not have otherwise had.

But questions remain about the administration of the accounts over a child's first 18 years, and no further details were announced. For instance, who would be responsible for managing the investments in each account, other than a default fund? A system has not yet been established for "Trump accounts" in general. Also, what will happen with these accounts as children move in and out of the foster-care system, perhaps going back to live with their parents, moving to other foster homes or being adopted?

"Real freedom means being able to make independent choices about your own future," Melania Trump said Thursday, but for foster children, that freedom can be hard to come by, even with a little extra funding.

-Beth Pinsker

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06-11-26 1708ET