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华尔街日报'Trump Accounts' May Trigger 'Compliance Nightmare' With IRS: Tax Experts Warn Parents
Financial experts are sounding the alarm over a hidden bureaucratic trap within the newly created “Trump Accounts,” warning that parents who contribute their own money to the government-backed savings vehicles could face a grueling tax filing requirement usually reserved for the ultra-wealthy.
The ‘Future Interest’ Trap
According to a report by the Washington Post, the issue stems from an oversight in the “One Big Beautiful Bill” law passed this summer.
While the government's initial $1,000 seed deposit and charitable donations—such as the massive pledge from Michael Dell and Susan Dell—are safe, contributions made by parents currently lack a crucial exemption from federal gift tax laws.
The core problem is technical but severe. Under current IRS rules, gifts are only tax-exempt if the recipient can use the money immediately. Because funds in a Trump Account are locked away until the child turns 18, the IRS classifies them as a gift of “future interest”.
Consequently, any contribution—whether it is the $5,000 maximum or a mere $25—triggers a requirement for the donor to file IRS Form 709. “It's going to create a compliance nightmare,” said Amber Waldman, senior director for estate and gift tax at RSM US, to the Washington Post.
A ‘Compliance Nightmare’ On Paper
Form 709 is described by experts as one of the most complicated documents the IRS produces. It is a 10-page filing that takes the average person or accountant more than six hours to complete.
Adding to the burden, the form cannot be e-filed; the government only accepts submissions by mail, and popular software like TurboTax does not include it.
Calls For A Legislative Fix
Experts are urging lawmakers to pass a “legislative fix” similar to the one used for 529 college savings plans.
Benzinga has reached out to Altimeter Capital, the firm led by “Invest America” architect Brad Gerstner, and the Tax Foundation for comment on whether a legislative correction is being drafted.
Until then, tax attorneys advise parents to accept free government funds but refrain from adding their own capital. “Don't put your own money in until this is clarified,” tax lawyer Susan Bart told the Washington Post.
S&P 500, Nasdaq, Dow Jones Dip In The Data-Heavy Week
After a slew of delayed economic data that was released last week, the major U.S. benchmark indices declined over the five sessions, but closed higher on Friday.
The S&P 500 was 0.37% lower, whereas the Nasdaq Composite and Dow Jones slipped 0.10% and 0.95%, respectively, in the last week.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Friday. The SPY was up 0.91% at $680.59, while the QQQ advanced 1.30% to $617.05, according to Benzinga Pro data.
The futures of Dow Jones, S&P 500, and Nasdaq 100 indices were trading higher on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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