The Gift That Comes With a Deadline

Last month, on July 4th to be exact, Trump accounts went “live”. If you’ve never heard of them, here’s a quick overview. Every child born between 2025 and 2028 qualifies for a $1,000 deposit from the federal government, seeded into an account that grows tax-deferred until adulthood. That’s not all. According to Americans for Tax Reform, there are at least (93) other organizations offering to make contributions.1 It sounds like the kind of thing you say yes to without thinking twice.

If your child has a disability, please look before taking this leap. The accounts are great. I’m not casting any shade on them. Unfortunately, they also have a provision that could screw your child out of SSI when they turn 18, if you’re not careful.

While your child is a minor, the money in their Trump Account doesn’t count against Supplemental Security Income’s (SSI’s) asset limit. That protection ends the day they turn 18. From that birthday forward, the full balance counts, dollar for dollar, against a limit that has been stuck at $2,000 for nearly 40 years with no adjustment for inflation - and no indication this is going to change anytime soon.

By law, a Trump Account can't sit as cash. The money has to go into a low-cost U.S. stock index fund, similar to what you'd find tracking the S&P 500, and while your child is a minor, there's no picking individual stocks or actively managing it. That matters for the math.

I'm going to use 4 percent growth here on purpose, and it's a conservative number. The S&P 500's historical average return runs closer to 10 percent a year.2 Even if the market underperforms its own history for the next 18 years, the $1,000 still clears $2,000 well before your child turns 18.

If your child is already on SSI, their 18th birthday is when the trouble starts. Going over the $2,000 limit means benefits get suspended, then terminated. Social Security doesn’t always catch it right away, either. When that happens, the overpayment keeps accruing until someone notices, leaving your child on the hook for money they didn’t know they weren’t supposed to have.

If your child isn’t on SSI yet because your household income is too high, the math runs the other way. By the time they turn 18 and apply on their own, the Trump Account balance sitting in their name could be the reason they don’t qualify.

Medicaid deserves its own mention here, separate from SSI. Most Medicaid coverage for people with disabilities, including the waiver programs that pay for waiver services, runs on that same $2,000 resource test as its own eligibility gate. That's true whether or not your child ever qualifies for SSI's cash benefit. A Trump Account balance that crosses $2,000 can cost your child Medicaid on its own.

There is a way out, and it’s the reason I’m writing this now instead of waiting. Families can move the entire Trump Account balance into an ABLE account, the tax-advantaged savings account built for people with disabilities, but only during the calendar year their child turns 17. Miss that window, and it’s gone. Once your child turns 18, the option to roll the money over disappears - along with the SSI eligibility it was protecting.

Right now, hardly anyone is taking advantage of this. Only about 246,000 ABLE accounts exist nationwide3, across every age group, not just children. Compare that to the roughly 1 million children under 18 who already receive SSI4 and, by definition, already qualify for an ABLE account. Most families have never heard of ABLE accounts at all, let alone the fact that a Trump Account can roll into one.

Here’s something worth clearing up, because I’ve heard the question and I imagine some of you have too. Does moving Trump Account money into an ABLE account at 17 count against the ABLE account’s own annual contribution limit? Surprisingly - no, it does not.

There is one requirement to know. The rollover has to be the full account balance, and it has to transfer directly from the Trump Account to the ABLE account rather than passing through your hands first. Take a distribution yourself before depositing it, and it stops being a rollover and starts counting as a regular contribution, subject to the annual limit after all.

This is why the move actually solves the problem instead of just relocating it. Money in an ABLE account gets a $100,000 exemption from the SSI asset test. A Trump Account balance sitting in your child’s name at 18 counts against the $2,000 limit dollar for dollar. That same money sitting in an ABLE account won’t, at least not until the ABLE balance itself climbs past $100,000. For nearly every family reading this, that ceiling is nowhere close. The rollover doesn’t make the money disappear. It moves it into the one place SSI has agreed not to count it.

One caution worth knowing before you assume this is a clean fix in every case. If your child’s ABLE account already has money in it, or receives other contributions in the same year, the Trump Account rollover adds to that balance rather than replacing it. Combined balances over $100,000 will suspend SSI until the account is spent down below the limit again, though Medicaid coverage generally isn’t affected the same way ABLE balances over $100,000 are for SSI specifically. Ask your ABLE plan administrator to run the math on your child’s actual balance before assuming the rollover is a simple, no-risk move.

You don’t need to solve this today. Your child’s 17th birthday is the deadline that matters, and if that’s still a few years out, you have time. What you need is to know this is coming. Most families won’t find out until it’s too late.

If you don’t have an ABLE account open, that’s the first call to make. You don’t have to wait for the birthday. When you talk to a plan administrator, ask directly whether they accept a trustee-to-trustee rollover from a Trump Account. These accounts are new enough that not every state’s ABLE program has a smooth process built for this yet, and you want that confirmed well before your child turns 17, not while the clock is running.

Mark the year your child turns 17 as the year the rollover has to happen. If your child is already 17 this year, that window is open right now, not next year. And if your family’s income has kept your child off SSI up to this point, don’t assume that stays true. What we covered earlier applies to your family too.

There’s a bipartisan bill in Congress, the SSI Savings Penalty Elimination Act, that would raise the asset limit to $10,000 and index it going forward. If it passes, a lot of this gets easier. Until it does, the $2,000 limit is the rule your family has to plan around, not the exception.