Summary
Learn how Trump Accounts may affect SSI disability benefits when a child turns 18 and what steps families can take to help protect eligibility.
When Congress passed the Big Beautiful Bill Act approximately a year ago, they created the option for every American citizen to place money into “Trump Accounts.” These are, essentially, retirement accounts set up by parents for children under the age of 18.
These are different than the “ABLE” accounts that are protected from causing issues for SSI recipients and can be counted as a resource — potentially reducing, if not eliminating your SSI benefits — if not handled correctly.
What Is a Trump Account?
A Trump Account provides the same tax incentives under the Internal Revenue Code as a traditional Individual Retirement Account (“IRA”), but for children.
Anyone can contribute up to $5,000 per year into a child’s Trump Account, and employers are able to add up to another $2,500 per year. Once money is placed in the account, it is invested in index funds until the child becomes an adult, at which point it automatically converts into a traditional IRA.
In short, Trump Accounts are designed to provide Americans with tax benefits when they start investing towards retirement early.
Can Trump Accounts Affect Disability Benefits?
Yes, but only for individuals applying for SSI benefits.
If an individual has worked enough to be eligible for SSDI, their entitlement for those benefits will not be affected by the fact that they held a Trump Account as a child.
SSI benefits, on the other hand, are only paid to individuals who meet strict income and asset guidelines.
Prior to age 18, funds in a Trump Account do not get counted as a resource and, therefore, do not impact a child’s ability to receive SSI disability benefits.
However, when a child with a Trump Account turns 18, the funds in the account automatically convert to an IRA and are counted as a resource when determining SSI eligibility. Therefore, if the account has more than $2,000 in assets, the child turning 18 will automatically become ineligible for SSI benefits as of their 18th birthday.
What Can Be Done?
If a child with a Trump Account is disabled or is likely to be unable to work when they reach adulthood, and the individual can only apply for SSI benefits, there are still steps one can take to preserve eligibility.
Under Section 530A of the Internal Revenue Code, the assets in a Trump Account can be transferred to an ABLE account for the child, which will preserve their eligibility for SSI benefits.
However, this conversion must be done:
- For all of the money in the Trump Account; and
- Within the calendar year that the child turns 17.
By converting the money in a Trump Account into an ABLE account following these steps, the holder of the account maintains their eligibility for SSI benefits.
Questions About Trump Accounts and SSI Disability Benefits?
If you have more questions about Trump Accounts and their potential impact on your disability claim, we can help!
Contact our office for a free case evaluation — we are here to help you understand your options and guide you through the process.
