The Investment Company Institute (ICI) is advising the Trump Administration to utilize multiple, competitive providers for Trump Accounts, a tax-preferred savings account for children.
In a comment letter to the Treasury Department of Wednesday, the ICI urged the government implement a “robust competitive marketplace” by incorporating additional parties, including IRA providers, rather than a single custodian. Doing so would reduce administrative burden and increase consumer choice, the organization stated.
“…As Treasury begins implementation of the Trump Account program, we urge you to prioritize the creation of a robust and competitive marketplace for account trustees and custodians,” the ICI wrote in its letter.
The organization observed that if the administration were to utilize a custodian instead of several qualified providers, it should incorporate white-labeling practices to reduce competitive advantages. This includes branding websites and other materials under the government instead of the custodian provider’s name.
“While still not ideal, white-labeling will somewhat mitigate the resulting competitive advantage bestowed on the Treasury-selected trustee or custodian,” the ICI wrote.
Among other items, the letter also encourages the Treasury Department broaden eligible investments under the new accounts, as “unnecessarily restricting the already narrow range of Eligible Investments will detract from the success of the Trump Accounts program,” the ICI stated.
This includes exchange-traded funds (ETFs) and mutual funds, which under current restrictions on leverage would be barred from Trump Accounts.
The ICI urged the Treasury Department to clarify the scope of the leverage restriction through guidance to avoid excluding funds that would otherwise be deemed “eligible.”
The tax-preferred savings vehicle was created due to a provision in President Donald Trump’s “One Big Beautiful Bill” legislation. It would provide $1,000 to each U.S. citizen with a Social Security number and born between January 1, 2025, and January 1, 2029.
The legislation will also allow family, friends and even employers to contribute up to $5,000 a year. Funds will be invested in a diversified fund that tracks a U.S. stock index such as the S&P 500.
ICI’s 16-page letter, including additional recommendations, can be found here.
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