The Investment Company Institute (ICI) has made several recommendations to the U.S. Department of the Treasury and the Internal Revenue Service (IRS) on how they can successfully launch Trump Accounts.
The recommendations will support the effective implementation of Trump Accounts with the youngest recipients receiving $1,000 from the government to launch their investment journey at birth.
“ICI was one of the earliest supporters of Trump Accounts because we believe that introducing investing at birth can put young Americans on a path toward long-term financial security. The recommendations we submitted today are focused on ensuring Trump Accounts are implemented efficiently and in a way that promotes competition and investor choice, both of which are essential to making this program work for families over the long term,” ICI President and CEO Eric Pan said.
ICI officials noted that a competitive marketplace for account trustees and custodians is essential. Further, it added that Treasury should mitigate competitive advantages associated with one firm being selected as the initial account provider, including through white-labeling and avoiding potential impediments to rollovers. The idea is to allow families to move accounts easily to their preferred financial institutions.
Further, ICI recommended that the Treasury interpret the eligible investment requirements for the benefit of investors. For example, allowing fund-of-funds structures offers a route towards convenient diversification and professional asset allocation.
Additionally, ICI asked the administration to clarify that Trump Accounts and employer contribution programs are not subject to the Employee Retirement Income Security Act (ERISA). It also asked the agencies to offer guidance on the application of the $2,500 annual limit on employer contributions.