An Alternative to the Trump "Baby" Account?

Trump “Baby” Account Article

A few of you, after reading what I wrote about the $1,000 “Trump Account,” asked me a fair question: is there an alternative?

Thanks for reading Sandra's Substack! Subscribe for free to receive new posts and support my work.

Let me tell you about a program California has already built, one that most families in our district have not yet heard of even though their own children may have money waiting in it right now. It’s called CalKIDS, and the second half of this post puts it side by side with the Trump Account so you can decide for yourself.

First, the thing I most want you to know: CalKIDS is specifically for education and vocational training expenses after high school; and I’ll be just as plain about its limits as I was about the Trump Account’s. It’s free, it’s already yours if you qualify, and far too few families are claiming it.

What CalKIDS actually is

CalKIDS — the California Kids Investment and Development Savings Program — is a children’s savings account program the state launched in 2022. It’s run by the ScholarShare Investment Board, the same state agency that runs California’s official 529 college savings plan. Think of it as a head start on education costs that the state funds — not money you have to put in yourself.

Here’s how a family qualifies. There are two paths:

Every baby born in California. If your child was born in California on or after July 1, 2022, they’re eligible for a deposit between $25 and $175 — regardless of your income. The exact amount depends on when they were born. It’s automatic. The money is set aside; you just have to claim it.

Low-income and high-need public school students. Low-income public school students are eligible for scholarships ranging from $500 to $1,500. This covers students identified as low-income, English learners, foster youth, and similar categories who were enrolled on a specific school “Census Day.”

The potential reach of this program is genuinely large. CalKIDS has been called the nation’s largest child development account program, with roughly $1 billion made available to more than two million California students since 2022. And starting in the 2025–2026 school year, school districts are now required to tell families about CalKIDS and their child’s potential eligibility — which means the schools in Kern, Kings, Tulare, and Fresno Counties are obligated to get this information into parents’ hands. Hopefully, your school districts are already getting the CalKIDS information out to you.

How you claim it — and how it grows

The money is created for your child automatically if they’re eligible, but someone has to claim it. You claim it on the Program portal at calkids.org. For a school-age child you’ll use their Statewide Student Identifier (the SSID — your school can provide it); for a newborn you’ll use the Local Registration Number from the birth certificate (or the unique code on the notification letter the state mails within 90 days of the birth). For a newborn, the advice is to wait up to 90 days after the birth before claiming.

When the time comes, the funds can be used for qualified higher education or career-training expenses — tuition and fees, books and supplies, computer equipment, certain housing expenses. And because CalKIDS lives in California’s 529 system, a family can link it to a ScholarShare 529 account and add their own savings if they choose. You’re not required to add a cent — but if you can, it grows in one place, and qualified education withdrawals come out free of state and federal tax.

That’s the program. Free state seed money for education, no contribution required, and a tax-free path to use it.

CalKIDS vs. the Trump Account — the accurate comparison

Now let me put them next to each other, because it would be easy to think they’re the same type of investment account. They aren’t. They’re built for very different purposes, and once you see that, the rest follows.

One is for your child’s retirement. CalKIDS is for education expenses only. The Trump Account is a traditional IRA — a retirement account. The money is meant to sit untouched for your child’s old age. CalKIDS is an education account — meant to be used when your child is ready for college or career training. That single difference drives almost everything else.

One is locked for decades. CalKIDS is available when your child needs it for continuing their education. The Trump Account allows no withdrawals before your child turns 18 — not even for hardship — and after that it carries a 10% penalty until age 59½. CalKIDS is there when your child is ready to head to college or vocational training after high school. No retirement lock, no early-withdrawal penalty.

One is taxed on the way out. CalKIDS is not taxed on qualified education expenses. When money finally comes out of a Trump Account, the $1,000 seed and all its growth are taxed as ordinary income. The earnings never escape tax. CalKIDS, used for qualified education expenses, comes out tax-free. So a dollar of growth is worth more in CalKIDS than in the Trump Account.

Who owns it — and why that matters so much for a disabled child. This is the part I will never stop emphasizing. In a Trump Account, the child is the owner from day one. That means the account is the child’s own countable asset toward the asset limits for means-tested benefits, and it can push a disabled child over the $2,000 SSI resource limit — costing them access to SSI, and often the Medi-Cal that comes with it. A CalKIDS-linked family 529 account, by contrast, is typically parent-owned, which generally keeps it from threatening the child’s benefits.

But here’s where I need to be accurate: a 529 is not the same as full protection from asset limitations if you need to access disability benefits. For SSI specifically, money in a 529 can count as a resource. The reason a CalKIDS/529 account usually doesn’t hurt a child’s benefits is that a parent/adult owns it — not because 529s are magically exempt. The tool actually built to shield a disabled person’s savings from being considered for asset limitations is an ABLE account, where up to $100,000 doesn’t count against the SSI asset limit, and the funds don’t count against Medi-Cal eligibility at all. If your child has a disability and needs access to means-tested benefits, please talk with a benefits specialist before relying on any of these accounts. That’s not a disclaimer to cover myself — it’s the recommendation I give any family considering any type of investment.

What happens if the money is never used — and here is where CalKIDS is very different. I promised to be as plain about CalKIDS’ limits as I was about the Trump Account’s, so here is the real catch. With CalKIDS, if your child doesn’t use the money for education or career training by age 26 — for any reason, including the child’s death or disability — the state seed and its earnings are forfeited and returned to the program to help another California child. You don’t get it back. There’s a narrow written appeal if there were extenuating circumstances, but the default is: use it for its purpose, or it goes back to the state.

Compare that to the Trump Account, where unused money — even after a death — stays with the family (taxed, and reported on the child’s final return if no beneficiary was named, as I wrote before). So this is the one place the Trump Account is arguably more generous: you can inherit it. With CalKIDS, you never owned it, so there’s nothing to inherit — you simply lose a gift you didn’t use. The difference: CalKIDS costs you nothing and is never taxed; it’s a conditional gift, not property. One important exception — a personal ScholarShare 529 account you open and link to CalKIDS does not expire; that money stays as yours to redirect. So if keeping something regardless is what matters to you, your own linked 529 account — not the CalKIDS seed — is the part that protects your investment.

And one more reason to claim the account, even if you are not sure your child will use it: there is a narrow appeal to use the funds after age 26 if life got in the way — but that appeal is only available if you claimed the account before the 26th birthday. An unclaimed account has no second chance. So claiming it early, even if college is years away, is what keeps every option open.

The ‘seed’ size difference — and the tradeoff. The Trump Account’s one-time $1,000 is larger than the CalKIDS automatic newborn deposit ($25–$175). CalKIDS gives low-income students up to $1,500, requires nothing from the family, comes out tax-free, isn’t locked until retirement, and doesn’t sit on a disabled child’s benefits like an anchor. When I weigh free, flexible, tax-free education money against a larger sum locked in a taxable retirement account my child can’t touch for at least eighteen years, the choice becomes clear for most working families.

What I think — and what we’ll do

I’ll say about CalKIDS what I said about the Trump Account: read it for yourself, and decide what fits your family’s needs. For some, the right answer is to claim CalKIDS and open a ScholarShare 529 account. For a family raising a disabled child, the right answer almost certainly includes opening an ABLE account. For very few Congressional District 20 families is the Trump Account the best of the options on the table.

What troubles me isn’t that these programs exist. I am grateful these programs exist! My sons both qualified for CalKIDS! It’s that the loud one — the one with a President’s name on it — is the least beneficial deal for working families, while the quiet one California already built is sitting unclaimed because you have not heard about it until now.

My job isn’t to represent only Democrats. It’s to represent everyone in California’s 20th Congressional District. And the district office is the instrument I can use to do the most good from day one. From those offices, we will help families navigate exactly these rules — CalKIDS, ScholarShare 529, ABLE accounts, Special Needs Trusts, SSI, and Medi-Cal — so that no family in this district leaves free money on the table, or loses the benefits their child depends on, because the rules were not accessible enough to understand.

Go check if your child has CalKIDS money waiting. Then keep asking questions — of me, and of everyone who wants your vote. I’ll keep answering you honestly.

With gratitude, Sandra

References

All primary sources unless noted. Where a document is paywalled or hard to reach, I’ve said so.

CalKIDS — official program site — eligibility, deposit amounts, how to claim, and the 90-day newborn note.
CalKIDS — Fast Facts Program Summary (PDF) — the newborn $25–$175 breakdown (initial deposit + $25 claim incentive + $50 ScholarShare 529 link incentive) and the up-to-$1,500 student amounts, in the program’s own words.
CalKIDS — Need Help / FAQ — qualified education expenses and the governing California Education Code (EC 69996–69996.9).
CalKIDS — Program Information Guide (as of Jan 31, 2026) — “Expiration of CalKIDS Accounts” (age-26 forfeiture, including death or disability), the linked-personal-529 exception, the age-17 withdrawal floor, the newborn vs. school-age claiming methods, and the appeal-only-if-claimed-before-26 condition.
CalKIDS — Link a ScholarShare 529 Account — how families add their own savings.
California State Treasurer / ScholarShare — CalKIDS Regulations — the governing regulatory text and the tax-free treatment of qualified 529 withdrawals.
California Student Aid Commission — CalKIDS — claiming accounts, the low-income scholarship range, and the 2025–26 school-notification requirement.
UCLA Financial Aid / CalKIDS Institute at UCLA — school-age eligibility standards.
IRS Notice 2025-68 — Trump Account rules: IRA status, the growth-period lock, and ordinary-income taxation of withdrawals. Internal Revenue Bulletin 2025-52.
IRS — One, Big, Beautiful Bill Provisions — Trump Account releases and details.
Congressional Research Service — Trump Accounts: Overview and Policy Considerations, R48910 — the SSI/means-tested-benefit interaction.
ABLE National Resource Center — FAQ — the SSI/Medicaid exclusion and the $100,000 figure.

A note on sourcing: these are state (.gov), federal (.gov), and university (.edu) primary sources, plus the ABLE National Resource Center and CRS. One point — that money in a 529 can count as a resource for SSI specifically — rests on policy analysis I’m still confirming against the Social Security Administration’s own program rules (SSA POMS); I’ll update if the primary source refines it. CalKIDS newborn deposit amounts shift by birth year, so check calkids.org for your child’s exact amount. Trump Account regulations remain proposed, not final.

Paid for by Sandra Van Scotter for Congress. No PAC money. No chased endorsements. sandra4cd20.com