Where does the Trump Account Fit?

A few years ago a fellow parent to young kids asked me, “Nate, what are you doing for your daughter to set her up for the future? We want to do something.”

To understand what actions make the most sense, it is important for you to understand what it is that you are trying to do.

For my wife and I: Saving for college and creating future flexibility.

Over the years different accounts aimed to help children get ahead have come about, 529 college savings plans, UTMA (Uniform Gift to Minors Act)accounts, Custodial Roth IRA to name a few, and now the TRUMP accounts.

Children born between January 1, 2025 and December 31st, 2028 receive $1,000 in seed money for their TRUMP account. This is or should be a no brainer for parents to take advantage of. The money is then invested in an S&P 500 index fund, (a basket of Large US companies) and cannot be touched until the child turns 18.

Once 18 the account control moves to your child and they can withdraw 100% of the funds. The withdrawal will be taxable as income.

Back to, “what are you trying to do?”

If you don’t want your child to have full control and access to the money at age 18, great, TRUMP accounts aren’t for you.

I remembered finding out my grandparents had bought some Savings Bonds for me. I RAN to the bank. Early access penalties be damned. How responsible will your 18 year old be?

What if my child will miss out on the $1,000 because of when they were born?

If under age 10 and born before the $1,000 seed money period, they could qualify for $250 courtesy of the Dell Foundation (yes Dell computers) and or the Dalio foundation if you live in Connecticut. To see if you qualify Click Here.

How can additional funds be added?

$5,000 can be contributed annually. No income requirements. Businesses can contribute up to $2,500 per employee.

So where does the TRUMP account fit?

This isn’t a college savings account, for me it is really more like a long-term account, maybe best served to be used as a future retirement account for your kids. The investments grow tax deferred until they are withdrawn, and 60 years is quite a long time for growth to compound. The problem, at age 18 your now “adult” child can pull 100% of the funds out and spend it on anything.

Financial planners and tax professionals are talking about potentially converting the money to a Roth IRA at 18 to take advantage of potentially low tax rates for your young adult which would then make distributions in retirement tax free. While interesting, your child still needs to be on board and do it.

Back to me. I’ll gladly take that free money should we have a child qualify. Otherwise, I’m not rushing to take advantage of the TRUMP account for our daughter. 

Our formula: 529 accounts for college. Joint investment account in our names (as parents) from which we can give our daughter money at any time in her adult life should she need it.

If you are a parent or grandparent and you have questions send me an email at nate@tomkiewiczwm.com.

To view more on Trump accounts: https://trumpaccounts.gov/

The information in this blog is the opinion of Nathan Tomkiewicz and does not reflect the views of any other person or entity unless specified. The information provided is believed to be  reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through Tomkiewicz Wealth Management, LLC, an investment adviser registered with the State of New York and Massachusetts.