Trump Accounts

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Theme / Investing

For many families, one of the greatest financial goals is giving their children a stronger start than they had themselves. While parents have long used 529 plans, custodial accounts, and trusts to begin saving for their children’s future, Congress has introduced another option this year: Trump Accounts.

These new accounts are designed to encourage long-term investing from an early age. Every U.S. child under the age of 18 is eligible to have a Trump Account opened in their name, with a parent or guardian serving as the custodian until adulthood. Children born between 2025 and 2028 are also eligible to receive a one-time $1,000 contribution from the federal government, providing an immediate opportunity for long-term compound growth.

Additionally, kids under the age of 10, born before 2025, may become eligible for a $250 seed funding from the Dell family. Beyond the seed money from the government or Dell family, parents, grandparents, and even employers can make additional contributions each year, allowing families to steadily build wealth over time.

However, Trump Accounts are not intended to replace every other savings vehicle. Trump Accounts do not function like a 529 or an UTMA. The features on a Trump Account lend itself to retirement savings. Any withdrawals before 18 are extremely restrictive, meaning it won’t lend itself to secondary education, and when the child turns 18 they can roll their Trump Account directly into a Traditional IRA. Like with an IRA, there are eligible withdrawals for first-time home purchases (up to $10,000), qualified higher education expenses or birth/adoption expenses (up to $5,000), but primarily the fund is meant to be a jump start for retirement. Families saving specifically for education still find a 529 plan more attractive because qualified education withdrawals are tax-free. Likewise, parents wanting to save for more general future expenses who may want to prioritize flexibility, a custodial account may make more sense. Every family's goals are different, and choosing the right account depends on how and when the money is expected to be used.

One primary drawback from our perspective on the Trump Accounts are the investment options. As of now, your investment options are extremely restrictive, and access to many of the Biblically Responsible mutual funds that we recommend doesn’t exist. If prioritizing biblically mindful investing is important to you, the Trump Accounts likely won’t be the best option.

If you’re unsure about a Trump Account, or were looking for additional answers about them, reach out to your financial professional to more information.

Nathan Carroll

Financial Advisor

208-918-8655

nathan.carroll@christianwm.com