MARKET UPDATE
Xerxes Nabong, CFP®, CDFA®
Philip M. Maliniak, CRPC®
Nicole Brown-Griffin, CFP®, CDFA®, EA
Aaron Petty, Client Associate
Hampton Roads: (757) 394-3486
Greater Phoenix: (480) 687-9339
Orange County: (949) 660-8869
Trump Accounts: A New Opportunity to Build Generational Wealth
A new savings vehicle launching on July 4th called a Trump Account is eligible for enrollment, providing families with another way to save and invest for a child’s future. Created under federal law, these tax-advantaged accounts are designed to help children begin investing early and benefit from decades of potential compound growth.
This won’t apply to everyone, but chances are you know someone who could benefit from it. If you don’t have children or grandchildren, feel free to forward this newsletter to a parent, grandparent, family member, or friend who may be interested in helping a child build longterm wealth.
Key Features
- Available for U.S. citizen children under age 18 with a valid Social Security number.
- Children born between January 1, 2025, and December 31, 2028, are eligible for a $1,000 Treasury-funded contribution.
- Parents, grandparents, and other eligible contributors may contribute up to $5,000 per year to help accelerate growth.
- The account is owned by the child, while a parent or authorized adult serves as custodian until age 18.
- Investments are generally limited to low-cost, broad-based U.S. stock index funds and ETFs.
Why Families May Consider Them
The greatest advantage is time. A child who begins investing at birth has decades for compounding to work in their favor. Even families who choose not to contribute beyond the initial government deposit may benefit from long-term market growth. According to the program website, a child receiving the $1,000 initial deposit and annual contributions could potentially accumulate significant assets by adulthood and beyond.
How Trump Accounts Compare
Feature
Trump Account
529 Plan
UTMA/UG MA
Primary Purpose
Long-term wealth building
Education savings
Flexible savings
Tax Treatment
Tax-deferred growth
Tax-free for qualified education expenses
Taxable
Annual Contribution Limit
$5,000
Much higher limits
No specific annual limit
Account Ownership
Child
Account owner controls
Child
Investment Flexibility
Broad U.S. index funds
Varies by plan
Broad investment options
Government Contribution
Eligible children receive $1,000
No
No
What Clients Are Asking
Who is eligible?
Any U.S. citizen under age 18 with a valid Social Security number may have a Trump Account. Children born from 2025 through 2028 may also qualify for the $1,000 government contribution.
Do I have to contribute money?
No. The account can be established without additional contributions, although families may contribute up to $5,000 annually.
What is the money invested in?
The program is designed around low-cost U.S. stock market index investments rather than individual stocks or speculative investments.
When can the funds be used?
At age 18, the beneficiary gains control of the account and may continue investing or use the funds subject to the account’s rules and tax treatment. The program specifically highlights potential uses such as education expenses and home purchases.
How do I open an account?
Eligible individuals can establish an account through IRS Form 4547 and the Trump Accounts platform. Link to get started here.
Our Take
Trump Accounts represent an interesting new planning opportunity, particularly for young families and grandparents seeking to create long-term wealth for future generations. While they are unlikely to replace 529 plans for education funding, they may serve as a complementary tool within a broader family wealth strategy.
As with any planning decision, the most important factor is not necessarily choosing the perfect account, it’s starting early and allowing time for compounding to work.
If you’d like to discuss whether a Trump Account makes sense for your children or grandchildren, please contact us. We’d be happy to help determine how it fits into your family’s overall savings strategy.
Your Team at Wealth Avenue,
