Trump Accounts

Anyone gifted stock to your kids so I can sell, pay capital gains under them, and move the money into the trump account? I'm looking at some 75%+ gained stock in my brokerage account and thinking it would be a way to max out there Trump for 5 years

I recently received an email to activate Trump Accounts for my children. Apparently the only trustee sofar is Robinhood. I was hoping that Fidelity or Vanguard would be on board. Probably some behind the scenes deal making going on.

My kids are too old for the government or philanthropic contributions. Are these accounts still worth it for older kids? It would be nice to hear a FI-minded CFP give an in-depth analysis.

Accurate that the annual $5k contribution is post-tax and the account converts to a traditional IRA at 18. Those contributions are still post-tax at that time and will not be taxed again (granted if below is followed). The growth is now pre-tax though like any growth in a traditional IRA and would be subject to normal income tax.

As mentioned in another comment, you'll need to complete the forms with each years tax filling to 'track' these post-tax contributions. Then when the account converts to a traditional IRA, if you plan on converting to a roth IRA during those early years (18-22 when a lot of kids are in college/minimal or no income), you would no longer need to track. I think the impact of this tracking is overinflated by fearmongering on the 'if they dont touch it until 65' ignoring the likelihood that this community will convert it at 18 and no longer need to track.

As far as the comments arguing taxable vs 529 vs UTMA, they each have their place. If you want a 20s fund, an UTMA or taxable are probably better. If you're going college fund, then 529. If retirement, IMO, taxable and trump accounts take the top. And Im not sure how to ignore the opportunity to basically superfund a roth IRA (after conversion at 18ish). A 'tiny' amount, as another person stated, becomes a fully funded retirement - if they have good financial literacy and leave it to grow.

5k x17 or 18 years at a modest 7% growth, then with only growth taxed at 0-12% (mostly 0 is safe guess), plus another 50 years of growth all as a roth IRA……

I found this helpful. Sounds like if you err on your taxes one year, it could turn your after-tax contributions into essentially pre-tax ones, thus double paying income tax. I am solidly in the 12% marginal tax bracket, so I plan on using the 529 and taxable brokerage to save for my children. Gains on the taxable brokerage are taxed at 0% as long as AGI is under ~95k.

Tldr: If you get the $1k, take it, but be weary of contributing beyond that.

Why Trump Accounts Fall Short (AMA, E135)

On his 15th Ask Me Anything episode, Jesse tackles a fresh set of listener questions with a throughline that centers on how to evaluate financial decisions in a

Apple Podcasts

I found this article really helpful:

Trump Accounts for Kids – Pros, Cons, and Other Investing Options

Learn about Trump accounts for kids and what they can offer. Find out the potential benefits and pitfalls of these new investment options.

Marriage Kids and Money

This article might be helpful.

I plan to take advantage of a variety of savings accounts for my little one, including the Trump account. A couple things to consider: 1) since all of that money will be in a traditional IRA, they might run into tax complications later if they want to do a mega backdoor Roth with money rolled over from a 401k. 2) Keep in mind that at 18 years old, this money is under their legal control, not yours. That is potentially a lot of money to be handing over to a kid that age. It’s impossible to tell when they’re little how they will be in their young adult years, so there is some risk there.

My plan is to utilize multiple accounts and at 18, slowly start converting the funds in my son’s Trump account (turned IRA) from traditional to Roth. I am also not going to tell him what accounts exist in his name until he is older and able to manage money properly. This plan could become a bit tricky, but I imagine I’ll figure things out as I go.

Congratulations! I would say take the free $1K for sure, but weigh the features of a Trump account against a UTMA and 529 when deciding what accounts you should contribute to.

@Cody Garrett, CFP® wrote a great article (before Trump accounts were a thing) comparing the benefits of a UTMA vs. 529 vs. a taxable account for a child. His conclusion is to make use of all available accounts together for maximum flexibility and tax efficiency. You can apply the same analysis to a Trump account to decide how it fits into your planning.

You're correct that although your contributions are post-tax, the Trump account is treated like a traditional IRA for the beneficiary.

One potential concern is that although expense ratios of the funds held in a Trump account are limited to 0.1%, the law didn't include limits on fees the custodian can charge. We won't know if those fees are good or bad until the accounts become active later this year.

A quick google tells me that IRAs are not counted for FAFSA purposes, but 529s are!

For me, Trump accounts are a no-brainer. You can convert the traditional IRA to Roth when they turn 18 and they'll pay little to no tax. By the time they hit 20 their regular retirement will already be funded. I think the personal finance community has really not ingested the sea change that Trump accounts will cause for generational wealth building. It's hard to overstate the impact that effectively starting a Roth IRA at birth will have. Imagine growing up your entire life already knowing that your eventual retirement is already secure.