To Trump it……or Not to Trump it……
For those in the Midwest who love the game of Euchre, which is a favorite amongst some of us on the team, they’ll get the reference. However today we aren’t talking cards, it the new Trump accounts that are available for saving and investing starting July 4th or 2026.
Below is a brief overview of what they are and how they work.
Understanding the New Trump Accounts for Minors
Major tax legislation passed in 2025 introduced Trump Accounts, a new savings option designed to help families build a long‑term financial investment for their children. These accounts allow up to $5,000 in annual after‑tax contributions until the year a child turns 18, at which point the account acts more like a Traditional IRA.
As part of a federal pilot program, children born from 2025–2028 are eligible for a one‑time $1,000 government contribution, provided a Trump Account is opened on their behalf by their parent or guardian. (According to the TrumpAccounts.Gov, typically only parents and guardians are eligible to open accounts, not grandparents, Aunts, Uncle’s, etc.)
Some key features:
- Contributions can be made by family members, employers, nonprofits, and government entities.
- Funds will be invested in a diversified portfolio of low-cost index funds designed to maximize long-term growth while minimizing risk.
- No withdrawals are allowed before age 18, except in limited rollover or correction situations.
- After age 18, IRA rules apply for taxation and distributions.
How Do Trump Accounts Compare?
While Trump Accounts offer a simple, tax‑advantaged way to kickstart savings, other vehicles may be more suitable depending on a family’s goals:
- 529 Plans: Ideal for education-focused savings, offering tax‑free growth and withdrawals for qualified expenses, plus the ability to front‑load five years of gifting.
- Custodial UTMA/UGMA Accounts: Provide greater flexibility, no withdrawal age restrictions, potential favorable tax treatment, and broader investment options.
Next Steps
Trump Accounts become available after July 4, 2026. Families can open an account and request the federal seed contribution through IRS Form 4547 or at trumpaccounts.gov.
While these accounts are designed to offer promising benefits, the right strategy depends on each family’s needs. Consulting a financial professional can help determine the best option for long‑term planning.
The BVB Group take: We would suggest that young parents consider taking advantage of these Trump accounts, especially for those children born in 2025-2028. The long-term tax deferred compounding at this age is a savings tool that allows a child to essentially have a Traditional IRA without earned income. In addition, we believe once the account turns into a Traditional IRA at 18, there will be very compelling reasons and opportunities to consider converting those funds to a ROTH IRA.
*Past performance is not indicative of future results. All investments carry some level of risk, including loss of principal.
*The information offered is provided to you for informational purposes only. Robert W. Baird & Co. Incorporated is not a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action.