Trump Accounts

We break down what Trump Accounts are, who actually benefits, and why they function as retirement seeds rather than college funds. We compare them with 529 plans and plain brokerage accounts so you can choose the right tool for your child’s goals.

• How Trump Accounts open via Form 4547 and start July 2026
• Who qualifies for $1,000 Treasury seed money
• Dell Foundation $250 rules and income-based ZIP filter
• Contribution caps, no tax deduction, employer $2,500 limit
• Access rules at 18 and penalties before 59½
• When parents should open one and when to skip
• Better fits for college and flexible goals with 529s and brokerage
• Practical funding paths that balance free money and control

To learn more about Stansell Wealth Planning visit:
https://www.StansellWealth.com
Stansell Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Chapters

• 0:16 Welcome And Follow The Show
• 1:25 What Trump Accounts Are
• 2:59 When And How Accounts Open
• 5:10 Who Qualifies For Seed Money
• 8:02 Dell Foundation’s $250 Details
• 9:47 Contribution Rules And Employer Matches
• 10:48 Access Limits And Penalties
• 12:18 Who Should Open One
• 14:16 Why You Might Skip Them
• 16:05 Better Alternatives: 529 And Brokerage
• 20:22 Final Advice And Contact Info
• 21:22 Disclaimers And Closing

Transcript

Speaker: 0:16

Hello, everyone. Hope you're doing well. Wherever you may be listening or watching this podcast, I appreciate you joining me. My name's Cody Stansell, the Stansell Wealth Planning Podcast. We go over uh various financial planning topics from investments to insurance to estate planning. Uh today we have a really good one. It's about Trump accounts, which I know we have a lot of, there's a lot of confusion, a lot of questions already, uh, but we'll dive into that here in a little bit. Uh, real quick, if you don't mind, if you've been listening to this podcast for a while, or maybe this is your very first time, would love for you to follow uh the episodes and follow the podcast. So whether you're on BuzzSprout or Apple Podcasts or Spotify, or if you're watching this on YouTube, if you can click the follow button, that really helps us uh know how many followers we have and the audience. While also you are alerted every time we come up come out with a new episode. So we're trying every Wednesday. Uh, if you follow the podcast, every time we come out with a new episode, you are notified. So benefits benefits everyone. So, yes, today, Trump accounts. Let's let's dive right in. What are they? Should you set up for one? What are the details? Right? We'll dive dive into all that. I'll go into a brief summary, uh, and then I'll give you my opinion and then give you more details from there. So that's kind of the flow that we'll go today. Uh, so quick summary and opinion on this. They are relatively new, so there's details coming out over time, and so there's not even all the details that we know yet. But my summary and my opinion, if if you already have an account open for your child, a college account, a savings account for your child, uh, with your child's future in mind, then Trump accounts may not be for you, right? Trump accounts are really for the underprivileged that saving for their child's future isn't really a top priority, or they don't have the means to open an account and actually invest, you know, people that don't really think about it or they're struggling to get through paycheck to paycheck. Trump accounts are really designed for those folks. Um, so we'll dive into that here a little bit. So it's a Trump accounts are a great way, a great way to jumpstart an investment account for your child if you don't have something already in place. Um, I will say this numerous times so that it comes across and it's very clear. Trump accounts are really just retirement accounts for your child. Okay, I'll repeat that. They're just retirement accounts, basically, for your child. Okay, I'll get into more of that later. Uh, but there are taxes and penalties if you spend any of this money before your child turns 59 and a half, just like a traditional IRA retirement account, right? So we'll we'll dive into that. Um, so if you only listen to 30 seconds of the podcast, that that's my summary, that's my opinion. Here's all the details. Okay. So Trump accounts are to accounts created by the Trump administration in 2025. And these accounts, first date that they'll actually open is July 5th, 2026. Okay. So you can't even open up a Trump account right now if you wanted to. Today it's it's February 2026. You couldn't even open it if you wanted to. So July 5th, 2026 is the first date that those will open. And also keep in mind, like I said, today is February. Uh and right now they're supposed to open up on July 5th, but I wouldn't be shocked at all if we get to April or May and the administration pushes them back because things aren't ready yet. So, you know, keep that detail uh in mind. So, how do you open one? Okay, uh very fun way. You have to file a tax form for it. So file tax form 4547, 4547 on your 2025 tax return. So whenever you do file this spring, whether it's February, March, uh, April, maybe you file an extension, whatever it may be, file form 4547 if you want to open one up, which I'll get into if you should even open one up. You don't really open up a Trump account. Okay. It is opened up for you when you file 4547, tax form 4547. And that account will be held at a custodian that the Trump administration chooses. Okay. It's not like you can come to me or go to Fidelity or Vanguard and say, hey, I want to open up a Trump account, please. They say that we can't, we can't do that. So it's it's kind of like having Social Security or Medicare, like it's it's through the government, right? It's all run through the government. So you that's how you open up account is filing 4547. Okay. So who are Trump accounts for? So if you have a child or a grandchild under the age 18, you technically can open up a Trump account for them. Okay. If they're older than 18, sorry, you missed a boat. Said kids later, I guess. Um 18 and under. However, everyone is there's a lot of confusion, and this is the most most of the questions I hear so far. Everyone is hearing that the government adding money to the accounts, and that is true. The government will add $1,000 one time, not annually, just one time. If your child has a birth year of 2025 through 2028. Okay, I'll repeat that. So the government will add $1,000 of their own money, seed money is what they call it. If your child has a birth year born in 2025, 2026, 2027, or 2028. So think of if their birthday is from January 1, 2025 through December 31, 2028, you open up a Trump account, the government will cede $1,000 to that Trump account. Okay, that's great. So sorry if you had a child December 30th of 2024. Sorry about that. Also, uh, they did make the last year 2028. So once again, if your child's born between 2025 and 2028, but that's just because that's the last year under this presidential regime, right? We have an election year in 2028. So the IRS, the government, they do this all the time. They put a deadline on things, but we wouldn't be shocked at all if we get a couple years down the road and oh, Trump accounts, you know, we'll also add $1,000 if your child's born between now and 2035. You know, just so don't be shocked at all if that deadline gets pushed back. But 2024 and um sooner, older. Sorry, uh, missed a boat there. Also, a lot of confusion too, uh, totally separate than the government. But Michael and Susan Dell, so of Dell Computers, the founder of Dell Computers, came out and is giving $250 of his own money. If you have a child uh 10 years old and younger, and stay with me here, 10 years old and younger, and you live in a zip code where the median family income is $150,000 or less, and who won't receive the $1,000 seed money from the Treasury for being born between 2025 and 2028. So I know it's a mouthful, just follow me here. So basically, if you are entitled to the $1,000 seed money being born 2025 through 2028, you won't get an additional 250 from the Dell Foundation. Okay, so they don't let you double dip. If you're receiving the $1,000, you won't get the $250. But if you basically have a child that's older, you know, 10 years between four and 10, basically, you'll get $250. Okay. Um, but why the zip code stuff and why the median family income? Basically, the whole theory is they don't they don't want wealthy communities to benefit from this money. Like if you're born in Highland Park or Beverly Hills, or you know, you if you live there, right? You then you won't receive that money. But most communities have a median household income of 150 grand or less. You can easily Google this, just put in your zip code and say median family income for zip code XYZ, and it'll give you the stat. And so most communities are below that number, but that's just a way for them to uh you know filter out the very wealthy communities. So if you qualify for the 1000, once again, you can't double dip, you won't get an additional 250. Um, what their gray there's some confusion in a gray area here, and it's unclear what 10 years old and younger for this $250 means. Like, what's what's the definition of that? We can't find more details from the Trump administration on it. So is that them saying if you turn 11 before the Trump account is opened, then you don't qualify? Does that follow a certain calendar year, like born in 2016 or later? We don't know. We can't find out that clarification in that detail. 10 and younger is how they have deemed it, but they don't give us more details on that. So great example of stay tuned. Those details will probably keep coming out. Um, another detail about Trump accounts is you can add your own money up to $5,000 per year per child. You don't receive any more free money from the government. Once again, that seed money from the government, either $1,000 or $250,000 is what it is, but you can add your own money if you want to. Uh now, should you, I'll go into that here in a little bit. Um, keep in mind if you add money to this account, you don't receive a tax deduction. There's no tax benefit for you adding money to this account. So it's not like a traditional IRA or pre-tax 401k. Um, also, employers, so your boss, your company, can add an additional, an extra uh $2,500 per employee if they choose, right? So some companies are coming out, especially the bigger ones, and adding that as a benefit to say, hey, if you work here, well, you know, we'll add $2,500 to your child's Trump account. Okay. It's just a way to entice good employees, right? So I'll go into that more in a little bit, but those are some minor details as well. With these Trump accounts, there are strings attached, and I don't recommend them for everyone. And here's why. So your child is younger than 18, should you just automatically sign up for one, right? First, you can't touch the money until December 31st of the year your child turns 17. Okay, so starting January 1 of the year that they turn 18, then you can touch the money, but before then, you you can't. So if you want to buy your child a new car when they turn 16, sorry, you can't use Trump account money for that, right? But starting January 1st of the year that your child turns 18, they basically turn into retirement accounts, like a traditional IRA. I know I said that before, but I'll keep pounding it into your ears. Uh, meaning if your child touches this money before they turn 59 and a half, just like your traditional IRA, there will be taxes. There will be a 10% penalty on the account growth. So, once again, let me make this clear. Trump accounts are a seed account for your child's retirement, not a seed account for their college or when they turn 18. Okay. So let me give you my opinion on them. Bottom line, who should apply for a Trump account, who should file form 4547 and have a Trump account open for them. Uh, to me, I put them in two categories. There's two types of two types of people. If your child is 10 years old or younger, uh, that's one type of person, go ahead and open one. Andor your employer offers to add free money into your Trump's uh your child's Trump account, right? So if you fall into either one of those categories, I can see it benefiting you. Right. So if you have a child 10, let's say, you know, under 10 years old, go ahead and file the form. You're about to get free money, either a free $1,000 or $250. Once again, if your child's born between 2025 and 2028, it'll be $1,000. Uh, if they're $10 and younger and they don't receive the $1,000, then it's $250. So who doesn't love free money, right? That's not bad. So yeah, go ahead and sign, go ahead and file that form, sign up for one. Yay. And like I said earlier, Trump reminder, Trump accounts allow your employer to contribute up to $2,500 per employee. So, like let's say I work at a company and I have three kids, my employer is only allowed to contribute up to $2,500 total. So I get to delegate, okay, a thousand goes into my daughters and $500 goes into my sons, but it can't be $2,500, $2,500, $2,500. So that's why the wording is like that. So if you have an employer that's offering this benefit, once again, free money, right? Go ahead and sign up for the account. Open a Trump account so that you have it open. That way you can receive free money, no matter what age your child is. Even if they're 13 and there's no free money from the government, uh, but your employer is offering to add free money, their own money to it, yeah, go ahead and open it up, right? So those are the two people that I can see benefiting from this for sure. Um, but once a Trump account is opened, should you contribute your own money to it? Right? That's a question. I say not so much. Okay. Reminder, this is really for your child's retirement 50, 60 years from now, right? Which is better than nothing. But if you're trying to just get them to and through college or save for their first car, or just set them up for a head start buying their own house one day, Trump accounts will not help you with that. Okay, let me be clear. They will not help you for if you want to spend any of this money before they turn 59 and a half, like they're like your own retirement accounts would. Uh, Trump accounts will not help you with that. There are better vehicles, better account types for those types of things. But if you are opening an account to get the free 1,000 or the free 250, and you want to add 20 bucks or 50 bucks on auto draft every month between now and when they turn 18, you know, go for it. That's great, right? Once again, you won't receive a tax deduction. And you have you can't, as a parent, you can't keep contributing to a Trump account after your child turns 18. Okay, so it's not a perpetual, you can just add money, free money to their account for the rest of their life. Once they turn 18, you can't add your own money to it. Okay. So keep those in mind. So who shouldn't open a Trump account? Okay. I will say this: if your child is 11 or older, andor your employer doesn't have the benefit where they add their own money on their own behalf, I say don't worry about Trump accounts. There's there's no benefit. Like I was saying earlier, there's other account types that you can benefit from with what you're trying to accomplish. Um, there's no free money for you, and all you're doing is adding your own money into the account that your child can't touch until they're 59 and a half. To me, that's not a huge benefit. Uh, everyone's a little bit different, right? But that's not the benefit that a lot of people thought Trump accounts would be. Okay. So uh in saying all that, I will say I do have clients that ask me, you know, hey, they have a 10-year-old or a 15-year-old, you know, it can the parents add to a retirement account, can they open up a retirement account for their child to set them up for when they retire one day? And I I do have clients ask me that. And if when a client does ask me that now, then I'll say, yeah, Trump accounts are great for you because to open up a regular retirement account, your child has to have earned income from a job. But if they're 10 years old and they don't have a job, but you want to save for their own retirement, yeah, Trump accounts are great. You know, keep that in mind. So if that's what you want to do, go for it. Just know, just know all the details, right? So if you say, okay, Cody, I didn't know all of those details about Trump accounts. Um, I I'm not really wanting to sock money away that my child can't touch until let's be honest here. Uh if you have a 10-year-old and they can't touch this money until they're 60, that's 15 years from now. You may not even be alive at that point, right? So it's kind of like an inheritance. So if you say, yeah, Cody, I didn't know all these details. What can we do instead of a Trump account that makes sense? There are two account types that we really love for uh saving for your child's future, okay? One is a college 529, college 529 account. Okay, that's the first one. And the second one is just a good old-fashioned brokerage account. So the college 529 is strictly an account you add money to for a child's college. So you add $2,000, you know, you have a newborn, you want to add two grand every year or $500 or five grand, whatever it may be. There's no income limit, there's no contribution limit. You can add as much as you want. But let's say you have a child, you want to add money to it, it grows and grows and grows. Uh, once you need to touch that money for all the standard college expenses, room, board, books, tuition, all the normal stuff, you're basically your investment grows tax-free if you use that money for college. Okay. So rule off example, you have a newborn, you add money to it. Over the years, they turn 18, they're ready to go to college, and you ended up adding $20,000 to it over their childhood, but you invested it, right? So it grew to $50,000, let's say. These are just hypothetical numbers. So it grows to $50,000. You can take all $50,000 out and use it tax-free as long as it's for that child's, once again, room, board, books, tuition, all of those things. Okay. So if you're trying to save for your child's college Trump account, nah, no, you know, don't do that. A $529, fantastic. Okay. The other account type that I mentioned that I really, we really love is a brokerage account. What is a brokerage account? It's just an ultimate flexibility account. What we do, and we do this a lot of time for clients. We open up a brokerage account in the parent's name. Okay. Because I have a lot of clients that say, okay, Cody, what if my child doesn't go to college? Or we don't want to save that much for their college, but we want to be able to uh buy a new car for them when they turn 16 or gift them this money when they turn 18 or give it to them for a down payment on their first house when they turn 22 or 30 or whatever it may be. That's where the brokerage account comes in. So it's an ultimate flexibility account. It's not a retirement account. There are no strings attached. Okay. So think of it like a savings account at your bank, but that you've decided to invest more aggressively than just a savings account. Okay. So the potential for growth is a lot more. There's no annual limit, there's no um contribution limit, there's no income limit. The account is in your name, right? Your tax uh ID number, your social security number, you follow it on your taxes every single year, but you can spend that money at any time for any reason. Okay. So I have a lot of clients that we open up a brokerage account. Once again, it's in my client's name, but it's we've all earmarked it. It's really for the child. And when they turn 18, you can gift them that brokerage account or uh turn 18. It's still in your name, right? You don't have to spend it for them. Maybe your child's not mature enough to receive $10,000, $50,000, $100,000, right? You still control it, uh, but maybe you give a little bit to them over time, or you gift some to them to help them buy their first house. It's the ultimate flexibility account. So that's what we get a lot of client questions on. And where I could see a lot of this confusion with Trump accounts is people thinking it's more like this that, oh, it's a way for me to save for my child, you know, to receive that money at 18 once they're an adult, and yay, but it's really for your child's retirement. So I know a lot of details. I wanted to go through all of those. Uh, definitely makes sense for some folks. Definitely doesn't really make sense for others. Uh, like anything, if you have any questions, any thoughts, um, feel free to email us. Call us once again. Uh, stancelwealth.com is our website, and I'm at Cody at stancelwealth.com is my email address. You can call us or text us at 469-606-2040. God bless you guys. Have a good rest of your day. Thank you for listening to the Stansell Wealth Podcast. This podcast is for informational and educational purposes only. It is general in nature and may not apply to your specific situation. Please consult with a professional before acting on any information shared in this podcast pertaining to financial, investment, legal, or tax advice. The views expressed by Cody and his guests do not necessarily represent those of Charles Schwab, Victory Financial Group, or any other organization.