Trump Accounts

[Porfirio]

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Anyone looked into these yet?

It seems like 1099s could give each of their kids $2,500 tax free (employer contribution) every year and also $2,500 after tax (individual contribution) for max 18 years.

I am seriously thinking of looking into this.

Side note:
It appears wealthy family charities can also contribute unlimited amounts to their kids’ Trump accounts without paying any taxes? This does not seem to be talked about much but the implications of something like this are HUGE.

 

[Janders]

There is still a lack of clarity on tax implications.

(1) if you get the free $1k, take it
(2) for most of us, we contribute with after tax dollars so the contribution isn’t tax advantaged
(3) it will grow in a tax sheltered space
(4) when they are 18 it converts to an IRA; they will need to pay taxes on withdrawals. It has been suggested that certain use cases (like for higher ed) would be exempt from exit taxation but this isn’t clear yet
(5) there may be a way to create a non profit fund it have it contribute pretax money into the account and thus have a tax haven… but this isn’t clear yet.

At this second it doesn’t look better than a 529; worse in some ways. Aside from the free seed money. But with clarity of the exact tax rules it make be a great idea…

 

[JacobMcCandles]

It looks like it’s only for kids born between 2025 and 2028. But who knows how it’ll shake out.

 

[southerndoc]

$5k per year up until age 18? If I contributed that for my daughter (turns 13 next year) until she reaches 18, 50 years (retirement age 68) with no monthly contributions and an 8% return would result in $1.5 mil. Not bad. I think I'll do it.

Looks like it starts in 2026 and contributions can be made starting July 2026.

 

[cyanide12345678]

It looks like it’s only for kids born between 2025 and 2028. But who knows how it’ll shake out.

I understood it as everyone under 18 can have an account.

And every kid born between 2025 and 2028 will get $1000 added by the government to their account.

But the account can be made for anyone less than 18.

 

[Janders]

I understood it as everyone under 18 can have an account.

And every kid born between 2025 and 2028 will get $1000 added by the government to their account.

But the account can be made for anyone less than 18.

Exactly.

Kids in that window get the free $1k

Kids in certain zip codes apparently also get a free 250.

 

[Porfirio]

I just want the $2,500/yr/kid tax free (not part of inheritance tax too).

 

[Janders]

I just want the $2,500/yr/kid tax free (not part of inheritance tax too).

Assuming they allow 1099 workers to contribute pretax funds as an “employer” contribution (likely?) your limit is 2500…
Not 2500 per kid.

“IRC Section 128 employer contributions (which are pre-tax) and contributions from other sources (which could be pre-tax or post-tax depending on the source) during the growth period are subject to an aggregate annual limit of $5,000 (subject to cost-of-living adjustments after 2027). Employer contributions may make up $2,500 of the $5,000 limit. The $2,500 annual limit is per employee and not per dependent of the employee. For example, if an employee has two or more children who each have Trump accounts, the Notice says an employer with a Trump account contribution program may only contribute up to $2,500 in the aggregate for 2026 to those Trump accounts.


Also sucks for w2 workers, unless they can convince their company to offer contributions as a company wide effort.

 

[Porfirio]

Not as good but still ok. My wife is an employee of my 1099 too so I guess a max of $5,000 over our 3 kids.

 

[Porfirio]

From what I am reading it seems the accounts at 18 are treated separately from IRAs - thus they can continue to save money in them along side IRAs.

 

[Major]

Will be setting it up for my kids

https://trumpaccounts.gov/