We imagine many of you have at least heard of Trump Accounts. These were created as part of the “Big Beautiful Bill” and have the following key provisions:
- Accounts are available for eligible children under age 18.
- U.S. citizen children born between January 1, 2025, and December 31, 2028, with a valid Social Security number are eligible for a one-time $1,000 contribution from the U.S. Treasury.
- Parents or legal guardians must elect to establish the account. The IRS currently allows this through an IRS account using Form 4547.
- Families, friends, guardians, and employers can contribute, subject to a total annual contribution limit of $5,000. Contributions have the potential to grow tax-deferred.
- Funds are restricted during childhood to low-cost U.S. equity index funds or exchange-traded funds (ETFs) tracking the S&P 500 or similar U.S. markets, with management fees capped by law.
With so much information surrounding these new accounts, it's easy to overlook their potential benefits. That would be a mistake, particularly for children eligible for the $1,000 contribution.
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The important thing about Trump Accounts is not the name, but the opportunity they provide.
If your child or grandchild qualifies for $1,000 of someone else’s money, claim it. The opportunity for even that amount to compound over their lifetime is too good to pass up. Whether you add to it beyond that is a planning decision and depends on your specific objectives.
In some circumstances, other accounts, like a 529, may be a better choice for education planning.
One benefit of Trump Accounts is that contributions do not depend on the child having earned income, as they generally do with IRAs.
We’ve attached a helpfulMFS Trump Account that provides more detailed information and are happy to review this with you.
Our main recommendation: focus on the financial opportunity and how it fits into your family's long-term goals.
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Here are some other things that caught our attention:
- The introduction of the FLYING Tesla Roadster was fun to watch.
- Europe continues to be very vulnerable to energy shortages, despite some improvements since the escalation of Russia-Ukraine hostilities. The outlook for oil and gas prices to continues to be strong- bad for consumers, good for producers.
- A major concern of AI advancement is its potential for disrupting current encryption systems. This interesting article looks at the problem and potential ways to avoid, or overcome, it.
- There was speculation that increased work-from-home opportunities might lead to higher birthrates. This paper finds a reduction in births, which may indicate that childbirth decisions are not based on work-from-home flexibility. It is possible this relationship will change over time.