Trump Accounts: What Advisors Need to Know-Slide handout

Slide handout

Pdf Summary

This webinar explained the new Section 530A “Trump Accounts,” a tax-deferred savings vehicle for children under 18 created under the One Big Beautiful Bill Act. It covered who can open and manage an account, eligibility rules, contribution limits, withdrawal rules, investment requirements, and how Trump Accounts compare with 529 plans, ESAs, Roth IRAs, and UGMA/UTMA accounts.<br /><br />Key points included:<br /><br />- Children born in 2025–2028 may receive a $1,000 federal government contribution.<br />- Parents, grandparents, and others may contribute up to $5,000 per year per beneficiary starting July 2026.<br />- Employers may contribute up to $2,500 per employee, tax-free to the employee, but subject to the overall annual limit.<br />- Only one account is allowed per eligible child, and a responsible person must be designated.<br />- Eligible children must be U.S. citizens under age 18 with a valid SSN.<br />- Growth-period contributions are restricted to approved investments, mainly low-cost U.S. stock index funds; cash and money market funds are generally not permitted.<br />- No withdrawals are allowed before age 18 except for limited exceptions such as rollovers or correcting excess contributions.<br />- After the growth period ends, the account is treated more like a traditional IRA, and distributions before age 59½ may be subject to a 10% penalty unless an exception applies.<br /><br />The webinar also discussed tax and planning issues, including basis tracking, gift-tax reporting, state tax uncertainty, and the IRS’s safe harbor for certain cash contributions. Overall, the speaker emphasized that Trump Accounts offer long-term savings potential but have significant restrictions and should be compared carefully with other education and retirement savings tools.

Keywords

Trump Accounts

Section 530A

tax-deferred savings

children under 18

One Big Beautiful Bill Act

529 plans

contribution limits

withdrawal rules

investment restrictions

IRS safe harbor