Should You Open a Trump Account?

Back in 2015, I wrote that Donald Trump wasn’t a political figure and I couldn’t understand why anyone treated him like one. That take aged… poorly. A decade later, he couldn’t be more political — and now there’s an investment account with his name on it. I’ve got thoughts about the politics, but I’ll save them for the end. First, let’s cover the practical ins and outs of Trump Accounts and how they might play a role in your child’s future.

Trump Accounts launched on July 4th (of course they did). If your child is a U.S. citizen born between January 1, 2025 and December 31, 2028*, the government will put $1,000 into their account. You do have to actually open a Trump account with a form at tax time or a quick sign-up online. The money goes into low-cost index funds, and anyone — you, grandparents, friends — can add up to $5,000 a year in after-tax dollars. Employers can chip in $2,500 of that tax-free. It’s all locked up until 18, when the whole thing essentially becomes a traditional IRA. Kids born outside the window can open accounts too; they just don’t get the free $1,000.

(An aside: This BBC keeps calling these “schemes”) It gave me a laugh. Maybe that’s a British thing? Anyway, given what I’m about to write, the word doesn’t feel wrong.)

Now, the projections. The government’s own app shows $250 a year turning into $19,000 by age 18 and $878,000 by 55. Max it out at $5,000 a year and the app says $13 million. Fortune asked four financial planners to check the math], and their answer was basically: pump the brakes. Those projections assume the market’s historical 10%+ every year for 55 straight years; Morningstar thinks the next decade could average closer to 6.3%. At a more sober 7%, a maxed account is worth about $185,000 at 18 and $1 million by 45. Still great! But “maxed” means $5,000 a year for 18 years — roughly $91,000. Most families aren’t doing that in this account or any other.

Michelle Singletary at the Washington Post wrote my favorite breakdown of the fine print (gift article) — a half-dozen reasons to keep expectations in check. Her bottom line on the seed money alone: by 18 it looks “less like a fortune and more like a down payment on a new car.” Beyond that, contributions aren’t tax-deductible going in, and the growth is taxed as ordinary income coming out — a worse deal than the capital gains rate in a plain old brokerage account. The seed is a four-year pilot, so extending it — or fixing that clunky tax treatment — requires a future Congress to pass future tax legislation. A plan that depends on a future Congress doing something sensible isn’t a plan. (Exhibit A: this Social Security mess) And at 18, your kid gets full control of every penny. I like to think I was fairly responsible with money at age 18, but I probably wasn’t that responsible.

So, should you open one? If your child qualifies for the $1,000: Yes. It’s free money and one form. My kids missed the eligibility window by more than a decade. However, if they’d been born in it, my politics could survive some paperwork.

Also, if your company offers matching funds, it is definitely worth it. It’s almost always worth getting as much matching money from your company as possible. That’s been true with 401ks for decades.

For your own dollars, though, I think the 529 is still the better home. Friends and family can gift into a 529 too. It’s more flexible than its reputation — trade schools, apprenticeships, and some K-12 costs count, not just college. And if education isn’t in the cards, current law lets you roll up to $35,000 of a leftover 529 into a Roth IRA, where it effectively becomes a better retirement account than the Trump Account would have been. I think. (There’s fine print… the 529 has to be at least 15 years old and the rollover happens gradually.)

The Politics of Trump Accounts

Nicole Russell at USA Today wrote a column titled Trump Accounts are free money. Don’t let politics stop you.” Her argument is that parents who refuse to open one because they can’t stand Trump are putting party ahead of their own child’s future. On that narrow point, we agree. Get your free $1,000.

However, I have a few problems with the rosy version she’s selling. She leans on that same government projection — the $1,000 seed alone becoming $243,000 by age 55 — which assumes 10%+ returns forever and, as the fact-checkers at PolitiFact noted, skips inflation and taxes. As you might imagine, inflation over 55 years is… not trivial. More importantly, the life-changing version of this program touches a very small slice of kids: the ones whose parents, grandparents, and employers pour in thousands of dollars a year. Most of the benefit doesn’t come from the government at all. It comes from friends, family, and companies — every one of whom could already give money to a 529 or a custodial account, without the ordinary-income tax hit and without the strings. The $1,000 is real. The $13 million is a brochure.

And here’s the part that really gets me. The administration has been rounding up employers — Uber, Intel, Nvidia, IBM, dozens more — to contribute up to $2,500 a year for their workers’ kids. Good for them, sincerely. But the United States federal government is the largest employer in the country, with roughly two million civil servants plus 1.3 million active-duty military personnel. It hasn’t offered its own workforce the benefit it’s asking every other employer to provide. We’re a military family, and we get plenty of benefits due to that, but we don’t get to ask our employer to make the contribution. Instead, I’m a shareholder of all the above companies, giving up that value.

I’d also point out that Russell is a conservative political columnist — her USA Today newsletter is literally called The Right Track — not a financial planner. Nothing wrong with that (said in my Seinfeld voice). But “don’t let politics stop you” lands a little differently coming from someone whose beat is to promote that political side.

Which brings me to my bigger question: why intentionally make a savings vehicle political in the first place? Bill Clinton signed the law that created 529 plans in 1996, and somehow nobody has ever asked me to open a Clinton Account. And if we are keeping political score: Hillary Clinton floated $5,000 baby bonds for every newborn back in 2007. Run that through an S&P 500 calculator and a kid born that year would be leaving high school about now with roughly $35,000 — $21,868.13 after adjusting for inflation. The response from the political right at the time? The Republican National Committee dismissed the idea as a “budget busting baby fund,” and Rudy Giuliani said it was proof Clinton was running a campaign built on pandering.

Pandering. Let’s sit with that word. The $1,000 seed applies only to babies born during this Trump administration* — and they named the whole program after the President. An early version of the bill actually called it the MAGA Account before the upgrade to his actual name. The IRS form to claim your $1,000? Form 4547 — as in the 45th and 47th president. That takes pandering to a level neither Clinton ever dreamed of. If we must pander, I’d rather we pander in a way that helps the public — like a bigger seed for every child — than in a way that strokes one man’s ego.

Final Thoughts

So, should you open a Trump Account? If your kid was born in the window, take the free $1,000 and don’t feel bad about it. Beyond that, my money would go to the boring old 529 with nobody’s name on it. Are you opening a Trump Account, maxing one out, or sitting this out on principle? Let me know in the comments.

*Technically, kids born January 1, 2025 are eligible even though Trump wasn’t inaugurated until the traditional January 20 date. And eligibility ends December 31, 2028, so a baby born January 1, 2029 misses out even though it’s still the Trump administration. The whole window is shifted 20 days earlier on each end.

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