By Andy Ives, CFP®, AIF®
IRA Analyst
From its onset, I have been a fan of the concept of Trump accounts. Created by the One Big Beautiful Bill Act (OBBBA), this new savings vehicle for children is now up and running as of July 4, 2026. At their core, Trump accounts have the potential to supercharge the very long-term retirement planning for kids. Conservative mathematical assumptions and the magic of compounding could result in a multi-million-dollar account for a toddler when he is age 60.
For some background information, a Trump account is a long-term retirement savings vehicle that comes packed with many rules and restrictions. For example, the maximum annual contribution (as indexed) is $5,000. But since Trump accounts allow for many types of contributions from different sources, that annual limit can be exceeded. In fact, the annual maximum can be surpassed in the very first year for some Trump account owners. How so? The initial one-time $1,000 Federal government contribution for children born between January 1, 2025, and December 31, 2028, does not count against the annual maximum.
But since last summer when Trump accounts were first announced, some weird stuff keeps happening.
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Trump accounts are established by an election made on IRS Form 4547. (That new form and form number in-and-of itself received more than a few eyerolls and groans.) One way to access the form and establish the account is via the website www.trumpaccounts.gov. But who is authorized to make the election to establish the account? There is an order of priority, as follows: Legal guardian; parent; adult sibling; grandparent; state child welfare agencies for foster children. Where things got weird was, if an eager grandparent jumped the gun and opened a new Trump account ahead of the child’s parent…the grandparent could be committing perjury! See the Slott Report entry which discusses that conundrum here: Grandparents should be very careful before opening Trump accounts.
As mentioned, contributions from different sources can be made to Trump accounts. One of these sources is tax-exempt organizations who make contributions to a “targeted group” of beneficiaries. It was originally understood that all contributions had to be made in the form of cash. But an odd development with these types of contributions sprung up just a few days ago, when the U.S. Department of the Treasury announced it will accept large philanthropic contributions of public company stock as Trump account contributions. Not only does this seem to fly in the face of current tax code provisions, but it also introduces new questions, like:
- If a large donor wants to give $150 per child, how can they do that if the stock price is, for example, $300 per share? One can’t donate partial shares (without a stock fund).
- Why was this rule made? To avoid a billionaire having to sell millions of shares that might depress the overall stock price? Is this a tax play to maximize a deduction?
It’s possible this could all be sorted out and explained away. So, while I am still a fan of the concept and possibilities of Trump accounts, it would be nice if the weird stuff went away.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/trump-accounts-weird-stuff-keeps-happening/