Broadcast RetirementNetwork’s Jeffrey Snyder discusses how to open a Trump Account when filing your 2025 personal income taxes with Alabama Media Group’s Leada Gore.
Jeffrey Snyder, Broadcast Retirement Network
Leada, it’s so great to see you. Thanks so much for joining us this morning. Thank you.
And this morning we’re going to talk about Trump accounts and its tax filing season. So it might be the perfect time if people are interested to set up a Trump account. But I thought we might take a step back.
These are new and they’re analogous or maybe similar to an IRA and or different to a 529. So what are these Trump accounts and how do they work?
Leada Gore, Alabama Media Group
Sure. Well, it’s interesting because these accounts have kind of flown under the radar for right now. I think we will see that change as we move into tax season, and especially as we move into the summer when the money becomes available.
But there’s really two different things that we have to talk about when we talk about these Trump accounts. One is that all children up to anyone 18 and younger is eligible to set up one of these accounts. The parents can fund it.
Their employer can fund it. Grandparents and friends can fund it. But there’s a special group.
There’s actually two special groups. There’s a special group here that qualifies for some additional seed money. And what it means is all children born between 2025 and 2028, regardless of family income, is eligible to receive $1,000 contribution from the government.
To make this a little more interesting, through a private donation of billions of dollars, there are certain low income children who will be eligible to get an additional $250. So those initial Trump accounts for that group could start out with $1,250 right off the bat. But the reason I say they’ve kind of flown under the radar is the money is not expected to be freed through July.
And the application process really just opened up. And you will fill out a form when you file your taxes that will basically set up this account. Funny enough, the form is 4547, which is named after President Trump, who was the 45th and 47th president.
I thought that was rather clever for myself.
Jeffrey Snyder, Broadcast Retirement Network
It’s interesting how they dropped that in there. So this vehicle is a perfect opportunity. I know you write about a lot of personal finance related issues.
This is the power of compounding. This is the power, as soon as you’re born, that someone can put money away. And then 18, 20, 30 years later, you’re going to have a nice little nest egg.
Candidly, I wish I had that when I was a child, which was many moons ago. So let’s talk about… I’m sorry, go ahead.
Leada Gore, Alabama Media Group
No, no, absolutely. It also gives people that maybe would not have access. This is going to be invested into the highest indexed funds.
So it’s going to be managed in such a way to try to yield the biggest return possible, which, let’s be honest, a lot of people probably would not have had access to that. So hopefully, that $1,000, or even if the parents start out with their own contribution, by the time that child is 18, you could be sitting on quite a nice nest egg.
Jeffrey Snyder, Broadcast Retirement Network
So it’s tax season. The IRS, I believe, has opened up their window for people to start filing. You mentioned the Form 4547.
What do we mean to know? Not only should you file your taxes, that’s number one, but what do you need to know if you want to take advantage and see if you’re eligible for these Trump accounts?
Leada Gore, Alabama Media Group
Yeah, well, anyone is eligible. As long as you’re under 18, you have to be a citizen, you have to have a social security number, and your child has to have a social security number. So obviously, if your child is born January, what is it?
27th, you’re born on the 27th, then it’s going to take you a little while to get that social security number. But once you have that, you can file. The key is, are you eligible for that $1,000?
Only children born 2025-2028 are. The form, I’ve looked at the form, is very, very simple. It is a one-page form.
It’s just going to be one of those things that people, I think, don’t realize, or they think they’re not eligible. But anyone is eligible. Honestly, if I was myself setting one of these up, there’s nothing about it that can hurt you.
Setting it up could do nothing but benefit you and your child. Down the road, it’s going to be interesting to see if we have legal issues with divorces and grandparents, and who owns this account and who owns that. But it is the parents until the child is 18, and then it goes over to the child.
There are some restrictions, similar to other type investment accounts, that what you can use it for. But even that’s being expanded. Because you have to think, it’s going to be 18 years before the first withdrawal ever happens from this year.
So there’s still going to be some rules, I’m sure, added on what you can use it for. But right now, it is more than just education. It’s a lot of different things.
It’s a pretty flexible account, more than, say, like a 529.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it actually, in some ways, sounds like a competitor, or it’s analogous to the IRA or the 529, or in some ways, a 401k or a simple 401k. You mentioned that maybe some people aren’t aware of this. And clearly, you’re doing a lot of fact-finding, and you’re writing about it.
But is there a marketing effort behind this that needs to be ramped up? Because I would think more Americans, they’re getting ready to file their taxes. Why wouldn’t they take advantage?
They should know about this.
Leada Gore, Alabama Media Group
Right, it is interesting. The IRS has done some. I’m up on their site all the time and looking at what they release.
It is kind of a sentence at the bottom of a lot of these things. But I think as we move forward, we will start to see a greater interest. Now, here’s the other thing I think will happen.
Let’s say you had a child in 2025. You don’t fill out the form with your 2026 taxes that you’re turning in. There’s nothing to prevent you from doing that next year.
You’re not held back from that. But you are delaying a year’s worth of interest that you could get. So I think you’re going to see a greater interest in this as we move ahead to tax season.
And hopefully tax professionals will be up to date on what this form is. Because like I said, for those who do their taxes themselves, there’s no reason you could not complete the same form. It’s very, very simple.
Jeffrey Snyder, Broadcast Retirement Network
And in terms of the other products, the IRA or the 529, is it an either or? So if I contribute to the Trump account, can I still contribute to an IRA? Can I still contribute to a 529 and 401k?
Leada Gore, Alabama Media Group
Absolutely. Yeah, it’s like a new avenue. You are capped at a $5,000 per year donation.
Employers, I think that donation might be a little bit lower. And I could see an employer using this as a great hiring tool. We’ll put $1,500 towards your Trump account every year or whatever they do.
But no, this does not impact any of the more traditional retirement savings type avenues.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I mean, it sounds like a great benefit if I were a younger man who had a family and had children. I don’t know why if you could afford it. Even putting something away makes a lot of sense.
We’ve got about a minute left and we’ve had a great conversation this morning. I wonder if you could take the last minute and just maybe summarize some key takeaways from the conversation, please.
Leada Gore, Alabama Media Group
Sure, the main thing I think people need to know is if you’ve had a child before 2025, 2028, that application for that extra $1,000 is now. You sign up for it and then you’re automatically eligible when that goes live in July 5th for that $1,000. But even if you’re not eligible for that $1,000, there is no harm in setting this up.
You stash $250 a year in it. As a parent who has someone in college now, I can assure you that money will come back to benefit you. But there’s no reason.
And the other thing is, of course, this is a tax-free, that money going in there is not taxable till you come out. And then it’s subject to rules. But it’s a win-win for a lot of people that I think over time people will really come to appreciate.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, certainly, it certainly starts with your writing. It starts with forums like the Broadcast Retirement Network. Leada, we thank you so much for joining us.
And look, we look forward to having you back again on the program again very soon.
Leada Gore, Alabama Media Group
Thank you so much.