Invest for Your Kids: New Trump Accounts Now Available

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“Compound interest over time is magic. And when you invest for a child, they have the longest possible time horizon.”

— Hannah Cole

In this episode of the Sunlight Tax Podcast, I break down the new Trump Accounts, a custodial savings program for children introduced in 2026. I walk through who qualifies, how these accounts work, how to open one, contribution limits, and the tax rules you need to know.

I also explore the potential advantages and drawbacks of using a Trump Account as part of a long-term savings strategy, how it compares to other options for investing in a child's future, and what families should consider before contributing. Despite the name, these accounts are a good thing.

Also mentioned in today’s episode:

00:10 Introduction to Trump Accounts and Their Purpose

01:28 What is a Trump Account and Its Legislative Background

02:52 Eligibility, Bonus Contributions, and Funding Limits

04:15 How to Open a Trump Account and the Election Process

07:17 Investment Strategies and Allowed Assets in Trump Accounts

09:04 How to Use the Trump Accounts and Withdrawal Rules

11:48 Who Can Open a Trump Account and Additional Flexibility

14:56 Next Steps for Building Wealth

If you enjoyed this episode, please rate, review and share it! Every review makes a difference by telling Apple or Spotify to show the Sunlight Tax podcast to new audiences.

Episode Links:

The Sunlight Tax Podcast EP159: My #1 Tip to Make Your Kid a Millionaire

Get my Tax Help on Substack

Get your FREE visual guide to tax deductions

Order my book: Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Watch YouTube video version.

Transcript:

Hannah Cole (00:07)

Hello, I want to come to you today with a big update about Trump accounts. Now, I realize this title is not most people's favorite. I suggest that you try and let go of the title and think about just the concept and what is behind it. To be totally honest, good people, civic-minded.

people who love this country and want to help the working class and middle class have been working on this idea for a long time and I think ultimately sacrificed their own egos and rubbed someone else's ego in order to get a good idea passed in an administration that wanted to put its name on it. So

I do recommend trying to scrub the name from your brain if that is helpful to you to listen better and understand the information. But in my opinion, Trump accounts are actually a good thing. the information available about them is still a little bit vague. And so you will find you may still have questions. but I want to give you the information that is available at least today, and let you know that.

As of July 4th, these accounts now are live. It is now for the first time your something that you can actually access and open if you are eligible, if you have a child who is eligible. So let's talk about what a Trump account is, what it's for, and how you can open one if it is right for you. All right. So what is a Trump account?

Trump accounts are something that was outlined in the large tax bill, the One Big Beautiful Bill Act passed when Trump got into office and the new Republican Congress came into office. So basically they are custodial accounts for a child to encourage long-term growth, long-term wealth building. I'm gonna be honest with you.

This is something I advocate everybody do. It's also something I advocate you do for your child if you have the ability. it's a kind of a thing. Trump accounts have only existed for a week now, but it's a thing, it's a concept I have talked about even on the Sunlight Tax podcast, opening a Roth IRA for your child. I'll link to that episode here. because it's a wonderful thing to invest money for your child.

Especially because one, the habit of long-term wealth building is a healthy habit for anyone. And when you invest for a child on behalf of a child, the timeline is working for you, right? Compound interest over time is magic. And when you invest for a child, they have the longest possible time horizon. So you can really do a lot of good in terms of building financial security for a child.

So that's why it's great. And Trump accounts for that reason are a really good thing. Are they the best available account versus other kinds of accounts that are already available? Time will tell. I'm not sure I'm gonna say yes on that, but are they good? Are they a tool in the toolbox? Yeah, I think so. Okay. So these are newly available accounts as of July 2026, and you can open one now.

I'll get to how to do that in just a minute. But the idea is these are custodial accounts that you open on behalf of a minor. So anybody from age zero up to age 18. Okay. It has to be a person who has a social security number. That is written into the law. In addition, so any any minor at all.

Anyone under age 18 is eligible to have a Trump account opened on their behalf, but there is a special election of bonus money that you can get if that child happens to have been born between January 1st, 2025 and December 31st, 2028. So that's a small subset of the full group who is eligible for a Trump account. This smaller subset can elect to have $1,000.

put into that account as seed money from the US Treasury. This is just free money given to you by the Treasury. Okay, how do you get this? So let's talk about what the limits are for money you can put into a Trump account and then I'll talk about who can open one. So the limits are you can put up to $5,000 per year into a Trump account for each miner.

If you have elected, if you have a minor eligible for that bonus treasury contribution, that treasury contribution does not actually count towards this $5,000. So that little group of people could get potentially $6,000 into their account. If you happen to have an employer, or if you are an employer and you are looking to create an incentive program for employee retention,

Employers are allowed to put an additional $2,500 into a Trump account on behalf of you know an employee's child, and that $2,500 can be excluded from taxable income for that employee. Charities and government entities are also allowed to make contributions to large groups of children.

There are private individuals, Susan and Michael Dell, for example, who have donated large amounts of money to put into Trump accounts. Ray Dalio, I know, has given a lot of money to go into Trump accounts. There's corporations that have done the same. So, you know, these are acts of generosity. and there is money available potentially for, you know.

underprivileged people in the state of Connecticut. It's worth looking if there are any pots of money available to you or your child.

Deposits can begin going into these accounts starting after July 4th, 2026. All right. Now, how do these accounts work? I'm gonna quote you something I read on State Street Financial, because I think it's a pretty good explanation of the vibe of Trump accounts. So this is a quote from State Street. The accounts during the growth period, which is the period prior to the beneficiary turning 18.

Are limited to investing in mutual funds or ETFs that track to a qualified index with at least 90% US company weighting. For example, the SP 500. Do not use leverage and have an annual fee expense below point one percent. Cash and money market funds are not permitted.

That's the end of the quote. The spirit of that is that these are accounts that are invested in low cost index funds without high fees, without fancy financial instruments. Okay. So you do not have flexibility about where this is invested. But in general, a lot of people do invest in S P 500 index funds. Like this is actually a pretty well regarded, well respected way to invest.

It does actually take the decision making away from you. But I honestly think this is a perfectly great way to invest. So the spirit of this ruling is that this is about long-term investing. This is not about fine fancy financial instruments. This is not about short-term gains. This is about money compounding on a long-term timeline, okay? Which is honestly the most secure and stable way to build wealth.

Initially, this money will be held with the US Treasury, and the money can then be rolled over to your preferred financial institution. I will be honest with you, the details on this little detail are pretty vague. So there's not much info beyond what I've told you here, but stay tuned, there is a website, trumpaccounts.gov.

that you can check back for more info. I will tell you, I just read through the Trumpaccounts.gov website. I had read through it about six months ago. Not a lot has changed in those six months. It was it was a little thin then and it remains a little thin now. Okay, so how do you elect? How do you open a Trump account? Well, you can use IRS Form 4547 or you can elect to open the account.

on a tax return. Okay. There is an additional election, additional box that you can check on your tax return if your child is eligible because they were born between 2025 and 2028, you can elect to have that bonus $1,000 from the US Treasury. So you can open the account and elect that bonus money all in the same tax return. This might be something you want to note for your taxes in the next tax return you file.

If you filed on extension this year, if October 15th is your extension due deadline, you can actually do it on your 2025 tax return. I did actually mention that in my kind of tax updates for the 2025 tax season this year. So hopefully some of you manage to open up a Trump account if that was related if you have kids if you had a baby this year. But I'm just reiterating that.

That remains true. So if you haven't filed your 2025 taxes yet, you can open the account and make that bonus money election on your 2025 tax return. No worries though, you can also do it on your 2026 tax return next year. So just maybe put a note in your tax files to make this election if you've got a kiddo.

another piece of information that is a little vague is that once you establish the account, elect to establish this account, the US Treasury will send you further instructions. I in my whole life before Trump came into office, I have never seen such vague tax law. But here we are. Wait for the Treasury to send you further instructions, is what it says.

The Trumpaccounts.gov website does not say much more than that. It says it could be a text, it could be an email, it could be a letter. All of that is a little vague for my taste, but there you go. That's how it works. All right. How can your child use this money? So remember, this is not your money. This is a custodial account for a minor, for your kid.

The child can use that money. It is fully accessible to them once they turn 18. They are not allowed to touch it before age 18. It has to be in there and be growing. Once they withdraw the money, it will be taxed. It basically turns into effectively the same rules as a traditional IRA, except that you can access the money at age 18 for qualified purposes. And those include qualified higher education expenses.

But also a first-time home purchase or for disability. So it's not only good for kids who are planning to go to college, it could also help them buy their first home or if they have a disability. So it's a little bit broader than just for education, which is what a 529 account is for by comparison. If you use it for something other than the designated purpose of the account,

Not only will it be subject to ordinary income tax rates, but also a 10% penalty. All right. After age 59 and a half, the child, the beneficiary, can withdraw the money for any reason whatsoever without penalty. But again, they will pay ordinary income tax rates on that money. Okay, so that's what I've got for you today on Trump accounts. They are

Basically, they are another way to set aside to stash money for a child in your life. I forgot to mention to you that also, this does not only need to be established by the parent. So you can open one for your child, and that's probably the most obvious use case. But a family member, a guardian, or a friend is allowed to open a Trump account for a kid.

So it is actually possible to do this for a friend of yours, right? You know a single mom who you know could use it, but is really, really busy and you just know she'll never get to it. You can in fact open a Trump account with her permission on behalf of those kids. So it's kind of cool in that way. There's a lot of flexibility. There's also a lot of moving parts and a little bit that's still vague, but these accounts are now open and available and especially.

Especially if you have a kid born very recently in 2025 or 2026. And of course, in the future, if you're maybe pregnant or planning to start a family and are gonna have a kid in 2027 or 2028, that's a magical four-year window where those kids in particular get a bonus thousand dollars to be stashed in this account. It's a great

additional tool in the toolbox for building your wealth, building the wealth of your child. It is something real and tangible that you can do. And although I personally find the name distasteful, it's still a good concept. I hope you'll consider it. All right, I

If this episode has been helpful to you, or if you have a friend who's got a kid, especially if they have had a kid in 2025 or early 2026, or maybe they're pregnant, please send them this episode so that they can open a Trump account and especially get that extra bonus money from the US Treasury. Thank you so much for sharing. Thank you for listening. I'll see you next week.

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I’ll share practical tips to organize your tax documents without overwhelm and share why my book, Taxes for Humans, and the accompanying workbook are designed to make the tax filing process simpler, clearer, and more approachable.

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Also mentioned in today’s episode: 

01:00 The Importance of Early Tax Preparation

03:36 Benefits of Filing Taxes Early

06:51 Practical Tips for Tax Organization

10:22 Introducing the Instant Relief Bundle

If you enjoyed this episode, please rate, review and share it! 
Every review makes a difference by telling Apple or Spotify to show the Sunlight Tax podcast to new audiences.

Links:

Order my book, Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Check out my program, Money Bootcamp

Get your free visual guide to tax deductions

Watch YouTube video version here

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00:13 Introduction to Tax Awareness

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08:11 Who Money Bootcamp Serves

10:53 The Difference Between the Book and the Program

14:55 Accountability in Money Bootcamp

18:31 Invitation to Money Bootcamp Open House 

If you enjoyed this episode, please rate, review and share it!
Every review makes a difference by telling Apple or Spotify to show the Sunlight Tax podcast to new audiences.

Links:

Check out my program, Money Bootcamp

Join my Open House Today at 3PM EST

Order my book, Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Get your free visual guide to tax deductions

Watch YouTube video version

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In this episode of the Sunlight Tax Podcast, I’m breaking down my most effective tax prep strategies to help creatives and entrepreneurs start the year organized, confident, and ahead of the game. I share my January setup to make your taxes a breeze. I'll give you the exact systems I recommend for simplifying tax season without overwhelm or guesswork – like tracking mileage and mileage logs, setting up a simple document filing system, knowing your 1099 requirements, and a receipt management workflow that’s easy to maintain all year long.

If you want to avoid costly tax mistakes and move through tax season smoothly, this episode gives you actionable tools you can implement right now. Whether you're self-employed, earning 1099 income, or running a creative business, you’ll walk away with a clear plan for staying compliant, reducing stress, and setting yourself up for a better money year.

Also mentioned in today’s episode: 

01:12 New Year, New Tax Strategies

03:13 Essential Tax Preparation Tips

09:44 Understanding 1099s and Deadlines

14:01 Setting Up a Business Bank Account

15:54 Organizing Receipts for Tax Season

19:28 Other Resources

If you enjoyed this episode, please rate, review and share it!
Every review makes a difference by telling Apple or Spotify to show the Sunlight Tax podcast to new audiences.

Links:

Get your free January Checklist

The Sunlight Tax Podcast EP4: Mileage: the best deduction you're missing

Join my free class: Make Taxes Easier and Stash an Extra $152k in Your Savings

Check out my program, Money Bootcamp

Order my book, Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Get your free visual guide to tax deductions

Watch YouTube video version

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Join me today to hear some basic steps to control your finances and how you can start investing today. 

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10:13 Investing Basics and Strategies

13:25 Empowering Financial Education and Resources

If you enjoyed this episode, please rate, review and share it!
Every review makes a difference by telling Apple or Spotify to show the Sunlight Tax podcast to new audiences.

Links:

Join my free class: Make Taxes Easier and Stash an Extra $152k in Your Savings

Check out my program, Money Bootcamp

Order my book, Taxes for Humans: Simplify Your Taxes and Change the World When You’re Self-Employed

Get your free visual guide to tax deductions

Watch YouTube video version