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Freedom for Retirement™ is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the Freedom for Retirement Podcast.
If you're a high-earning professional, business owner, or someone approaching retirement
and wondering whether you are truly on track, you are in the right place.
This podcast is all about helping you make smart, confident financial decisions without
the fear, confusion, or sales pressure that so often comes with money advice.
Each episode is designed to break down complex topics like retirement planning, investing,
taxes, and cash flow in plain English.
So you can understand what really matters and avoid the most common and costly financial
mistakes.
Everything you hear here is educational, fiduciary focused, and grounded in real-world
planning experience working with clients just like you.
I'm your host, Josh Duncan, partner at F5 Financial Planning.
Let's get started.
Most people who have heard about Trump accounts assume this is something for babies.
The government deposits $1,000 into an account for a newborn.
And if your kids are already in school, there is nothing here for you.
That is not what I've found.
Three months ago, I opened a Trump account for my son, who is 15 years old.
I'm Josh Duncan, partner at F5 Financial Planning, where we take a fiduciary approach to
maximizing our clients' wealth.
Well, today I want to walk through what a Trump account actually is, how you open one, how
much you can contribute.
And what the money is invested in, and what happens the day your child turns 18 and the
account becomes theirs.
A Trump account is a custodial investment account created under the 2025 tax law in the
section known as section 70204.
A parent, a guardian, or another authorized adult can open one for any United States
citizen child under the age of 18 who has a valid social security number.
That clears up the question about only babies being eligible.
The $1,000 seed deposit from the Treasury only goes to children born between January 1st,
2025 and December 31st, 2028.
My son does not qualify for that seed money because he was born well before that window.
But he still qualifies for the account itself because he's under 18 and has a social
security number.
That distinction matters because many people hear $1,000 for babies and stop listening.
If you have a teenager, a 10-year-old, or a five-year-old, you are still eligible to open
an account and start contributing.
The only difference is you are not getting the government's head start.
Think of it less like a savings account you would open at a bank and more like an
investment account that happens to be run through the IRS and the Treasury Department.
The money inside it does not sit in cash, it goes into the market.
From the moment it lands.
For folks who are business owners or high income professionals, this is worth a second
look, even if your kids are already older, because the account is not means tested and
there is no income limit that phases you out.
A family with one child or five children can open one for each of them.
This is a great opportunity to save money tax deferred.
Now, opening a Trump account means filing IRS form.
4547 called the Trump Account election.
There are three ways to submit it.
You can do it directly in the Trump Accounts app.
You can do it when you file your tax return, or you can do it through the IRS's own secure
portal called the Individual Online Account or IOLA.
I filed mine with my 2025 tax return.
After I submitted the election, I received an email letting me know the account was ready
for me to finish setting up.
That setup involved
verifying my identity, which is standard for anything tied to the IRS, and it took a few
extra minutes, but nothing complicated.
Once that was done, I linked a bank account and made my first contribution.
The whole process took less time than I expected and there was no fee to open the account.
What surprised me was how much it felt like setting up a brokerage account.
You're not mailing anything in or waiting weeks for a paper confirmation.
If you have more than one child, you go through the same election process separately for
each one, since every account is tied to a single child's social security number.
Now the parent or guardian who opens the account remains a sole custodian, meaning you
control it until your child turns 18.
At that point, as we will get to, the control shifts.
Until then, you are the one deciding how much goes in and how often.
Once the account is open, contribution limits work like this.
Family and friends combined can add up to $5,000 per year per child.
That includes grandparents, aunts, uncles, or anyone else who wants to contribute towards
a child's account, not just the parent who opened it.
Employers can contribute too, up to $2,500 per year.
And that piece works in two ways.
Your own employer can contribute towards your child's account, since your child counts as
your dependent.
And if your child has a job of their own,
That employer can contribute directly to your child's account as the employee, as long as
the employer has set up a Trump account contribution program.
Either way, the contribution is not taxable income to the employee.
And remember, the employer contribution counts inside the $5,000 cap.
It's not an extra $2,500 on top.
It is part of the same limit.
There is also a path for larger gifts from corporations and philanthropic organizations to
groups of children rather than.
One at a time, which is how some employers and foundations have been able to fund accounts
for large numbers of kids at once.
So, what is the real potential of growth with these accounts?
Well, picture two children who both start with the same $1,000 seed deposit.
One family never adds another dollar, the other family contributes consistently every year
until the child turns 18.
Treasury has published its own projection showing what a range of contribution levels
could turn into.
By the time a child reaches 18, and the gap between doing nothing further and contributing
steadily is not small.
I want to be careful here because the those projections are illustrations based on
historical market averages, not guarantees.
But if you invested $5,000 per year for 18 years and received a 9% annual return, the
account would be worth over $200,000 at the end of 18 years.
Now, this is a standard.
Time value of money calculation, which never reflects how the markets actually perform.
Markets move up and down, and the total someone will actually have after 18 years will be
different.
What I can tell you is that the $1,000 from the government is a starting point, not a
plan.
The plan is whatever you decide to do after that.
Now, right now,
The investment menu for Trump accounts is narrow by design.
Contributions have to go into mutual funds or exchange traded funds that track a broad
United States stock index, something like the S P 500.
You cannot pick individual stocks and you cannot hold cash or bonds inside the account.
In my son's account, every contribution has gone automatically into a fund called SPYM,
which is State Street's S P 500 Index Fund.
As of today, that is the only investment.
Option available inside the Trump account platform.
More options are supposed to be added later, but they are not live yet.
So if you open an account today, you are getting the same single fund everyone else is
getting.
This is different from a typical custodial account you might open on your own, like a UTMA
or a UGMA, where you can invest across stocks, bonds, or a diversified mix depending on
the child's age and how soon the money might be needed.
I like the idea of simplicity within the investment options in the Trump accounts at this
time.
It's one less reason to avoid getting started as there is only one investment option.
So what happens when your child turns 18?
This is the part I think about most because my son turns 18 in three years, not 18 years
from now, like it would be for a newborn opened account today.
When that happens, control the account passes entirely to him.
The account converts to traditional IRA tax treatment.
And he becomes the one making decisions, not me.
At that point, he can withdraw the money right away for something like education or a home
purchase, or he can leave it invested and let it keep growing.
There is no rule that says the money has to be spent on school the way there is with a 529
plan.
It becomes his account, taxed the way a traditional IRA distribution is taxed, and the
decision is entirely his.
Since it's treated as a traditional IRA, once he
Takes control, pulling money out well before typical retirement age would generally
trigger the same additional tax that applies to early withdrawals from any traditional
IRA.
Now, the IRS issued formal guidance on this in December of 2025, though full regulations
are still being finalized.
So it's worth a quick check against IRS.gov closer to the date rather than assuming
today's general IRA rules apply exactly as written.
Now,
Picture two 18-year-olds with the exact same account balance.
One withdraws the money for a car, the other leaves it alone and lets decades of
compounding keep working.
Both are allowed under the rules.
Neither's required.
The government's $1,000 was never the important number.
The important moment is the one where an 18-year-old decides what kind of decision they're
gonna make with that money that has been growing since before they could drive.
A Trump account is real money.
With real rules, and it is not something you set up once and forget about.
Every family and friend contribution made, every year you let it sit invested in the
market, and every choice your child makes the day they turn 18 adds up to the outcome.
My son will not turn 18 for three more years, so I will get to see how this plays out
sooner than most parents who are opening these for a newborn today.
If you're weighing how a Trump account fits into your broader financial picture alongside
everything else you're already doing for your kids,
That is exactly the kind of decision worth talking through with your own financial planner
or tax professional, since every family situation is different.
If you found this episode helpful, please consider subscribing to the podcast and leaving
a review.
It helps more people find the show and continue learning how to make smarter financial
decisions.
I'm Josh Duncan, partnered F5 Financial Planning.
If you would like to learn more about how we help our clients achieve financial freedom
for personal significance,
Please visit our website at www.f5fp.com.
Thanks for listening, and I'll see you in the next episode.