For Adam Bergman, the benefits of the Trump account are not limited to the money his two sons can accumulate over decades. A new account is your chance to learn how investing works.
Bergman, founder of IRA Financial, told CNBC that he wants to open a Trump account for his sons so they can take advantage of the tax-advantaged growth that savings and investment accounts provide.
“It’s not just about the amount of money you have at the end of the day, but I hope it opens people’s eyes and says, ‘Hey, this is what savings is. This is how it works,'” he said. “It’s a very powerful tool.”
How Trump Account Works
Mr. Bergman is one of millions of parents considering whether and how much Mr. Trump’s account fits into their family’s financial goals.
Families signed up more than 6 million children ahead of the official launch of Trump Accounts on July 4, according to the Treasury Department. Approximately 1.4 million of the registrants will be infants born between 2025 and 2028 and will be eligible for a $1,000 seed investment from the federal government.
Parents, grandparents, and loved ones can contribute up to $5,000 per year to an account, also known as a 530A account. Employers can also contribute up to $2,500 per worker per year, which is included in the $5,000 annual maximum contribution.
The funds in these accounts typically cannot be accessed until you turn 18, at which point the account converts to a traditional IRA.
For more information, see our guide to Trump accounts.
“If I can get money for free, I’ll take it.”
Will Matthews and his wife are expecting a baby who will be eligible for free seed money. The couple also opened Trump accounts for their two young children. He said he anticipates each recipient may receive a $250 charitable donation from the Dell Foundation, which will be given to children 10 and under living in eligible zip codes.
“If I can get free money, I’ll take it,” said Mr. Matthews, a self-employed senior auditor in Columbus, Ohio.
Matthews believes that investing early can help improve children’s financial education, but said he and his wife are unlikely to add more money to their children’s Trump accounts beyond these grants.
“These accounts don’t have enough tax benefits to make you eager to put all your eggs in this basket,” he said.
Instead, he said he is first focused on funding a 529 savings account to cover the cost of a college education.
Experts say 529s, custodial accounts and Roth IRAs are worth considering in addition to or instead of Trump accounts, depending on your family’s goals and schedule.
Create a “tax-free millionaire”
bergman family
Provided by: Bergman family
Bergman said he plans to contribute up to $5,000 a year to the Trump account by the time his sons turn 18. At that age, it becomes a traditional IRA that the owner can use as needed.
“I think it will make people want to invest,” said Bergman’s eldest son, Aven, 15. It will also tell you that you can see growth in your portfolio.
Bergman and his wife, Jaclyn, have already encouraged Aven and his brother Ever, 12, to convert their Trump accounts to Roth IRAs in the future. With a Roth IRA, investment growth and future retirement withdrawals are generally tax-free.
“We’re going to invest in it together,” Adam Bergman said. “They will become tax-free millionaires.”
Although Aben is more than 40 years away from retirement, he said he believes an early start will pay off.
“We need patience. It’s going to go up from here,” he said. “If you’re patient, you’ll start making a lot of money over time.”
Sign up: Money 101 is an 8-week course on financial freedom delivered to your inbox weekly. Sign up here. Also available in Spanish.
