Trump accounts can be “one of the best” long-term planning options, despite their name, says Werner.
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Quick Tax Tip
With Art Werner
CPE Today
Trump accounts are “one of the best provisions that we have seen,” tax expert Art Werner says in this Quick Tax Tip.
Acknowledging that the name itself may create resistance among some taxpayers, he says that for people who are not fond of President Trump, “when they hear the name Trump account, it turns them off.” But if they dismiss the account because of its name, he adds, “they are walking away from a tremendous opportunity.”
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Werner explains that funds in a Trump Account are effectively locked away until the child reaches age 18. Once the beneficiary reaches adulthood, the money can be used for specific purposes that he describes as major life milestones, including higher education, purchasing a first home, starting a business, and ultimately retirement planning.
Werner encourages advisors and clients to “take away the name” and focus on the concept. He explains that the Trump account was created under the One Big, Beautiful Bill legislation and becomes operational on July 4, 2026. At that point, advisors will be able to help clients establish accounts for minor children.
According to Werner, the account functions as a “lockbox.” Money can be contributed, but it is “almost impossible to remove it while the child is under age 18.” Although there are a few exceptions, he emphasizes that withdrawals during childhood are generally prohibited.
When the child reaches age 18, Werner explains that the account holder assumes legal responsibility for the account, which “converts into essentially an IRA.” If funded properly, the child can begin adulthood with “an IRA account that is actually significantly funded.”
Werner highlights several potential uses for the funds, including education expenses, first-time home purchases, and possibly starting a business, depending on future guidance from Treasury and the IRS. However, he believes the greatest value comes from leaving the money invested. “The most important reason for this is let it ride,” he says, noting that long-term growth could leave beneficiaries with substantial retirement assets.
While Werner says he “probably wouldn’t have called it a Trump account,” he suggests that “a Kickstarter account” would better capture its purpose. He argues that the account is “a way to kickstart the child into financial maturity, financial freedom, at a relatively early age,” which is why he says, “that’s what I love about these.”