Locator: 51123INVESTING.
Trump Accounts: https://www.trumpaccounts.gov/.
Query:
Can one open a Trump Account at Schwab or must it be done through the Trump Account app?
Reply:
IRS Form
How to prove priority:
My take on the Trump accounts:
- traditional IRAs for children and others under the age of 18 years old
- which means withdrawals are taxed as "regular income"
- these are not like Roth IRAs
- free money from government, major corporations, and parents' employers in some cases
- very confusing and strict tax-related guidelines
- can only start the process through the government (www.TrumpAccounts.gov)
- except for the "free money" which is very, very limited and highly regulated, there remain better options, particularly 529 plans
My hunch: unless these accounts open automatically upon the birth of a child, these accounts will be hard to sell.
The "529 plans: are a much better alternative.
They can be redeemed tax-free (traditional IRAs, upon redemption are taxed as ordinary income). Yes, they can only be redeemed for educational purposes, but money is fungible, the owner of the 529 plan can re-name the recipient at any time for any reason for an indefinite period, and, finally, "education" is very broadly defined. And 529 plans can range from very conservative to very aggressive plans. While we're at it:
Trump Accounts: way too complicated; particularly for the measly return for upper middle class and the elite. I wrote that before I saw this, link here:
Experts interviewed by Yahoo Finance were not convinced that Trump Accounts offered a clear advantage over similar options, like a traditional or Roth IRA or a 529 education savings plan.
529s, for example, allow earnings to accumulate and are not subject to federal and state taxes when used for qualified education expenses.
Zach Teutsch, a managing partner at Values Added Financial, said that a family would have to be "shockingly sure" that their child would not attend college to opt for a Trump Account instead of a 529 plan.
"The giving kids money aspect is generally good," Teutsch said. "The account structure seems ill-considered."
Traditional IRAs offer an up-front tax deduction, while Roth IRAs are funded with after-tax money, but the dollars are withdrawn tax-free in retirement.
Trump Accounts tax the money when it goes in and when it comes out. Additionally, IRAs — both types — offer a greater variety of investment options and higher contribution limits.
What's also confusing about Trump Accounts is that they allow for both after-tax contributions, like individual gifts from family members or parents, as well as pre-tax contributions, like those from employers.
In general, experts say that Trump Accounts have significant drawbacks compared to other options.
"It's not very attractive," said Ann Reilley, CEO of Alpha Financial Advisors. "It just seems like they're complicating things for no reason."
It's also noteworthy one must link one's e-mail address with the US government before opening / funding one of these accounts.