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Hello everyone, this is Kevin. I enrolled all seven of my children in the Trump Accounts program. And as the CEO of a company with a nine-figure revenue, you might ask: Kevin, why? Well, in this video I'll break it all down. We will do this in a pros and cons format so that the key conclusions can be easily seen.
Keep in mind that there is a lot of skepticism about these Trump accounts because of their political label. So I hear Democrats saying, “Oh, well, the Democrats are just going to kill Trump’s program anyway. It doesn't matter." I don't think so. And let me start with that to dispel those fears. First of all, many people sign up even though their children don't qualify for the $1,000 bonus.
None of my seven children qualify for this bonus $1,000 . They were not born during the Trump administration . So what? Apparently we missed the deadline. Born a little early. Well, it happens. Birth lottery. We didn't win it in the case of Trump's account. But the bottom line is that 6 million kids have already signed up in the first week of the program, and only 1.4 million of them are actually eligible for that bonus thousand dollars.
So, it's clear that many people see a reason or logic for signing up other than just those extra thousand dollars. Especially since the families have already contributed over $50 million. I expect this amount to increase significantly over time . I have n't actually even deposited funds into these accounts yet.
I'm still working on getting everything set up perfectly, but the accounts are already open, so I'm ready to transfer the money. So, here's how it works, and first my thoughts on the Democrats' concerns. Will the next administration repeal this ? I do n't think so. I do n't really think politicians like to abruptly abolish such tax-free programs, especially when they affect children.
I'm not saying it won't or can't happen, but I know that Ivanka Trump pushed for a doubling of the child tax credit during the first Trump administration, and Democrats kept it, and even briefly expanded it to $3,600 in 2021. So family cash programs, especially more complex ones like this tax program, which also has a lot of public support and market support, tend to stick around for a long time.
What's more concerning is that a lot of people invest in an S&P 500 index fund, which is where your Trump account money is actually going, and then the big recession comes and, you know, over the course of three years, people lose 40%, and we're talking about a newborn baby . Welcome to capitalism. But I really want to start with something very, very, very important.
So, this is just a quick foundational piece. Important conclusion number one. Frankly, the stupidest thing I've seen is when people just say, " Hey, just fund everything from your personal after- tax account." I think this is an amateurish approach. You know, you paid your taxes, the money in your savings account, you spend it.
I think there is a serious opportunity to sit down and think about how you can do this through your part-time job. I personally believe that everyone should have a part-time job to write off expenses that they wouldn't be able to write off otherwise. If you have a part-time job, you can now write off things like part of your housing expenses, utilities, phone, part of your car expenses, laptop—anything that is necessary and common for your business, or, for example, work uniforms, right?
So the bottom line is that if you have a business, the advantage, especially if you have an S- corporation, is that you can contribute up to $2,500 per employee and/or child. I'll explain that in a moment. Pre- tax, which means you get a tax break for it. The company writes it off, and those funds can be credited to the Trump child's account.
So let's explain this a little more clearly and then summarize, because this is a pretty important point. Okay, let's say mom, dad, and two kids work for this S- corporation, whatever it is, a marketing company or something else . Okay, let's take this dirty board. Mom can contribute $2,500 for her children because she is an employee.
She can contribute $2,500. Technically, it is the company that makes the contribution. The company receives a tax write-off. So, it's a company contribution, but mom can decide who gets the money. Can dad get them ? No, Dad can't get them. Children can get them. OK. Good. Well, which child will get them?
The one you love the most. All $2,500 can go to the first child, or all of it to the second. You can split it 50/50. You can really do anything you want. You can distribute that $2,500. Uh, and this is a contribution from the company that you distribute. Now, the dad who works at this company can do the same , which means the parents can contribute a total of $5,000 in this scenario: all to the first child, all to the second, 60% to one, 40% to the other—as you wish.
Any combination you want, that money can go to these kids in their Trump accounts. Okay, cool. But now let's assume that these children are also employees of the business . Remember how I said “and/or” earlier? You are an employee and/or a child who is also an employee. Yes? So let's clear this up a bit.
If you are a child who is an employee, you can make a $2,500 contribution from the company. If you're a parent and you're an employee of a business, that business can contribute $2,500 for that child, right? The child can contribute to the employee's own account. Er -er, mom or dad can make contributions to any children they want, in any distribution they want.
So in this example, to make it easier, let's assume that the child, well, the first child receives this $2,500 contribution from the business, which they direct into their own Trump account. Same for the second child. In this example, a business, like an S corporation, that would normally take in $10,000 in income and send it out as dividends, and let's say they're in California, which would be crazy, but let's just say they ended up in California, they're potentially paying about 50% in taxes.
They would have $5,000 left after taxes. But now they can write off that $10,000. The business receives a $10,000 write-off, and the children are left with $5,000. That's pretty cool. So now the parents saved five thousand and the children received five thousand in this scenario. This is just great.
This is an example of how these Trump accounts are a huge life hack . So let's simplify this a bit in case any of this was confusing. Uh, and this is just to make it very clear what the difference is, and then we'll move on to the next take. So, the beginner's approach is, if you have a Trump account, just send your child $2,500 from your savings account and let them grow that money, and in the future they'll pay some taxes on it .
A complete loser- newbie approach when it comes to Trump's new accounts. The best thing to do is actually run it through an S corporation. Here's an example: If mom, dad, child one, and child two work part-time for the family , mom and dad can contribute $2,500 for each of the children, and the children can contribute $2,500 on their own to their own Trump accounts.
Technically, it's the business making the contributions, but in this example, the company can get a $ 10,000 tax break , which leaves the business with an additional $5,000 in profits that would otherwise go to taxes. And in this case, that extra $5,000 goes into the children's accounts. That's why many business owners are opening Trump accounts.
And this is the number one strategy in the new professional version. Okay, this is pretty important. Now a few little things related to this. You should have some form of Trump contribution program. Either a benefits attorney or artificial intelligence will help you put this together so that you have at least some proof of what you are actually doing.
Compose it, sign it, let everyone know, send it by email or whatever. Put it in a folder. Done. Talk to a lawyer about this to check everything out, or an accountant to help you sort it all out, because you need a professional to represent your interests. Make sure you have the appropriate documentation.
It is also important to remember that this generally works for S corporations that pay wages on a W2 form. So, it could be about employees or, you know, certain partnerships could be a good fit as well. This gets a little more complicated or confusing if there are no W2 payments. So it doesn't have to be an S corporation.
An S corporation is simply where you typically see W2 forms. Sometimes LLCs also pay wages on a W2 form. Just think about it. Keep in mind that this is also different from payroll taxes , like the FICA tax exemption that you can get if you have , say, an LLC that employs people. This is different. Just ask the AI about it if you have any questions.
Some families do this: instead of setting up their children in an S corporation, they set them up through a family LLC, which allows them to save on FICA taxes while it is a pass-through entity. I'm probably oversimplifying things , but that's because we need to focus on Trump's accounts. OK. Uh, secondly, uh, the first thought I often hear from newbies is that people hear about the $5,000 limit and think that's the family limit for a married couple filing a joint return.
It is very important to know that this is actually a limit of $5,000 per child's account. So, each child can receive up to $5,000. It could be $2,500 in contributions from someone else and $2,500 in contributions from themselves or through themselves, as an employee, or in any other way. This is important to know, but it is a $5,000 limit.
You can discuss your situation with an AI, an accountant, or someone you trust. But remember what it means. If you have three children, that could mean $15,000 in contributions. Seven children could mean contributions of $35,000. An employee or employer contribution limit of $2,500 is set for each employee.
And again, you can divide it between the children, though. So keep that in mind, because some people hear that and think, "Oh, I have three kids, so I can only contribute $2,500." No. It's for everyone, which is just incredibly cool. So, two working parents means two separate benefits of $2,500 each, because each child is entitled to one, and each parent is entitled to one.
This is useful to know. This is the second tip. Good. Currently, some clarification is still needed from the IRS regarding situations where multiple employers make contributions for the benefit of the same child. So we do n't have any details on that yet. It will be soon. Good. The third topic to remember.
Many people hear about the "Trump account", click on the ad after searching on Google and end up in the wrong place . There are very simple ways to do this. The easiest, in my opinion, is to simply download the " Trump account" app. I personally went through the trumpaccounts.gov website. I'll show you that too.
You can do it any way you want. Trumpaccounts.gov simply redirects you to the app. But there is also an IRS webpage for the " Trump account." Let me correct myself. This is the " Trump account" on the IRS website. This is Form 4547. So taxpayer, this should be here. 4547—that's, you know, basically Donald Trump's name, right?
President number 45 or presidential number . President number 45 and 47. And you can use the submission system here. Here she is. Okay, here she is. So, IRS.com/Trumpaccounts. Okay, it's here. That's where I went. So, Trump accounts, you can log in here. And after entering, you need to provide your driver's license, go through Face ID so they can conduct all the necessary checks.
You need social security numbers. You need to create an ID.me account. You can do it. If you go through this process and fill out the paperwork, it will take you 10 minutes. It's worth it. Honestly, you can do it while this video is playing . So, go to IRS.gov/trumpacounts. just go there, enter your details, and in about two business days you will receive an email approving your Trump account.
What struck me as suspicious when I received the email was that it looked like a marketing email from Robinhood. It didn't look at all like an official letter from the IRS regarding Trump's account. This is what he looked like. I swear, it looked like a scam to me. OK. Welcome to Trump's accounts. To complete the setup, activate your child's account.
And I'm like: what? Robinhood? Where does Robinhood get my children's data and all this information? Here's what you need to know. Robinhood is the only way to open a Trump account right now. So, this is their partnership. Do you want to use Fidelity or another platform— unfortunately, no. A newbie looking at this would think, "I don't know, this is somehow suspicious." Newbies are clicking on ads and random links to get money from Trump's account.
A professional knows that the best way to get the money is to go to IRS.gov/Trumpacounts or download the Trump accounts app from the app store. And this is only available through Robinhood, because that's who the White House decided to partner with. So while this looks like marketing, it's actually a partnership with Robinhood.
I was amazed. And all data is supposedly protected and verified by the Ministry of Finance. They already have your social security numbers and your children's numbers. Quite strange. It's worth keeping that in mind. So, point four : data. The Ministry of Finance supposedly says it is protecting all of this.
They already have everything. So, if it's unsafe with them, then nothing they have is safe. Hmm, well, I guess. Item number five, uh, free money. So, the free $1,000 won't appear automatically. Deposits will begin flowing into the accounts in 2026, including Michael Dell's money. This appears automatically based on the zip code or the child's age, but not instantly.
And that government seed money doesn't count toward that annual $5,000 limit . Worth knowing. This is point number five. Point number six, uh , some people say, " Listen, I don't really want to use Robin Hood." This is normal. You know, supposedly later this year Fidelity says you'll be able to transfer them to them.
Schwab expects to be able to do this at some point as well . Personally, I just leave everything to Robin Hood. It's pretty easy for me. And they allow you to invest directly in SPYM, which by the way, if you're not familiar with it, many people track the ticker prices of SPY or QQQ. Okay, so you have SPY and QQQ.
Okay, they have fees and expense ratios associated with them. SPY is up nine, uh, nine basis points, so you know, 0.09%. And QQQ is actually quite, uh, quite high. It is twice as expensive, 0.18% for an index fund. So if you just type in SPYM, you will get a very, very similar product, even if the price looks different.
QQQM, add that "M" at the end , and you really get a non-marketing product that has a slightly lower expense ratio. So QQQM is 15 basis points instead of 18. And look at this. SPYM, which Trump's accounts are actually linked to, is only 0.02%. This is a very low cost for an index fund. Honestly, it's pretty impressive.
And obviously, it's the S&P 500, so you know, it's 500 companies in the United States. I'm not saying it's indestructible, but it's a good product. The next point to know is, uh, some people think, point number seven, some people think that kids need a salary to make contributions. It is worth noting that income is not required for children.
Anyone can contribute. You can actually contribute to any Trump account if you want. But theoretically you could send money to my kids' Trump accounts . However, there is a hard cap of $5,000 per year per child for third-party contributions or contributions by the child themselves through an employer—a total maximum of $5,000.
After 2027, this limit will begin to increase to reflect inflation. So, probably in 2028 they'll say, "Oh, okay. Now it's going to go up 5%, or 3%, or whatever." You don't have any grace period for the deadline. Therefore, the money must be deposited by December 31st. This is an extremely important sub-point.
Honestly, regarding point number seven, it should be a separate point. So, you know, don't think you'll be able to do it by next year's tax deadline. You must submit them by December 31st. So mark it on your calendar . OK. It's worth noting that the contributions are subject to the $ 19,000 annual exclusion , which is something to keep in mind if you've been wondering about this issue.
Also worth considering: If you do this, or if you top up a 529 account with a large amount, you can use up some of that exclusion by contributing here. Now, to be as clear as possible about the gift tax exclusion for 529s, since it's a complicated topic, it's worth clarifying: the $2,500 company contribution is not included in gift tax calculations.
This is not a gift. Only if the parents then want to give more money, or someone else wants to give money to the child, will this affect the $19,000 tax-free limit. So keep that in mind. And now the last point, the most important one—the finale . What really happens at the age of 18? So, myth number one: money is locked up until age 59 and a half.
Wrong. Completely false. This is not true. Myth number two: You get a tax hit as soon as they turn 18. So they turn 18, and bam—there's a tax bill because you didn't pay taxes on that money in the account. That's also wrong. Here's how it works. In general, you have many options. But you are not obligated to do anything.
No tax hit will occur until the money physically leaves that account. So when a child turns 18, starting January 1 of the year they turn 18, they can do three things . Option one: she can keep the account. She can let it compound for decades, and eventually it will be subject to retirement plans withdrawals after age 59.5, and then the mandatory distribution phase will come, and this income will be taxed as ordinary income.
Quite a good, calm option. No problem, but perhaps not the most optimal strategy. Option two: transfer to cash. You withdraw the funds, pay income tax and a 10% penalty because you withdraw the money before age 59 and a half—this is where the myth of "locked" funds comes from. And if it's not college tuition, buying your first home (with a down payment of up to $ 10,000), having a child, or other specified exceptions, you'll still pay that 10% penalty and taxes.
This is option number two. So, you could leave everything as is. Option number one. Option number two: pay the fine and take the money. There may be an exception for you or your child at that time . Option number three: a smart strategy, as some say, professional. This doesn't mean that other strategies are for beginners, it's just that people often don't consider this option.
So, the third option is to gradually convert your retirement account to a Roth. But for a conversion, like a "backdoor conversion", you will have to pay taxes. So the strategy is this: when children are already independent, responsible for themselves, and the " kiddie tax" does not apply to them, right?
This is important. Don't start big conversions while they are students you support, because the taxes they will have to pay will be at your rates, not theirs. So don't do it while they are students. which you maintain. Be careful with this nuance in the future. Talk to an accountant. Yes, this is all quite complicated.
Instead, convert in small chunks during their early, low-income years of adulthood, paying 0 to 12% under the standard deduction, or perhaps 15% if you're in lower- tax California, for example. This is usually the best option. So in the early years of their earnings, it is worth converting this account to a Roth.
The main goal is to pay low taxes on the accumulated funds so that they can continue to grow tax-free. This is a real jackpot. Therefore, the priority of funding should be as follows: first take the " free money" if you can get a thousand dollars. Get a business deduction for Trump if possible. Accept charitable contributions to children's accounts if other people want to send funds.
Perfectly. up to 5 thousand in total . If the child has income, they should contribute to their Roth account. Then parents, in my opinion, should put money into a 529 for educational expenses, college, professional courses, or whatever. If you want, you can contribute money to this account, but only if the child plans to work or you will help them convert to a Roth later.
Otherwise, you can just use a regular taxable account and you won't have to worry about some of the penalties. So, somehow . A complete " novices vs. pros" breakdown of Trump's accounts. And if you liked it, this video will be the first in our series about money and investments. We'll call it a sort of mini-course on YouTube, it simply provides useful information on tax lifehacks and strategies to help you save and earn more. So be sure to subscribe to see more videos like this. .
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