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Trump Accounts

Last month we introduced the new Trump Accounts after they officially became available in July. After reviewing the legislation in more detail, we wanted to highlight what we believe is their most significant long-term benefit.

Key Features

• The account is owned by the child, with a parent or other authorized custodian managing it until age 18.
• Eligible children born between 2025 and 2028 receive a one-time $1,000 government contribution (no income limits apply).
• Up to $5,000 may be contributed each year (indexed for inflation after 2027).
• Investments grow tax-deferred.
• Unlike a traditional IRA, contributions can be made before a child has earned income, allowing retirement savings to begin much earlier.

The Biggest Long-Term Opportunity

In our opinion, the most attractive benefit of a Trump Account is the potential to begin retirement investing before age 18 and later convert the account to a Roth IRA. Starting decades earlier gives compound growth much more time to work.

For example (using hypothetical assumptions):

1. A child receives the maximum $5,000 contribution each year for 18 years, totaling $90,000.
2. If invested at a hypothetical 7% annual return, the account could grow to approximately $170,000 by age 18.
3. The account is then converted to a Roth IRA. Income tax would be due on the investment gains (approximately $80,000 in this example), assuming the original contributions represent after-tax basis.
4. If the Roth IRA continues earning 7% annually until age 65, it could potentially grow to more than $4 million, with future qualified withdrawals being tax-free.

While these figures are purely hypothetical and actual investment returns will vary, they illustrate how starting retirement savings at birth instead of age 18 can dramatically increase long-term wealth.

Things to Consider

Trump Accounts are not without drawbacks:

• The child gains control of the account at age 18 and could choose to withdraw the funds.
• Someone must pay the income tax on any Roth conversion. Some families may choose to spread the conversion over several years to reduce the tax impact.
• Tax laws are not permanent.  Given ongoing federal budget deficits and rising national debt, future tax policy could change.  While Roth IRA’s currently offer tax-free qualified withdrawals, there is no guarantee today’s rules will remain in place decades from now. 

Our Thoughts

Trump Accounts provide another valuable planning tool for families. However, they are not automatically the best savings vehicle for every goal.

• If the primary objective is education, a 529 plan generally provides greater tax advantages.
• If the goal is helping with early adult expenses, such as a first home purchase, a UTMA/UGMA account may be more appropriate.
• If the objective is long-term retirement savings, a Trump Account may offer a unique opportunity because it allows retirement investing to begin before a child has earned income, with the potential for a future Roth conversion.

Rather than asking which account is best, the better question is: What are you trying to accomplish? In many cases, the answer may be using several different account types together to meet multiple long-term goals. Please contact us if you have questions or would like to discuss how this or other planning strategies may fit into your overall financial plan.  

Why Do Markets Keep Going Up?

One of the questions we continue to get asked is, "Why do the markets keep going up?"

The simplest answer is earnings. While headlines often focus on interest rates, politics, tariffs or the economy, the long-term value of a company is driven by its ability to generate profits. When corporate earnings continue to grow, stock prices have historically tended to follow.

Coming into 2026, Wall Street analysts were estimating S&P 500 earnings growth of approximately 14% to 15%. Actual results have been significantly stronger, with some full-year estimates now approaching 30%. Much of this strength has been driven by continued earnings growth from large technology companies, increased investment in artificial intelligence and expanding profit margins across many industries. Looking ahead, current earnings estimates for 2027 and 2028 are in the low teens, still well above long-term historical averages.

Of course, markets are never without risk. One of the biggest uncertainties is whether the substantial investment being made in artificial intelligence ultimately delivers the productivity gains and profits investors expect. If it doesn't, earnings growth could slow and markets could become more volatile.

No one knows exactly how this will play out. Rather than trying to predict every headline or market move, we believe the better approach is to stay focused on the long term. History has shown that investors who remain disciplined and invested through both good and bad markets have generally been rewarded over time. We'll continue to monitor the fundamentals, filter out the day-to-day noise and make thoughtful adjustments when appropriate, while keeping your long-term financial plan at the center of every decision.

 

This material is meant for general illustration and/or informational purposes only.  Views expressed in this newsletter may not reflect the views of Osaic Wealth, Inc.  It is our goal to help investors by identifying changing market conditions.  However, investors should be aware that no financial advisor can accurately predict all of the changes that may occur in the market.   This material should not be relied upon as investment advice.  Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal.   There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. This article contains forward looking statements and projections.  Past performance is no guarantee of future results.  Neither Osaic Wealth, Inc. nor its representatives provide tax or legal advice.  If you don’t wish to receive marketing emails from this sender, please reply to this email with the word REMOVE in the subject line.