For Adam Bergman, the benefits of a Trump Account aren’t limited to the money his two sons could accumulate over decades. The new accounts are a chance to teach them how investing works.
Bergman, the founder of IRA Financial, told CNBC he was eager to set up Trump Accounts for his sons to help them take advantage of the tax-advantaged growth available with these savings and investment accounts.
“It’s not just the number of dollars you’re going to have at the end of the day, but it’s hopefully opening people’s eyes to say, ‘Hey, this is what savings is. This is how it works,'” he said. “It’s a very powerful tool.”
How Trump Accounts work
Bergman is one of millions of parents figuring out whether — and to what extent — Trump Accounts fit with their family’s financial goals.
Ahead of the official July 4 launch of Trump Accounts, families signed up more than 6 million children, according to the Treasury Department. About 1.4 million of those registered are babies born between 2025 and 2028, who are eligible to receive the $1,000 seed investment from the federal government.
Parents, grandparents, and loved ones can contribute up to $5,000 a year to what are also known as 530A accounts. Employers can also make contributions of up to $2,500 per worker per year, which are included in the $5,000 annual maximum contribution.
Funds in these accounts are generally not accessible before age 18, and then the account converts to a traditional IRA.
For more details, check out our guide to Trump Accounts.
‘If it’s free money, we’ll take it’
Will Matthews and his wife are expecting a baby who would be eligible for the free seed money. The couple also set up Trump Accounts for their two young children. He said they anticipate each could be eligible for a $250 charitable contribution from the Dell Foundation offered to children 10 and under who live in a qualifying zip code.
“If it’s free money, we’ll take it,” said Matthews, who is self-employed and works as a senior auditor in Columbus, Ohio.
Although he believes investing early helps to improve a child’s financial education, Matthews said, he and his wife are unlikely to add more money to their children’s Trump Accounts beyond those grants.
“These accounts don’t have that many crazy tax advantages for me to be gung-ho on putting all my eggs in this basket,” he said.
Instead, he said, he is focusing on funding 529 savings accounts first to help pay for their college education.
Experts have said 529s, custodial brokerage accounts and Roth IRAs can be worth considering in addition to or instead of a Trump Account, depending on your family’s goals and timeline.
Making ‘tax-free millionaires’
The Bergman family
Courtesy: Bergman family
Meanwhile, Bergman said he plans to make the maximum Trump Account contribution of $5,000 per year for his sons before they turn 18. At that age, it becomes a traditional IRA for the owner to use as they see fit.
“I think it helps people want to invest,” said Aven,15, who is Bergman’s eldest son. “It also teaches you that you could see the growth” in your portfolio.
Bergman and his wife, Jaclyn, are already encouraging Aven and his brother Ever, 12, to convert their Trump Accounts to Roth IRAs down the line. With a Roth IRA, investment growth and future retirement withdrawals are generally tax-free.
“We’re going to invest in it together,” Bergman said. “They’re going to be tax-free millionaires.”
Although retirement is more than four decades away for Aven, he said he believes his early start will pay off.
“You need to be patient; it’s going to go up,” he said. “Just be patient, and over time, you’ll make a lot of money.”
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