Podcast Summary

ACTEC Trust & Estate Talk

Episode: Trump Accounts (IRC §530A): Estate, Tax, and Wealth Planning Considerations

Date: February 23, 2026
Host: Connie Iister (ACTEC Fellow)
Guest: Susan Bart (ACTEC Fellow – Arizona/Illinois)

Episode Overview

In this episode, host Connie Iister and guest Susan Bart delve into the newly created “Trump Accounts” under Internal Revenue Code Section 530A. This is a recently legislated, tax-favored investment vehicle for minors, raising important questions for estate planners, tax advisors, and wealth management professionals. The episode systematically explores technical aspects, beneficiary issues, tax implications, funding limitations, and strategic considerations—especially as practitioners and families prepare for implementation and regulatory clarification.

Key Discussion Points & Insights

1. Introduction to Trump Accounts

• Launch and Eligibility:
  • Accounts expected to be available by July 4, 2026 ([01:21]).
  • Every U.S. citizen born 2025–2028 with a Social Security number is eligible for an account and $1,000 government seed funding.
  • Applications via IRS Form 4547 or online; two elections required (account opening, seed money claim) ([01:54]).

2. Funding Sources and Limits

• Four Potential Funders:

  1. Government:
     • Seed deposit of $1,000 for eligible newborns ([02:10]).
  2. Charitable Organizations:
     • May fund accounts for specific beneficiary classes, with government pre-approval.
     • Example: Michael and Susan Dell to give $6.25 billion for underprivileged children not receiving seed money ([03:13]).
  3. Employers:
     • May contribute up to $2,500/yr per employee (or dependent child) ([04:01]).
  4. Individuals (Family Members):
     • Combined contributions from employers and individuals capped at $5,000/yr per beneficiary ([04:28]).

• Gift Tax Issue:

  • Contributions by individuals do not qualify for gift tax annual exclusion due to “future interest” status—contrasting with IRC 529 accounts ([04:39]).
  • Lacking statutory language to exempt reporting, requiring technical correction by Congress or the IRS for clarity.

  “Contribution to a Trump account should not qualify because you cannot withdraw that money until the beneficiary is age 18. That is in my mind the very definition of a future interest and not a present interest.” — Susan Bart ([04:39])

3. Account Mechanics and Growth

• Investment Constraints:

  • Must be invested in low-cost, broad-based U.S. equity funds, e.g., S&P 500, with expense ratio < 0.10% ([02:31]).

• No Distributions Until Age 18:

  • Exception for rollover to ABLE account in case of disability at age 17 ([05:28]).

• Automatic IRA Conversion:

  • At 18, Trump account auto-converts to IRA status for the beneficiary ([05:53]).
  • IRA rules then govern further distributions.

  “At that point what happens is it automatically becomes an IRA for the beneficiary...the normal IRA rules would apply.” — Susan Bart ([05:53])

4. Taxation of Withdrawals

• General Rule:
  • Distributions subject to ordinary income tax and potential early withdrawal penalties until age 59.5 ([06:13]).
  • Exceptions: higher education expenses, disaster relief, adoption, first-time homeownership (per IRA rules) ([06:33]).
• Tax-free Component:
  • Only original contributions by individuals (family) are tax-free; all growth, government, employer, and charitable contributions are taxable ([06:44]).

5. Strategic Comparison: Trump Accounts vs. 529 Plans

• 529 Plans:
  • More flexible and broadening qualified distribution categories (primary, secondary, and higher education, plus annual K-12 limit) ([07:40]).
  • Tax-free qualified distributions, beneficiary changes, and Roth IRA rollovers up to $35,000 ([08:09]).
• Trump Accounts:
  • Distributions—except for individual contributions—are taxable.
  • Less beneficiary/parental control after age 18.
  • Practicable advice: direct personal/family funds to 529 first; consider Trump accounts only for seed or charity funds and pending further regulatory guidance ([08:55]).

“In general, you may want to fund the 529 accounts before you start putting your own money in a Trump account. And in any event, wait until we get clarification on the gift tax annual exclusion question.” — Susan Bart ([09:17])

6. Practical and Policy Considerations

• Awaiting implementation details (participating institutions, final IRS forms, clarifying regulations) ([03:03]).
• Monitoring for policy updates and technical corrections vital for advisors and families considering contributions ([10:35]).

Notable Quotes & Memorable Moments

• On the Gift Tax Annual Exclusion:

  “Section 529 has very particular language...we are missing that language in section 530A which ACTEC has pointed out now twice in comments…” — Susan Bart ([05:04])

• On Account Control at Age 18:

  “No one can stop them from taking a distribution if they think they have a good use for the money, whether it’s taking a beach vacation, a ski vacation or a trip to the casino.” — Susan Bart ([06:03])

• Charitable Funding Example:

  “Michael and Susan Dell of Dell computers will contribute $6.25 billion to Trump accounts ... for children under the age of 10 in certain geographic areas...not getting the thousand dollar Government seed money.” — Susan Bart ([03:13])

Important Timestamps

• [00:41] – Episode framing and guest introduction
• [01:21] – Trump account rollout schedule and eligibility
• [02:10] – Overview of funding sources
• [03:13] – Charitable funding, Dell Foundation example
• [04:39] – Gift tax annual exclusion issue
• [05:28] – Disability rollover exemption
• [05:53] – Automatic IRA conversion at age 18
• [06:13] – Distribution taxation and penalties
• [07:40] – 529 account comparison
• [09:17] – Strategic advice: prioritize 529 contributions
• [10:35] – Upcoming developments and need for technical corrections

Summary Table: Trump Account Essentials

| Feature | Trump Account (IRC 530A) | 529 Account | |-------------------|-------------------------------------------|-------------------------------------| | Open To | US citizens born 2025-2028 | Anyone | | Uses | Retirement savings, must convert to IRA | Education (K-12, college, more) | | Tax Treatment | Taxable on distributed gains (mostly) | Qualified distrib. tax-free | | Control Ages | Managed by parent/guardian until 18 | Controlled by account owner | | Contribution Caps | $5,000/year (ind + employer/beneficiary) | Varies by state, often higher | | Withdrawals | Not until age 18 (except disability) | For qualified education expenses | | Gift Tax Excl. | Not currently eligible | Specifically included |

Final Takeaways

• “Trump Accounts” provide a unique but narrow opportunity—advisors should tread carefully, especially given potential gift tax complications and more tax-efficient alternatives like 529 accounts.
• The primary appeal is for beneficiaries receiving government or large-scale charitable contributions; parental/family involvement is limited by contribution caps, lack of present-interest gifting, and loss of control at age 18.
• Practitioners and families should stay alert for regulatory changes and implementation updates as accounts roll out in mid-2026.