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- [00:00]
Roman
Included among the many, many, many, many, many, many, many provisions of the one big beautiful bill signed into law by President Trump on July 4th of last year is a pilot program for something known as Trump Accounts. These are investment accounts that all American kids are eligible for, and very notably, any American child born after January 1st of 2025 is, is eligible to receive a $1,000 deposit into their account, courtesy of the federal government. This is money that is not taxable, it's not a loan, meaning that the kid never has to pay it back. And also because of the type of account that it is, basically an investment account that the kid cannot touch until he or she is 18. By the time the child is ready to take that money out, that $1,000 might have grown substantially. But by that time, if the market continued to have the same historical returns that it typically does, 8 or 10% a year, it means that by the time that your child is 18, they will have an account with upwards of $6,000 in it. By the time they're 28 years old, that account might have upwards of $28,000 in it, meaning that this is a fairly good opportunity and something that if you're a parent, you should definitely not miss. And the best part is that all you have to do to claim this money is to fill out a few forms of the irs. And so today let's go through all the details. First, we'll discuss what these accounts actually are, then how to set up your child's account. Thirdly, we'll discuss how the kid can actually go ahead and use the money. Then we'll discuss some more technical details, like where the money is coming from to fund it. And then lastly we'll discuss what practical next steps you should be taking are. And all I ask in return is that if you appreciate content like this, please do smash those like and subscribe buttons below this video. I ask you every episode, but today's episode is indeed important because if the algorithm picks this up and shows it to ever more American parents, they won't miss this chance to give their kids a good head start in life. So thank you for that. Now, to start with, as I mentioned earlier, the one big beautiful bill signed into law by President Trump on July 4th of last year. Within it, a provision establishing a pilot program known as Trump Accounts. These are tax advantaged children's Investment savings accounts, which are designed to promote things like financial education, retirement readiness, as well as general asset accumulation by American kids. A good way to think about them is that they're basically 401k accounts for children. And the idea of these accounts is essentially twofold. One, it's to give American kids a little financial boost right from birth, while also giving them automatic exposure to the US Stock market, which at least the theory goes, then gives them a legitimate stake in America's financial future. It's attempting to create a new generation of US Citizens who are not totally removed from the markets. The idea goes that if you have some skin in the game, then perhaps you will be less inclined to push for socialism and tear down the whole system 20 years from now. That's again, at least the thinking behind it. And that thinking, by the way, of being a bulwark against socialism, it was really pushed forward by Senator Ted Cruz, who just for your reference, he was really one of the biggest proponents of getting these Trump accounts included in the text of the one big beautiful bill. And here was him laying out this anti socialism part of the argument during remarks that he made at a podium right alongside President Trump.
- [03:31]
President Trump
The second benefit, and what I'm really excited about is we are creating a new generation of capitalists. Every child in America is going to be an owner of the biggest employers in this country. We've all seen the sad statistics of how many kids are losing faith in capitalism. Well, ten years from now, a little boy is going to pull out his phone and he's going to look at his app and he's going to see his Trump account. And instead of thinking of big bad, scary corporations, that little boy is going to say, I own 50 bucks of Apple, I own 100 bucks of Dell, I own 75 bucks of McDonald's. And every child is an owner of the biggest employers in this country that will transform this country. Mr. President, thank you for signing it.
- [04:17]
Roman
Now, on a practical level, these accounts work as follows. Any American citizen children born between January 1, 2025 and December 31, 2028 are eligible for a Trump account that will automatically be seeded with a one time $1,000 grant. Basically, any kids born in this four year span of time are automatically eligible to get $1,000 from the US government deposited directly into their account. That is free money that everyone should apply for and I'll tell you how in a moment. And also I will mention that if your kid is is under the age of 18, but they don't, they were not born in that four year span of time, you can still open up an account for them. They will not be eligible for that $1,000, but they might be eligible for other seed grants which we'll Discuss in a moment. Now, the account itself, once you open it, it's basically an ETF, which tracks the broader US Market. The text of the law, it doesn't directly stipulate which stock index they're going to use, but it's probably going to be something like the s and P 550. And also what's interesting is that the dividends in your child's account will automatically be reinvested, leading to some fairly good compound growth. As an example of what this growth will look like in practice, you had the President's Council of Economic Advisors put out a report. You can see it up on your screen, and included in it was an estimate of the returns that one can expect to see from these accounts using the S&P 500's average historical returns. And so if an account holder adds no other money other than that initial $1,000 federal grant, they can expect to have their account be worth around $5,800 by age 18 and $18,000 by age 28. And indeed, I actually looked it up. I used AN S&P 500 Historical Return Calculator to see what my account would look like if this program were available when I was born, and by the time I was 18, my account would have $5,900 in it. And by the time I was 28, my account would have had a little under $15,000 in it, which is not bad.
- [06:14]
President Trump
However.
- [06:15]
Roman
However, it's also worth mentioning that Besides the initial $1,000 investment that these kids are eligible for from the US government, you have parents, friends, as well as employers who can also contribute money into the child's account up until the kid is aged 18. Now, there are some limits to how much money you can put it put in every single year for your kid. At the moment, you can only put in upwards of $5,000 per year into this account. And within that limit, you, employers can only contribute $2,500. So they're capped. However, I will mention that the law states that these annual deposits are indexed to inflation. And so over the course of the next 18 years, the amount you can actually deposit per year will increase over time. And secondly, I'll also mention that while there are caps on how much individuals and employers can contribute donations into the system from others, like philanthropic individuals, like billionaires, large corporations, as well as state governments, they actually have no limit to how much they can contribute. Meaning, I'll just paint you an example. You open up an account for your kid, it automatically gets seeded with that $1,000 initial seed investment from the federal government. You don't put in any extra money, but it's feasible that during the next 18 years your state government might put in some money or some corporation or some billionaire philanthropist also contribute some money into the system. And so with these different additional investments made into the account, the growth, it becomes much, much more impressive. If we actually circle back to that report that I mentioned a moment ago, the one from the President's Council of Economic Advisors, they have a few different estimates. And so, for instance, if an account holder makes a Midpoint contribution of $2,500 per year on top of the initial $1,000 grant, they can expect an average return of around $154,000 by age 18 and, and $555,000 by age 28. However, if an account holder contributes the maximum of $5,000 every year for 18 years, which will increase a little bit with inflation, they can expect to see the account absolutely balloon to over $300,000 by age 18 and $1.1 million by age 28, which is obviously very good. Now, a couple of things worth mentioning. The first one I alluded to earlier is if you have a kid who's under the age of 18, but they were not born in that four year period, you can still open up a trump account for them, but they just won't be eligible for that initial $1,000 seed grant. But they might receive other types of grants though, which we'll talk about in a moment. They are coming, they've already been announced, but they just will not be eligible for that $1,000. Secondly, the money in this account, it's locked up until the kid reaches the age of 18. Once he or she turns 18, they will be able to withdraw the money only for quote unquote qualified purposes, which are actually laid out in the law as being things like helping to pay for tuition or job training, placing a down payment on a home, or starting a business. And so in theory, the kid won't just be able to take the money and blow it on a one time vacation. Otherwise, if they don't want to use the money for a down payment or tuition or starting a business, the kid, after reaching 18, the kids, they can actually roll the account over into a traditional IRA account. Now the obvious next question here is how do you sign up? Well, included in the text of the law is another provision requiring a one year waiting period after the signing of the one big beautiful bill, meaning that the earliest that the accounts can actually begin to get funded with these $1,000 grants is July 4, 2026. During this one year long waiting period between when the law was signed and when the accounts can actually start to get funded, the particulars of the program are currently getting ironed out in the regulatory process. And so for instance, in December the irs published this 44 page notice right here of their intent to issue regulations pertaining to the Trump accounts. That notice, by the way, it includes dozens of ANSwers to some FAQs frequently asked questions and if you want to go in and read all of those and learn more about the program, I'll link that 44 page notice down in the description box below. Now, to open the account for your kid, you will need to fill out something called IRS form 4547. It's numbered as such because it's a Trump account and Trump was the 45th and 47th president of the United States. Ergo, I mean the IRS form 4547. It's amazing. The form which you can see up on your screen is only available in draft form. So please do note that form is still a draft. We'll need to still wait a few more months while the IRS finalizes the official form that you'll actually be filing with them. However, if you want to just take a look at the draft, I will link it down in the description box below. I'll also note that the Treasury Department has come out and said that they will be able to establish a Trump account for the kid regardless of whether the parent fills out a Form 4547. They will just use the information based on any new dependents that are claimed on your annual tax return. But just to be safe, once the form, the official form is available, I would recommend just filling it out and submitting it to the IRS for every one of your kids. Better safe than sorry. Now, at the moment, the expected date is sometime in May of 2026 for when both the forms as well as the website for the accounts will be up and running. And so I would mark your calendars For May of 2026 a couple of other things worth mentioning. Firstly is the question of money. Where is the money actually coming from to fund all these accounts? Especially, I should note, given the fact that there are going to be a lot of kids eligible. Under the current interpretation of the 14th Amendment to the U.S. constitution, any child born on U.S. soil, with a few minor exceptions, is automatically a U.S. citizen. Now, the U.S. supreme Court is currently looking at a case and they're set to make a ruling in the next few months on this matter, but let's just assume it remains the same. So there are going to be any kid born on US Soil is a US Citizen and assuming a regular birth rate for the next four years that are earmarked for these Trump accounts, that's going to be 14.4 million eligible children born sometime between January 2025 and December 2028. And so at $1,000 per kid, that's $14.4 billion. However, the plan is only apportioned $410 million that'll be available up until 2034. So that basically assumes that Congress will have to reauthorize additional funding later if they wish to continue with the program. It'll just become one of the countless things debated on whenever a new spending bill goes to the House floor. But actually, there's going to be another source of funding, as we mentioned earlier, besides the funding from the federal government, philanthropic grants from ultra high net worth individuals as well as major big corporations will also help to fill these accounts. And perfectly along that line, just last month you had Michael Dell, the billionaire founder of Dell Technologies, alongside his wife, Susan Dell. They pledged to donate over 6 billion billion into the program. Susan and I are super excited to announce our 6.25 billion dollar gift to 25 million American children. When children have a future that they can see is worth saving for, then that will help build hope and opportunity and prosperity for generations to come. Now that money is actually earmarked for children born outside of the pilot program's four year window, meaning that that money from Michael Dell will actually go to kids who do not qualify for the $1,000 seed grants. It'll also be for kids living in areas with low median incomes. And this actually appears to be the plan with government funding being essentially the bare minimum and America's wealthy class filling in the gaps through philanthropic donations. Here was in fact The Treasury Secretary, Mr. Scott Bessen, speaking on that very point.
- [13:57]
Treasury Secretary Scott Bessen
Through the 50 state challenge, we are inviting every philanthropist in every state across the country to partner with us in building generational wealth for America's children through Trump accounts. There are four ways Trump accounts will be funded. First, through an initial $1,000 seed from the government. Second, through the donations of parents, friends and employers. Third, through the generous donations of wealthy Americans and philanthropic organizations. And fourth, through donations from state governments.
- [14:35]
Roman
And indeed, following the announcement of the $6 billion donation from Michael Dell, you had the Treasury Secretary announce something called the 50 state challenge, where he called on philanthropists, companies as well as different state government to make donations into these Trump account programs of the kids in their respective states. Now, among the first contributors to this challenge was Mr. Ray Dalio, founder of the Bridgewater investment firm. He and his wife pledged to give 300,000 children in Connecticut $250 each, for a total of $75 million. Now, according to the Treasury Secretary, this was actually just the first of 20 such pledges.
- [15:12]
Treasury Secretary Scott Bessen
Ray is representing Connecticut in the 50 state challenge. Today he will announce a generous contribution to to boost funding for Trump accounts for kids across Connecticut. Ray has made the first move, but we welcome other donors and foundations in Connecticut and across the country to join him in the 50 state challenge, which.
- [15:33]
Roman
Is very cool and probably very timely since Social Security, as we all know, is headed for insolvency. So this 50 state challenge might be the only way that kids can actually get this funding. And so there you have it. These accounts are going to be funded by both congressional allocation, hopefully, but also from these philanthropic efforts. Please go ahead and make an account for your kid once form 4547 is available. Even if your kids are older and they don't qualify for that $1,000, still seriously consider making that account. Not only can you contribute to it and perhaps your employer can contribute to it as well, but there is a concerted effort at the national level to get billionaires and large corporations and state governments to contribute money for the next generation. So basically there's kind of no reason to set this up for your kid. If you're interested, the next step it would be to go to the official government Trump account website that was recently set up. It's www.TrumpAccount.gov and on there you can fill out your email address. In order to get any update, I'll throw the link to that webpage. You can find it down in the description box below. And also as the forms and web pages become more and more available, if you want to you can check back on this episode, I'll actually update the description the description box below so that once the forms become available, you'll have access to them right there. I'll try to make this episode sort of a one stop shop for you. So if you bookmark this episode, check back in in a few months, I'll have all those forms down in the description box below. I can assure you of that. That's my promise to you. And in exchange for that promise, all I ask is that you smash those like and subscribe buttons so that more people can reach this episode and get notified of these accounts and then until next time. I'm your host, Roman, from the epic times. Stay informed, and most importantly, stay free.