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The answer, of course, is “it depends” — and it’s not quick or easy. Like most things tax-related, the answer is tailored to each client’s circumstances and goals and of course the tax law! 📚⚖️

Since it’s passing, our office has spent 30+++ hours attending seminars focused entirely on the newly passed One Big Beautiful Bill Act (OBBBA), Public Law 119-21. We’ve been learning the law and discussing how to educate our clients (and ourselves). We’ve been working up tax planning and tax minimization ideas for 2024 (where applicable), 2025, and 2026+++, and we’ll continue to do so as technical corrections and guidance are released.

Since its passing, I’ve been highlighting a different portion of the law in my weekly blog posts to start us thinking 🤔 / talking 🗣️ / planning ✍🏻. This isn’t about quick answers or solutions — which are often like “putting a band-aid on a bullet hole” 🩹🔫. These “quick questions” are just jumping-off points for deeper conversations, just as these blog posts are designed to get you thinking… but the real answers will depend on your short-term and long-term financial goals. 🧭💬

This Week’s Focus: the New Trump Savings Account as created in the One Big Beautiful Bill Act (OBBBA),

How Does It Work in Practice?

• 📂 Structure & Access: The accounts are structured like a traditional IRA, meaning distributions after age 18 (before age 59½) are taxed as ordinary income, and early withdrawals (for non-qualified reasons) may incur a 10% penalty.
• 📈 Tax-Free Growth: The invested funds from parents or guardians grow tax-free – the growth is tax-deferred (no tax on the contributions—again, similar to IRA rules).
• 👶 Who Is Eligible: This account is available for children under age 18 (contributions cannot be made the year the child turns 18). The child must have a Social Security number.
• 💵 Funding: The account can be funded from several sources, but there is an annual limit of $5,000 per child. It is expected that the annual contribution will be adjusted for inflation after 2027.
• 📅 Timing: Accounts can be funded on July 4, 2026 (but NOT before). Annual contributions must be made by December 31 of the contribution year.
• 🎁 Federal Government Contribution: There is a one-time automatic $1,000 deposit from the federal government for children born between Jan. 1, 2025, and Dec. 31, 2028 (once the initial contribution is made and an election/request processed). NOTE: This $1,000 government contribution is taxable when distributed.
• 🏢 Employer Contributions: Employers can contribute to the accounts for their employees or the dependents of their employees but are limited to $2,500 per year and would be taxable when distributed.
• 📊 Investment Vehicles: Trump accounts have limited investment options. They may only be invested in mutual funds or exchange-traded funds that track a qualified index, such as the S&P 500.
• 💸 Tax on Distributions: Tax is incurred when funds are withdrawn on all growth and on contributions other than by parents and guardians. Distributions after age 59½ are taxed at favorable long-term capital gain rates.
• 🚫 Tax Benefits from Contributions: None, but it is nice to get a $1,000 happy birthday gift from the government.
• 🔄 Rollovers: Withdrawals are generally not allowed before the child turns 18. Upon reaching age 18, the funds are rolled over into a traditional IRA, subject to regular IRA withdrawal rules and taxation. However, children with a qualified disability may roll over the funds into an ABLE account at age 17.
• 🧪 Pilot Program: This is a pilot program by design: The Treasury may, or may not, establish automatic enrollment during the pilot phase (2025–2028), which could significantly affect uptake among eligible children.

✅Final Thoughts Outside of opening this account for newborns for the 🎁 free money, these accounts are:

• 🔒 More restrictive and complicated in many ways than alternatives like the Roth IRA and 529 plan.
• ❌ Missing big tax incentives — the main benefit is deferred tax on growth with long-term capital gain treatment… but that can often be achieved with a regular brokerage account without these restrictions.

 📌Let the planning begin: Please keep the “quick questions” coming — but let’s also keep the conversations going until we’re confident we’ve landed on the best possible answers and strategies. Your financial plan is more than a number — it’s your roadmap and should include tax minimization planning

 🚀Seems like this is another call to action, no wishful thinking, let’s not say “I wish I had…”,  and as always

 Feel free to search our website for some of our complementary resources or get in touch:  Contact us if you have tax concerns, tax minimization questions or want to discuss the next steps for your business success and financial goals.  Use our search box 🔎for those posts specific to tax minimization, business planning, business best practices, casualty losses, etc. and see what “pop’s” up. Here’s a link to other blog posts.