Positives and Negatives for Trump Accounts

There is a common saying: “There’s no such thing as a free lunch”, but that might not be true. On June 9th, 2025, sitting in the White House, President Donald J. Trump and several other business leaders announced the new creation of “Trump Accounts.”

Trump accounts are established to create a better future for children, covering expenses such as college tuition and taxes. Except that only U.S. citizens born between January 1, 2025, and January 1, 2029, will receive the Trump accounts. Each newborn is given $1,000, which becomes accessible at the age of 18. At 18, they can only use 50% of the money, and it must be used for educational purposes. Once 25, they can use 100% of the money, but still only for educational or purposes beneficial for the future, also known as “qualified expenses.” When the children turn 30, they are finally allowed to spend it however they prefer. Even though Trump’s accounts are annoying sometimes, as you can only spend it on “qualified expenses” until 30, they still contain many benefits.

Trump accounts allow kids to remain tax-free until they withdraw money from the account. $1,000 may seem little compared to the constant inflation or money needed to pay for college, “Trump accounts can be a great complement,” says Jaime Eckels, a financial planner and wealth management partner at Plante Moran Financial Advisors. But even though free money sounds wonderful, it is a frustrating process to go through to obtain it.

Trump accounts may seem beneficial at first glance, but there are possibly better options to adopt. When children turn 18, the Trump account essentially converts into a traditional IRA. It follows the same rules as traditional IRAs, including only allowing withdrawals related to college or for purchasing a home. According to Ann Reilley, CEO of Alpha Financial Advisors, Trump accounts, “[are] not very attractive. It just seems like they’re complicating things for no reason.” And Reilley is true: Trump accounts have limited long-term savings, more restrictions, and add a 10% tax to any withdrawal before turning 30 that does not fit the “qualified expenses” criteria.

All in all, Trump’s accounts have their advantages and disadvantages. It means you are allowed free money, but you can only access it after you turn 18, and can only use it for educational purposes until you turn 30, which raises the question: Is “free” always better?

Sources:

https://finance.yahoo.com/news/heres-how-the-new-trump-accounts-work–and-why-financial-experts-dont-love-them-150126358.html

https://www.cnbc.com/2025/07/08/how-trump-accounts-work.html

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