Robert Brokamp

What are the downsides of this?

Well, first of all, you own the account, so you're going to owe all the taxes.

Any dividends, interest, capital gains, they're going to be reported on your tax return, right?

And there are no special tax benefits.

Custodial accounts, as well as some of the other accounts we're going to discuss, they have some tax advantages, but not so with this case.

And then the other one is probably more of a consideration than a downside, and that is just make sure it's factored into your estate plan.

If you open this account and you want it to go to someone specific, make sure that's in your will, or maybe make it a transfer on death account so it goes to the intended beneficiary if something happens to you.

Let's move on to Trump accounts.

These were created by the One Big Beautiful Bill passed last year.

These Trump accounts, also known as 503A accounts, they're tax-deferred accounts that could be open for anyone with a Social Security number who will be younger than 18 by the end of the year.

The accounts can actually be opened now by filing Form 4547 with a 2025 tax return, or by completing the form at TrumpAccounts.gov.

However, the accounts can't be funded until July 5th, 2026.

Just as an aside, while these accounts are new, the idea has actually been around for many years with some bipartisan support.

A previous iteration was called Baby Bonds, and I was actually part of a couple of discussions about how they should be invested.

I'm personally happy to see that these accounts are now available, though they're a bit more limited than I would have preferred.

But we'll get into that.

Let's get into the advantages of these accounts.

Tax-deferred growth.

The investments grow tax-deferred.

Withdrawals of earnings are taxes of ordinary income.