Robert Brokamp

The after-tax contributions that you put in to fund the accounts won't be taxed when distributed.

And you could get a contribution from Uncle Sam.

So U.S.

citizens born between January 1st, 2025 and December 31st, 2028 are eligible to receive $1,000 from the U.S.

Treasury that gets deposited into the account.

All right, what are some of the downsides?

Well, first of all, limited menu of investments.

The only investments available in Trump accounts will be low-cost index funds, and the providers haven't yet been determined.

There are contribution limits.

Families, friends, and employers can contribute up to $5,000 per year per child.

Contributions by individuals are not tax deductible.

There are some early withdrawal prohibitions.

Basically, the money must be left in the account until the beneficiary turns 18.

Another downside of Trump accounts is that there are penalties on non-qualified withdrawals.

So once the child turns 18, the account essentially becomes a traditional IRA, which means the withdrawals of earnings will be taxable at any time.

But withdrawals before the age of 59 and a half will be assessed a 10% penalty, though there are some exceptions that apply to all traditional IRAs, such as for qualified higher education expenses and first-time home purchases up to a limit.

Like some of these other accounts, they're irrevocable and loss of control.

So at age 18, the account owner can use the money however they wish.

And then the final downside is just that there are some lingering unknowns.

Not all the details of Trump accounts have been worked out yet, such as which financial services firms will actually be holding these accounts.