Started going live. I set them up for my kids. My BIL and SIL set them up for their kids. They sent me links so I could contribute. However; the links appear to only allow me to make one time contributions. Has anyone figured out how to set up recurring contributions for friends and family? Thanks
Trump Accounts
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Last: 10 days ago by TxAger
What's the point of a Trump account over other accounts for kids?
Tax deferred growth then Roth IRA conversion at 18
Basically it's a "Roth" like account they can have without an income limitation like the current IRA structure. And it is $5000 yearly contribution. Invested only in an S&P500 ETF that is locked away until they are 18.
This is why I'm just sticking with the UTMAs. No restrictions on how much I can contribute and what can be invested in.
Ragoo said:
Started going live. I set them up for my kids. My BIL and SIL set them up for their kids. They sent me links so I could contribute. However; the links appear to only allow me to make one time contributions. Has anyone figured out how to set up recurring contributions for friends and family? Thanks
Upper right on the app there is a drop down menu. In that you can find an option fore recurring contributions.
Ragoo said:
Basically it's a "Roth" like account they can have without an income limitation like the current IRA structure. And it is $5000 yearly contribution. Invested only in an S&P500 ETF that is locked away until they are 18.
Ya no thanks.
It's nothing more than attempting to add another forever bid to a massively overvalued market.
No diversification means I can likely outperform in accounts already available that give me freedom to operate how I wish.
I am not asking for opinions, I am asking a functional question with the mechanisms of the app.
Thanks
Thanks
I see this for my kids, but not with the links my BIL and SIL sent me for their kids.Fenrir said:Ragoo said:
Started going live. I set them up for my kids. My BIL and SIL set them up for their kids. They sent me links so I could contribute. However; the links appear to only allow me to make one time contributions. Has anyone figured out how to set up recurring contributions for friends and family? Thanks
Upper right on the app there is a drop down menu. In that you can find an option fore recurring contributions.
Ragoo said:
I am not asking for opinions, I am asking a functional question with the mechanisms of the app.
Thanks
Well you posted in a message board rather than go to the application and figure it out.
Expect more opinions than functional information.
My apologies, I figured since you were doing it you had determined the advantages.
It's free money, foolish not to take it.
So when it's converted to a Roth, they can withdraw tax free? Is that correct? I thought I read that the kids had to pay taxes when they withdraw like a normal IRA?
this is not true, thanks for your input thoughATM9000 said:Ragoo said:
I am not asking for opinions, I am asking a functional question with the mechanisms of the app.
Thanks
Well you posted in a message board rather than go to the application and figure it out.
Expect more opinions than functional information.
mavsfan4ever said:
So when it's converted to a Roth, they can withdraw tax free? Is that correct? I thought I read that the kids had to pay taxes when they withdraw like a normal IRA?
It converts to a traditional roth at 18. You'd have to do a roth ira conversion which would come with whatever tax implications exist at that time.
Heineken-Ashi said:Ragoo said:
Basically it's a "Roth" like account they can have without an income limitation like the current IRA structure. And it is $5000 yearly contribution. Invested only in an S&P500 ETF that is locked away until they are 18.
Ya no thanks.
It's nothing more than attempting to add another forever bid to a massively overvalued market.
No diversification means I can likely outperform in accounts already available that give me freedom to operate how I wish.
Haven't paid a lot of attention to these, because I've no potential to use them. But I was completely unaware of that fact, Geez, kind of stupid. Even most company 401k plans have a whole lot of options to choose from.
I think you guys have completely missed the point of the program.
you don't think having little Joey dabbling in 3X inverse ETF's is the way to go?
Fenrir said:mavsfan4ever said:
So when it's converted to a Roth, they can withdraw tax free? Is that correct? I thought I read that the kids had to pay taxes when they withdraw like a normal IRA?
It converts to a traditional roth at 18. You'd have to do a roth ira conversion which would come with whatever tax implications exist at that time.
Th use of "Roth" is what is confusing me. You said "Roth Ira" and Raggoo said it's a "Roth like account."
You are saying it converts to a traditional IRA, not a Roth IRA, correct? That is my understanding, meaning that withdrawals will be taxed. And you are saying that if you convert to a Roth IRA, then the applicable taxes for that conversion will apply, correct?
My understanding is that it converts to a traditional IRA, not a Roth IRA. I just want to clarify in case others were confused like me from the multiple "Roth" references.
Thanks for all the info on this thread.
A Trump account is basically a traditional IRA for minors with limited investment options. I would say the ideal participant is someone that wants to save money for their kids' futures but doesn't want to spend a lot of time figuring out the best investments. If your kid is eligible for the free $1k there is absolutely zero reason not to take it and at a minimum let it grow.
Once the kid reaches 18, it will transition to a traditional. After that, they will have the option to convert it through normal conversion methods if they would prefer it to be a Roth however it is not required. There are currently tax implications for that action and will almost certainly be tax implications in the future. It could easily just stay as a traditional IRA and they could move it to whatever brokerage they want.
Once the kid reaches 18, it will transition to a traditional. After that, they will have the option to convert it through normal conversion methods if they would prefer it to be a Roth however it is not required. There are currently tax implications for that action and will almost certainly be tax implications in the future. It could easily just stay as a traditional IRA and they could move it to whatever brokerage they want.
Not a financial advisor in any way.
My understanding is that it converts to a traditional IRA at 18
HOWEVER: Any dollars you contribute transfer as tax free contributions to a Roth IRA. You are only taxed on the growth.
Example: You have put $25,000 over time. Account increases to $30,000. You only pay tax on the $5,000 increase if you convert the account to a Roth.
My understanding is that it converts to a traditional IRA at 18
HOWEVER: Any dollars you contribute transfer as tax free contributions to a Roth IRA. You are only taxed on the growth.
Example: You have put $25,000 over time. Account increases to $30,000. You only pay tax on the $5,000 increase if you convert the account to a Roth.
Ok that's what I thought. Thank you both.
Diggity said:
you don't think having little Joey dabbling in 3X inverse ETF's is the way to go?
Exactly. It's designed to get people who wouldn't normally invest in their or their children's futures a kickstart.
You give those people the option to immediately dump it all on Gamestop for some chicken tendies, they are going to pull that slot machine arm.
For those curious I got my answer.
1) contributions being set up on a recurring schedule can only be done through a linked bank account
2) contributions made by friends and family can only be done via debit card, therefore no recurring ability.
1) contributions being set up on a recurring schedule can only be done through a linked bank account
2) contributions made by friends and family can only be done via debit card, therefore no recurring ability.
Ragoo said:
Basically it's a "Roth" like account they can have without an income limitation like the current IRA structure. And it is $5000 yearly contribution. Invested only in an S&P500 ETF that is locked away until they are 18.
Here are the approved list of funds for a Trump account
iShares Core S&P 500 ETF (IVV)
Vanguard Total Stock Market ETF (VTI)
State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)
iShares Core S&P total U.S. Stock Market ETF (ITOT)
https://home.treasury.gov/news/press-releases/sb0551
Trump accounts can't be fully exploited unless the kid doesn't touch them until their 50s at a minimum. If you are expecting the money you put in there to be used for college or a down payment on their first home, you likely won't get much value from them vs other savings options.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
in the app it says the investment is automatically made in SPYM - which based on putting some money in last night is exactly what happenedKansas Kid said:Ragoo said:
Basically it's a "Roth" like account they can have without an income limitation like the current IRA structure. And it is $5000 yearly contribution. Invested only in an S&P500 ETF that is locked away until they are 18.
Here are the approved list of funds for a Trump account
iShares Core S&P 500 ETF (IVV)
Vanguard Total Stock Market ETF (VTI)
State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)
iShares Core S&P total U.S. Stock Market ETF (ITOT)
https://home.treasury.gov/news/press-releases/sb0551
permabull said:
Trump accounts can't be fully exploited unless the kid doesn't touch them until their 50s at a minimum. If you are expecting the money you put in there to be used for college or a down payment on their first home, you likely won't get much value from them vs other savings options.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
I guess. But with a maximum of $90k/child and limited tax benefits, it's a relatively small tool.
$90k plus compounding growth. 5000/year to 18 and then sit on it until 55 is like $2MM without contributing another dime.P.H. Dexippus said:permabull said:
Trump accounts can't be fully exploited unless the kid doesn't touch them until their 50s at a minimum. If you are expecting the money you put in there to be used for college or a down payment on their first home, you likely won't get much value from them vs other savings options.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
I guess. But with a maximum of $90k/child and limited tax benefits, it's a relatively small tool.
P.H. Dexippus said:permabull said:
Trump accounts can't be fully exploited unless the kid doesn't touch them until their 50s at a minimum. If you are expecting the money you put in there to be used for college or a down payment on their first home, you likely won't get much value from them vs other savings options.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
I guess. But with a maximum of $90k/child and limited tax benefits, it's a relatively small tool.
$90k at age 18 will likely grow to $5,760,000 by age 59 when a person can withdraw from the Roth IRA. And that's all tax free money. That doesn't sound like a small tool to me lol.
It's essentially a way of super funding a Roth IRA for a kid early on in life. I don't know about you but I'd love an extra $5.7MM in my Roth IRA in retirement.
My comment was directed towards:
My point was that for estate planning, a $5k annual/$90k lifetime limit is far less that the existing $38k annual married gift exclusion or the $30MM lifetime gift and estate tax exclusion.
Obviously if kids leave the money invested for 65 years, it can grow to a large number. But that's due mostly to compound growth and beneficiary discipline, not due to the relatively small initial wealth transfer. And it's not unique to Trump accounts.
Quote:
This is just another tool in a generational wealth transfer estate planning kit.
My point was that for estate planning, a $5k annual/$90k lifetime limit is far less that the existing $38k annual married gift exclusion or the $30MM lifetime gift and estate tax exclusion.
Obviously if kids leave the money invested for 65 years, it can grow to a large number. But that's due mostly to compound growth and beneficiary discipline, not due to the relatively small initial wealth transfer. And it's not unique to Trump accounts.
Proposition Joe said:
I think you guys have completely missed the point of the program.
Texag5324 said:P.H. Dexippus said:permabull said:
Trump accounts can't be fully exploited unless the kid doesn't touch them until their 50s at a minimum. If you are expecting the money you put in there to be used for college or a down payment on their first home, you likely won't get much value from them vs other savings options.
The types of people who are going to exploit them to the maximum are the ones who already set up trusts for their children and grandchildren. This is just another tool in a generational wealth transfer estate planning kit.
I guess. But with a maximum of $90k/child and limited tax benefits, it's a relatively small tool.
$90k at age 18 will likely grow to $5,760,000 by age 59 when a person can withdraw from the Roth IRA. And that's all tax free money. That doesn't sound like a small tool to me lol.
It's essentially a way of super funding a Roth IRA for a kid early on in life. I don't know about you but I'd love an extra $5.7MM in my Roth IRA in retirement.
I thought withdrawals on accumulated growth of these accounts were taxed as ordinary income right?
It is. That's why you convert it to Roth at 18 as soon as possible. Then all growth is tax free.
Mmetag10 said:
It is. That's why you convert it to Roth at 18 as soon as possible. Then all growth is tax free.
Ok. I think I get it. Effectively when you convert to a Roth, you'd only pay tax on anything in the account that's @ pre-tax income.
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