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I learned something today and thought I'd share.
Many/most of you have probably heard about the "Trump Accounts", or officially, 530a accounts ... they're managed by the IRS, invest exclusively in low-cost (<0.1% ER) and basically operate the same as a custodial traditional IRA for children. I knew that they created them & that they were available for newborns, and would also come with a $1,000 kickstarter from the federal government (a la you & me & everyone else's tax money). What I *didn't* realize is that you can actually establish the accounts for ANY minor child under 18. The only difference is that their accounts don't receive the $1,000 kicker.
Politics aside, this is an outstanding opportunity for anyone with kids. Although I already have very healthy UTMA accounts for each of them, I just did the paperwork to also open these accounts for each of my children. I'll be able to add $5k/yr to those accounts, and with my wife being pregnant with DD4 (due in early December ... not sure if I've mentioned that here yet), I'll be able to create one for her later on as well. The growth on that money will be phenomenal, given that it'll have many decades to grow & double -- $5k today becomes <$150k in 50 years! The initial plan will be to max it every year for them, and as each of them approaches 18y/o & they're able to roll it over into a proper IRA account, we can do rollovers to Roth IRAs since their incomes will presumably be very low & the taxes will be minimal at that point.
Has anyone else created the accounts for your kids? I know the political & economics philosophy are fraught with arguments, but one thing that's undeniable is the benefit that this will provide to kids in their future. I'm really happy to have this opportunity to help them for the long term.
Many/most of you have probably heard about the "Trump Accounts", or officially, 530a accounts ... they're managed by the IRS, invest exclusively in low-cost (<0.1% ER) and basically operate the same as a custodial traditional IRA for children. I knew that they created them & that they were available for newborns, and would also come with a $1,000 kickstarter from the federal government (a la you & me & everyone else's tax money). What I *didn't* realize is that you can actually establish the accounts for ANY minor child under 18. The only difference is that their accounts don't receive the $1,000 kicker.
Politics aside, this is an outstanding opportunity for anyone with kids. Although I already have very healthy UTMA accounts for each of them, I just did the paperwork to also open these accounts for each of my children. I'll be able to add $5k/yr to those accounts, and with my wife being pregnant with DD4 (due in early December ... not sure if I've mentioned that here yet), I'll be able to create one for her later on as well. The growth on that money will be phenomenal, given that it'll have many decades to grow & double -- $5k today becomes <$150k in 50 years! The initial plan will be to max it every year for them, and as each of them approaches 18y/o & they're able to roll it over into a proper IRA account, we can do rollovers to Roth IRAs since their incomes will presumably be very low & the taxes will be minimal at that point.
Has anyone else created the accounts for your kids? I know the political & economics philosophy are fraught with arguments, but one thing that's undeniable is the benefit that this will provide to kids in their future. I'm really happy to have this opportunity to help them for the long term.
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