I thoroughly dislike that they are called “Trump accounts”. That goes beyond politics and beyond everything else, regardless of political positioning in the spectrum, I’m very annoyed with “Ramesses II” plastering his name in all the monuments.
With that out of the system, I just opened the 530A account for my daughter. This accounts were launched on July 4th, and basically it’s an IRA account for kids under 18.
Kids that are 17 can still open it, as long as they turn 18 next year.
Parents, grandparents, uncles, aunts, friends, anybody can contribute, and the account can get up to $5000 a year.
That money grows free of any tax, including capital gains. If you buy a stock that takes the elevator and you want to collect earnings on said stock, you can do it, and not be taxed, as long as the money stays in the account.
Once the kid turns 18, the account transitions a traditional IRA, but it can be rolled to a Roth IRA (IMO the single most important retirement account we have)
A 530 A account does not conflict with a 529, it is possible to have them both.
There are a lot of benefits to this account, and it can significantly simplify retirement planning for the next generation. I do believe that it’s important to look beyond the name and ponder what it can do for our kids.
