130: Trump Accounts Explained: What Every Parent Needs to Know Before They Open One

Trump Accounts are making headlines, but do they actually benefit your child, or are they just political noise? In this episode, Jessica and Brandon break down everything you need to know about the proposed Trump Accounts: who qualifies, how the accounts work, what happens to the $1,000 government seed money, and how they stack up against 529 plans and UTMA accounts.

You'll learn:

• Who is eligible (birth dates, citizenship requirements, and what you might be surprised to find out)
• How compound interest on $1,000 plays out over 18 years
• Why Brandon and Jessica say "take the free money — but don't put another cent in"
• Which accounts are actually better for your child's future
• The one major restriction that makes this account less useful than what already exists

Whether you're a new parent, expecting, or just trying to stay financially informed in a chaotic news cycle, this episode gives you the unfiltered facts, and yes, a few strong opinions, so you can make the best decision for your family.

New episodes every Wednesday!

Subscribe to The Sugar Daddy Podcast newsletter

Explore The Sugar Daddy Podcast Stan Store — Downloadables, tools, and more to level up your money game together!

Head over to our YouTube channel to catch this episode in full video form.

Apply to be a guest on the show.

You can also email us at: thesugardaddypodcast@gmail.com

Connect with us on Instagram
We’re most active over at @thesugardaddypodcast

Chat with Brandon
Want to work together? Learn more about Brandon

Book a free 30-min call to see if it's a fit.

Show us some love, hit subscribe, leave a five star rating, and drop a quick review!

Money, relationships, and the mindset to master both. Hosted by financial advisor Brandon and his wife Jessica, The Sugar Daddy Podcast breaks down how to build wealth, unpack old money beliefs, and have real conversations about love and finances. Their mission? To help couples and individuals grow rich in every sense of the word: emotionally, relationally and financially.

...

Transcript

Why Trump Accounts Matter

Jessica 0:00

In today's episode, we're tackling something that's getting a lot of attention in the personal finance world, and that is Trump accounts. So in today's episode, you're going to learn who qualifies for them, how the account actually works, how they compare to 529 plans, and what parents should actually do to open them or not open them. Stay tuned.

SPEAKER_02 0:22

Sugar Daddy Podcast, yo. Learn how to make them pockets grow. Financial freedoms where we go. Smart investments, money flow.

Jessica 0:33

Hey everybody, welcome to the Sugar Daddy Podcast, where we help you build a clear financial plan so you can feel confident and in control of your money. Welcome back to our OGs. If you've been here a while, thank you for tuning in every Wednesday. And if you're new here, we hope you'll stick around because we have a good time every Wednesday wherever you are listening to your podcasts.

Brandon 0:56

Hey, babe. What are we talking about today?

Jessica 0:59

Ugh, I don't even want to say the word, but today we are talking about Trump accounts.

Brandon 1:05

Yeah, if you guys are new, um, we don't keep it a hidden secret. We are not Trump supporters, never have been, never will be, and to be honest, don't prefer not to be even associated with those who still support this man. However, we are going to talk about Trump accounts because it is something that he is currently proposing. And we want you guys to at least have the details to understand from a financial standpoint what these are and how they could be potentially beneficial.

Jessica 1:32

Yes, because even though it has his name in the title because he's a raging narcissist, uh, there could be financial benefits. So we do want you to have the information, and then, you know, I like to say, do with that information what you will. So we're here to educate and to answer some of the questions, maybe dispel some of the things kind of going around about them and educate you. So that's what today's episode is for, regardless of what line you're on.

Brandon 2:03

And I also do want to kind of start the episode with this is not the first time that something of this nature has been proposed.

Jessica 2:11

Okay. Sounds new. Sounds new to the people.

Brandon 2:14

It is not new. So let's, I mean, we'll go ahead and get into it. So I won't even, I we'll talk about that as we get into it.

What A Trump Account Is

Jessica 2:19

Okay, where do you want to start?

Brandon 2:21

Uh basically, first and foremost, like what is the Trump account? And to kind of simplify it as best as possible, it is basically a government uh the investment account for a child. So basically, what they're looking to propose to do is invest initial$1,000 from the government. When I say from the government, I don't even like that term because the government isn't having money. It's our money. Yes.

Jessica 2:43

But the government is mismanaging our money at all times. But it's going to Under all administrations, let's be clear.

Brandon 2:49

Air quotes the government is going to deposit$1,000 into an investment account for a U.S. born child, a citizen. Now, the reason I was saying that this is not the first time that this ever been proposed because there has been proposals for this in the past, and even, you know, as recent with uh Corey Booker trying to do baby bonds, something similar to this as well. So I don't want the people to think that, like, hey, I have a negative take on this because I think there could be some benefits, but this isn't some nuanced new thing that Trump came up with. Like, let's be honest about this. This has been proposed numerous times, just unfortunately has not actually been put into law and passed, unfortunately.

Jessica 3:28

Okay. All right. So what is the Trump account?

Brandon 3:35

I'll say it again. The Trump account is an investment account that is being opened by the government for a, you know, a newborn child, and they're going to automatically deposit$1,000 into the account.

Jessica 3:47

Okay. But is it like an IRA?

Rules Limits And Allowed Uses

Brandon 3:49

No, it is not. Well, it has So that's what I'm asking. Okay. All right. So it has some similar features of different accounts, all right? Okay. So the money's going to be deposited into the account. And the problem is here is that we actually don't even have all the details yet.

Jessica 4:02

Because it's not even available.

Brandon 4:03

Correct. You cannot currently enroll in it, and all the details have not been finalized. But as far as proposals that have been put out there, is that the money would be growing tax deferred. That's the idea behind it, hopefully, because if not, then you know it's missing some benefits there. But um, the idea here is that it's uh the there's the child will invest, the parents can also invest up to$5,000 into the account.

Jessica 4:27

Is that$5,000 a year or like total ever in its lifetime?

Brandon 4:33

$5,000 a year is what they're proposing now that you can potentially put into the account. Okay. But the account has a restriction that you wouldn't be able to access it until you're 18 years old. And the idea behind that is that it does have some flexibility in regards to what it could potentially be used for. Um, main thing that you know most people think about is educational expenses, but it also could be potentially used for like a first-time home purchase. And they've even had some proposals out there where it could possibly be used for starting a business. But the main one that people are kind of thinking of is the education aspect.

Jessica 5:01

Okay. So, but we already have accounts for education. I 100% agree with you because For those of you driving or walking and not seeing my face, my face is one of confusion right now. I'm like, wait, it's called a 529. What's happening?

Brandon 5:17

So, like the I I'm going to infer some of like my thought process of maybe what I think they're thinking behind it. Okay. But the idea behind it is that, you know, so many people um are so far behind when it comes to financial literacy and getting a you know a head start on the investment aspect. So the idea is to kind of start an investment account so that people start to get money into the market so they can benefit from compound interest. So that's one of the premises behind it as far as why they're I think they're trying to put it in place. Now, what I actually think really is is that it's kind of putting a band-aid on a bigger problem that actually is the you know wealth gap disparity. Where it's kind of one of those things where, you know, there's a obviously there's a wealth gap, and there's a we have episodes on that, but there's a whole issue behind that. But the idea is that they're trying to give breadcrumbs instead of actually, you know, the loaf of bread to the people. Because there's a lot of issues in regards to why there's a wealth gap, which is one income in general, in regards to how people are paid, how salaries are not keeping up with the increased cost of goods. So that's a bigger issue. But what we're talking about is this is that the idea behind this is to get people starting to invest early. And hopefully, you know, the way that we would look at it is that you start to have these conversations also with your child at a young age, as far as looking at these accounts as they get older and having that financial literacy conversation that we really need to have for so that they understand this at an early age.

Jessica 6:41

Well, so I'm seeing a couple of things because I feel like we already know that most people don't invest. We know that the majority of people don't have financial literacy. We know that or aren't financially educated. We know that people are underpaid. We know people are living paycheck to paycheck. We know that the cost of living, the cost of goods, inflation is not keeping up with the cost of wages. So there's all these problems happening. And now we have this account that is already an existing investment account, right? Because you can go and open investment accounts for your children. Hold on, let me finish. And then on top of that, we now have Trump's name on it, which is also going to alienate people from wanting to open this account because people are going to be like, no, I don't want to deal with him. I don't trust anything he does, right? Whatever your ideas are of him. So you've got all these, this huge group of people that's already struggling, already lacking the education needed to understand what investing is, how compound interest works, et cetera, et cetera. And now you slap the man's name on it. So, like, aside from the fact that it's only for a very limited amount of people, right? So people, babies born between January 1st, 2025 and December 31st, 2028. So that, like, our kids aren't eligible.

Brandon 8:07

Yeah, that's as of now, like I said, there are like I feel like there's just so much wrong. The final website. So here's the thing is like, in all honesty, I we're doing this because if it does come to fruition, we want you to have the information. But the reality is that this could possibly not come to fruition just like all the other proposals beforehand, and then also all the empty promises that Trump is his entire, you know, presidential history has been full of.

Jessica 8:29

I mean, it's our money, right? So like it's our thousand, thousands of dollars in tax dollars. So if somebody between this three-year age range right now takes the money for when it's available and puts the thousand dollars in, what would happen if this doesn't come to fruition, but people have, I mean, I guess it's like free government money that could also just go away at any point.

Brandon 8:54

So I'm gonna make sure I understand your question.

Jessica 8:56

Okay.

Brandon 8:56

So what I'm saying is that currently you cannot open this account. It does not exist. All right.

Jessica 9:01

I'm talking about for when it is available.

Brandon 9:03

When it is available, hopefully, well, when it is available, first and foremost, I would say it's a free thousand dollar or quote unquote free thousand dollars. So I would encourage every parent who has an eligible child to go ahead and open up the account and take the thousand dollars.

Jessica 9:18

So if you have a child between uh January 1st, 2025 and December 31st, 2028, as of right now.

Brandon 9:24

As of right now, I would once the account is available and you would have to probably proactively open up the account. So keep it.

Jessica 9:32

Which maybe there's gonna be instructions coming on this.

Brandon 9:34

But I would open up the account, and the account is gonna be restricted to low-cost um stock market stock market index funds, which I think is also beneficial. So it limits the complexity of like, you know, diving into individual stocks or cryptocurrencies or anything of that nature. That's not gonna be an option as of right now within that account.

Jessica 9:52

Oh, you can't buy his crypto.

Brandon 9:54

We shall see. But um the idea behind that.

Jessica 9:59

Like raging on the inside already, and we're like four minutes into the episode.

Brandon 10:03

The idea behind it is that it is the investment account that is the basic, you know, investing strategies that I think most people should utilize. So it keeps it simple and gives you a free thousand dollars. Okay. That is honestly the most beneficial part of it right now. Now, based upon the other accounts that you have available to you that you can simply open up on your own and also the track record of this current administration, I would never put any additional money into this account personally, because the benefits that come with this account are available to you in other accounts that not are associated with the government.

SPEAKER_02 10:38

Right.

Brandon 10:39

And also this administration. So, you know, we're going to get into some more details, but at first, I would just open the account, take the$1,000, and you have to leave it in the account. You can't, you know, take it out, but invest it accordingly in that account and just have that thousand dollars there. And anything else that you otherwise would have contributed to that account, open up another account and contribute there. Because the first thing I always tell people is what is the purpose of the account that you're opening for your child? Because you have to determine that first. Because, for example, if you're someone that is not all about your child going to college, you don't really necessarily think that's a path that they should go or are going to go, whatever maybe, whatever your reasoning is, then you probably don't want to open a 529 plan, you know, because that's yeah, doesn't make sense. Right. You might want to look at, you know, maybe an Utma account, a uniform transfer to minor account as an investment account for a child instead. But you always got to start out with the purpose. So, for example, with us, we have multiple accounts for our children, and it's because we have multiple purposes. So we have a 529 plan that can be used for educational expenses for our child, and there's benefits to that. But then we also do have the UTMA as well, because there's benefits to that as well. So, like I said, you really need to understand what the accounts, the pros and cons of each account, and then based upon your situation, what the goal you're trying to achieve determines on what you know avenue or both, you know, a little bit of both that you take.

Jessica 11:54

Right. Okay. I think that's sound advice. I mean, my take as a non-licensed professional is I don't want to give the government any more money because I'm already ticked off every single time I see all the money they take out of all of my paychecks.

Brandon 12:10

I 100% agree. So no, no, thank you. Because it also, too, all right. So if you're going to look at the Trump account as an educational account, one, if you want to put more money into an educational account, you have limits with the Trump account. Whereas the 529 plan has higher contribution limits. Right. Now, also, too, is that um with a 529 plan, let's say, for example, you want to send your child to a private school, K through 12. You can use a 529 plan to pay for educational expenses for K through 12 private schools.

SPEAKER_02 12:41

Oh.

Brandon 12:41

You don't have that option in the Trump account as written now because you're not able to access it until 18 years old.

Jessica 12:47

Right.

Brandon 12:48

And then so, like, honestly, just like everything else that Trump kind of does, he does a crappier version of it. And once again, he creates another account that he's trying to do something, but there's already an account that exists that's better. Once again, he's a mediocre white man doing mediocre things.

Jessica 13:06

Mediocre feels generous.

Brandon 13:08

That is very true. He's wealthy, so that kind of that kind of like levels it up because he has money. That's without the um stolen money. That's about it.

Compound Interest And The Real Math

Jessica 13:15

Stolen money. Okay. Um, so let's talk about what a thousand dollars looks like once compound interest does what compound interest does.

Brandon 13:24

Well, I mean, if you were to put the thousand dollars in, like I said, I wouldn't contribute anything else. But if you were looking at, you know, roughly a 7% annual rate of return. Which is conservative, right? Yeah. You could be looking at almost$3,500 if you started the account when the child was born to when they're 18 years old. And that's just compound interest. That's not contributing anything else additionally.

Jessica 13:44

I mean, you're not going to do much with$3,500, especially 18 years into the future.

Brandon 13:50

Mostly if it's going to use them for college. Right. So you can the idea behind it, like I said, I really think that like when pe when they roll out these types of, you know, quote unquote financial literacy or attempts to help people financially, it's like they need to also provide the more important part, the education. Where it's like, okay, you have a thousand dollar account, you know, let's contribute something additionally each, you know, each month.

Jessica 14:15

And show them what that will do, how compounds are you?

Brandon 14:18

Even if it's just like we've talked about this before, even if it's just$25 a month,$50 a month,$10 a month, the contributions on a continual basis each month, along with compound interest, can make a huge difference in, you know, 18, 20 years.

Jessica 14:34

Right.

Brandon 14:34

But like I said, I would never contribute anything additional to this account, as we said, because right now they take Social Security out of our check every uh you know, every pay pay.

Jessica 14:43

Uh don't get me started.

Brandon 14:46

More than likely, we're not going to see that.

Jessica 14:48

Nope. You're welcome. You're welcome.

Brandon 14:49

You really need to focus on the idea, like I said, like the idea of taking the free money, investing it, but then opening up a different type of account that actually makes more sense for you and you have 100% control.

Jessica 15:01

Yes.

Brandon 15:01

Also, too, you have a lot, you're probably going to have a lot more options as far as what you can invest into these other accounts.

Jessica 15:05

Right. Which again, there's a portion of financial education that has to go with that to know what the other accounts are, what compounding is, how do you actually invest so that you're not just putting money into an account and it's sitting there in cash. You're actually buying, you know, your assets with it. I mean, there's so much.

Brandon 15:28

Yeah. That like I said, the only benefit of this account, in my viewpoint, and I will admit, I am 100% biased because I cannot stand this man and I don't trust him. However, if you just look at the details of the account and I take my bias out of it, the only benefit of the account is the free money. Because anything else you can do in other accounts. There's nothing that this account does that you could not do somewhere else.

SPEAKER_02 15:51

Right.

Brandon 15:51

And I want to I want to, you know, really make sure people understand that. This account is not something special. The only benefit is the free money.

Jessica 15:59

Free. Our tax dollar money. Yeah. So I mean, like Brandon said, if you have a kid that qualifies from those dates, take the thousand dollars and then open the account and let it sit there. And don't forget about it.

Brandon 16:12

Here's one thing I want to point out where some people may view it as a benefit. I also I may I don't necessarily view it as a benefit, is that this account is available to anyone. Anyone that has a child that's eligible. So what that means is that someone that is a multimillionaire or a multi-billionaire still has access to this account.

SPEAKER_02 16:32

Yeah.

Brandon 16:32

Which I think is nonsense. Because I understand about being equal, but let's be honest, that doesn't make sense. If your parents are already billionaires, you don't need to thousand dollars.

Jessica 16:44

Because citizens.

Brandon 16:45

The other um, the other proposals that have happened more specifically, Corey Booker's, I want to believe it was called like baby bonds, it was kind of tiered based on your income. So for example, those households that had lower income would have received more money than those houses that have higher incomes.

SPEAKER_02 16:59

Right.

Brandon 17:00

Which I think if you are a good person and you have a higher income than say somebody else, then you've you understand that.

Jessica 17:07

Yeah. Well, that's just, but you know, here's the thing about that. We are also the people that are like, yes, I would love my tax dollars to go to feeding every kid in public school. Yes, I want my tax dollars to fix the broken roads and to pay teachers more and and and and no, I don't want my tax dollars going to funding unnecessary wars. That I mean, let's we're gonna let me woos out. We're gonna really try to stay on track here. We are the people who want our tax dollars used for good for the betterment of our communities, for the betterment of our children, for the betterment of people who don't have the things that we have not to fund billionaires and corporations. Point blank, period, hard stop. That is our stance. So, yes, please use my tax dollars to feed all the children in public schools. Please do that.

Brandon 18:00

Yeah, because once again, I think it's one of those things where like we're trying to give you the information, but this is also a pod, it's our podcast. So we're gonna give you our our personal take. It belongs to us. If you don't like it, don't listen. I'm gonna say if you don't like it, don't listen. But the bigger problem is let's just say, looking at it from an educational standpoint to help pay for higher education. This is not the way to do it. There is a much better way to do it. And there's plenty of countries in uh across the world that have figured out how to create to provide free college to their, you know, citizens. So there's a there's there's things that we could do better.

Jessica 18:31

There are things that we're we could be learning from other countries. Yeah.

Brandon 18:35

So or there or you know, as I said, like I think this is just I'm gonna give you crumbs and hope you shut up while I'm doing all this terrible stuff over here. And that's the reality of it.

Jessica 18:46

And I'm gonna put my name on it. Now, like I said, you can again open an account that doesn't have to it is our tax dollars, so take that free$1,000.

Brandon 18:52

But like I said, if you're looking to, but if you're actually looking to be, you know, fund an investment account for primarily education expenses, don't do this one. Do the 529 plan. It's much more beneficial, has a lot more benefits, and it's yours.

Jessica 19:05

And we have an entire episode about it.

Brandon 19:07

Yeah. And if you're looking for something that's if you're looking for something that's a little bit more flexible in regards to what you could use the money for, you can use a variety of different types of custodial brokerage accounts, you know, like we already mentioned the UTMA. If your child is of a certain age and they have um um earned income, like you know, they have a part-time job, then you can also open up a custodial Roth IRA for them, which is extremely beneficial. But like I said, the only drawback is that your child does have to be working in some form or fashion and bringing in money.

Jessica 19:31

Working legally, yeah.

Brandon 19:32

And they don't have to the thing is they don't even have to necessarily contribute their own money. You can the child makes$5,000 for the year, you can you could put the$5,000 in. You know? But the idea, like I said, is take the free money, then look elsewhere.

Jessica 19:46

Yeah, don't forget that you opened it, right? Don't forget that you opened the account, but uh do not use this as your primary investing vehicle.

Brandon 19:53

No, I wouldn't advise that. And yeah, also just like you know, like we still don't have all the details, so it could change, it could not exist, who knows? But it is something that has been talked about, you know, extensively enough that we thought it made sense to go ahead and do an episode just to provide you with the information and also let you know, hey, keep your eyes open for any information that comes through that hey, this is actually enacted, because if you're eligible for it, then you definitely want to take advantage of it.

Eligibility Checklist And Practical Recap

Jessica 20:21

Right. So it's not available yet as of the requ this recording date, which is the middle of March 2026. Um but we'll keep you posted. You can also, you know, subscribe to um our social media, so we'll make updates there as we learn more. But there are better ways to invest, but take the free money if you qualify. So just again, as a recap, um, your child has to be born between January 1st, 2025 and December 31st, 2028. That is as of right now. They must be a US citizen, they must have a social security number, um, and they have to be born after the program begins within those dates. So take that for what it is. Uh, you know, the best thing that you can do for your child is start investing for them early because time in the market is really the most valuable gift, along with the financial education. So you know that we talk about this all the time. But talk to your kids about money, talk to them about finance, talk to them about investing, compounding. Don't make it intimidating. It doesn't need to be a sit-down family meeting, but open the conversation for them to feel comfortable asking about money and starting to learn about and understand that things have value and that things have a cost and that not everything is priced equally.

Brandon 21:42

Also, here's one more thing that you know the wording I think is the way that it is on purpose is that your child must be born in the United States, not just a US citizen.

Jessica 21:56

Oh.

Brandon 21:57

So if you were living abroad and you're A US citizen, like you and your spouse are US citizens, but you have a child abroad who technically would still be a US citizen.

Jessica 22:06

Like me.

Brandon 22:07

Yes, you might not be eligible for the account, which is completely in line with their BS when it comes to immigration.

Jessica 22:17

Well, you you heard it here first. Take the free money, don't contribute anything else. We would advise against it.

Brandon 22:26

Yeah, we're gonna provide you with guys with good advice, but you're also gonna get our strong opinion.

Jessica 22:29

So Yeah, we have a lot of those. Um Yeah, I mean, this is all we have. They haven't they haven't released more information. So take it for what it's worth. You now have the information. Keep an eye on you know things as as things develop. If you have a child that qualifies, personally, we do not. So, you know, we're just keeping an eye on things because this is what we do for the podcast. But hopefully take it with a grain of salt. We will talk to you next Wednesday when we're not boiling anymore. Thanks for listening. We'll talk to you soon. I know it's really impossible these days. All right, bye, friends. Don't forget, Benjamin Franklin said, an investment in knowledge pays the best interest. You just got paid. Until next time.

SPEAKER_02 23:16

Sugar Daddy Podcast, yo. Learn how to make them pockets grow. Finance and freedoms where we go. Smart investments, money flow.

Wrap Up And How To Follow

Jessica 23:25

Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review, and share this episode with your friends, family, and extended network. Don't forget to connect with us on social media at the Sugar Daddy Podcast. You can also email us your questions you want us to answer for our past the sugar segments at thesugardaddypodcast at gmail.com or leave us a voicemail through our Instagram.

SPEAKER_00 23:54

Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based upon your own personal circumstances. We should take independent financial advice from a license professional in connection with or infinitely research and verify any information you find in our podcast and which you rely upon, whether for the purpose of making an investment decision or otherwise.