This is the Truth Network. Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well. Welcome to Finishing Well with Certified Financial Planner Hans Scheil. And today's show is IRC Section 530 Savings Accounts for Children, sometimes known as Trump accounts. And, you know, how cool that God provided this plan for children here born recently, or maybe your grandchildren, that there's going to get this $1,000 nest egg, you know. And so it's a neat thing that Finishing Well isn't just about what we leave behind.
Sometimes it's about what we put into the hands of the generation that literally is coming up of God's generation, the next one coming up. And so when you think about Moses' mom, her name was Jockpit, and she didn't have a lot of resources. And she certainly had big struggles, but yet she certainly was looking into God's plan and what his accommodation would be for the next generation. And that basket, although it was a small thing, ended up being a huge thing in God's plan. And so.
So it may seem like $1,000 is a small thing for that baby, but it could end up being a huge thing, right, Hans? Oh, it absolutely can. Yeah. Um So these things were created with a great idea and a great plan which we're going to give every kid from the moment of birth a chance financially. And we're going to open up an account.
Once we get the account open, people can contribute to it. Yeah, in a lot of different ways or from a lot of different places. Um And it's kind of interesting what's happened during the last year.
So this was an idea. that really started in the White House. And as you know, the White House can't make any laws. On their own, they have to go to Congress, and Congress has to Think of the laws. And they try to have to create laws that they can pass both houses.
And then They need to create laws that once they pass both the House and the Senate. then that the President will sign. And this thing was part of the one big beautiful bill. Um And it was just a vision. It is an idea that we're going to start a savings account for children.
And to me, it's interesting when Um Somebody thinks of an idea like The president did. Yeah, in his team. And then by the time the Congress gets done with it, And then once the Congress passes, puts it into law, or he signed it into law. then the IRS has to go to the IRS. And then the IRS That's why I put in the title, Internal Revenue Code Section 530A.
I mean, they've got to actually create something that's real, that has laws and guidelines and rules and taxes and all that kind of stuff and they did And it took them a year to do it.
So this passed in July of and you couldn't open one until July of 2026. And so one of the organizations that I belong to had a had a meeting just to inform all of us. They had their experts study the whole thing and the landscape. And back in June, And so I just decided to put out a video, and these things are out. I can tell you right now that Tom, who's on The videos with me and does this radio show occasionally.
He has a nine-year-old. A two-year-old and a baby. Pian. You know, we we assess these things in terms of Tom's Children And Tom's just like, of course I'm going to take a free $1,000. On my baby.
And his His two-year-old was born in 2024, so they're not eligible for the thousand dollars. But Michael Dell I don't know if you read about that, Michael Dell Foundation. donated six point two billion dollars that he set aside Um Where they're going to give out $250 to each kid in America. That opens a Trump account, or their parents open them a Trump account, or a 530A savings account. Um Whoever doesn't get the $1,000, but they open a Trump account, they're going to get the $250 from his foundation.
So Tom just told me the other day he opened all three accounts right after we made this video. Uh which was a few weeks ago. And then the other day, he got the $250. for his two older kids.
Well, not older, the two-year-old and the nine-year-old. Um that showed up in their account. uh their Trump account And then he put $250 in his baby's account because he wants to keep it all equal. and the thousand dollars hasn't shown up in the baby account yet. But when it shows up.
And it gives the thousand dollars put in there, he's going to put a thousand dollars On The two-year-old and the nine-year-old. That's a little complicated, but he's keeping it equal But he's getting free money. from somewhere where it didn't exist before. Wow, is there an age requirement for that One where the children get two fifty. I mean, they have to be under eighteen or they You can't open a Trump account for anyone that's eighteen or over.
But if you open a Trump account, even if you've got a fifteen or sixteen year old, this this you can get the two fifty from this other fund? Yeah. Wow. That's news in of itself, isn't it? And you know, the other thing that I was impressed is I watched a video under the same title, which you again you can get at CardinalGuy.com.
I was so impressed that Tom was talking about it simply have an app. Right? And like he you can go to this app. Mm-hmm. And and he he navigated it all through the app.
He said the app worked really well.
So you get an app for your phone and and you got your kids' savings account on them. I mean, that's slick as anything, right?
Well, it is.
Now, keep in mind the reason we're talking about Tom, because we're going to get to my grandkids in a sec. But I can't open an account for my grandkids. The parents need to be the ones opening the account.
So now if you want to do something for your grandkids You you you need to go to their parents. Who are your children? Yeah. Encourage them to open it. It costs nothing to open these accounts.
I mean, you just go on the app. You fill out their name and Social Security number and address and zip code and whatever whatever else, date of birth. Um and you put in all the information that they asked for. Yeah. They're going to open the account.
It has nothing in it, but the account's open. But as soon as that account gets open If any kids born 2024 Her before which means they're not eligible for the $1,000 from the government. They must just send something. To the Michael Dell Foundation that says, Hey, we got an open Trump account, we got a kid that's. you know, two years old or more, whatever.
And Boom, the money goes in, because Tom said it just showed up quicker than the $1,000. Yeah, that's worth listening to the episode just to find that out. Because, man, I've got several grandkids that are going to have Trump accounts before you know. That's after we get done with the show here. And I don't want to take up our time now.
uh telling you where to find it. But if you just go into the app store or whatever and you type open a Trump account. Um Something like that. It'll take you to this app. And then one of your kids, the parents.
can legally open them. No. Funny story with that is I'm up at my place in the mountains, and I am down the lower level. I'm just working constantly up there, and all the couples. including my wife were upstairs, the grandmas.
and the grandpas are upstairs. I don't know, socializing, doing whatever they do. And so I come up there to eat lunch. And after Tom and I had talked about this, And it was kind of hard for me to break in the conversation. with with the other five people, but somewhere in there I just kind of Brought it up, and boy, did I get their attention!
They found out $250 of free money. And one of my brother-in-laws he he has three babies that His grandchild count as this year has gone up by three. I mean, there's been three babies born this year, and I said they're going to get the thousand dollars each. He says, how much does this cost us? And boy, those women.
They were following me downstairs to get the app and Tom's number and. Yeah. Yeah, and I can't ever get to any of them interested in my videos or the radio show Um anyhow, I just found that kind of funny. And then Uh for my grandkids So Paik was born. December twenty fifth on Christmas twenty twenty four.
So he was born six days too early for the thousand bucks. And my son knew that. But He didn't know about the $250. Right. And I think there's some more foundations that are doing stuff or talking about doing stuff.
So open these accounts. If you've got a grandchild under 18. Um have your kids open these things or sit down with them and do it under there and do it do whatever. Um 250 bucks. will just get transferred in there.
And if they never put another dime, it'll sit at interest. can grow to the point where they're 18, it it it's going to be some money. Yeah. And especially since we're going to find out a lot more about these things by the time they retire, it'd be well more than $1,000, I'm sure. Yeah, so let me tell you something I don't like about them is basically Congress didn't know what to.
Put these things as are So so the basically it's a tr traditional IRA. or it turns into a traditional IRA at age eighteen.
Okay.
So And before eighteen, it's a wannabe IRA or something. I I don't know exactly what kind of term you're going to put on it.
Well, they called it in the in the video you guys did, you called it the growth period, which I was very curious. In the growth period, other than the fact that nobody can get at the money without just unbelievable. penalties and that kind of stuff. But during the growth period, i is there accelerated interest or anything on that?
Well, so the money is going to be invested. And we didn't get into that in the video, and today we're not going to spend a lot of time because there's only one or two. Maybe just one custodian. It's Robin Hood. that you're actually opening the account.
And they put so many rules and regulations and that nobody can make any money on these, which like I'm fine with. Um I bet a lot of banks aren't.
So that's one of the reasons. And nobody knew what they were until about May or June. when I'm talking about institutions, so. These things were kind of rushed out, and there's only one custodian, and it's Robin Hood. And there's a bunch of rules.
Like It has to be invested in companies that are in the US so they didn't. They didn't want These Trump account monies. Their child savings account monies to be invested in foreign corporations. Yeah. There's a bunch of rules around the investments, but the answer to your question, it's going to be invested in stocks.
Well, this would be a good time to remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And so if you go to CardinalGuide.com, you're going to see there are seven worries. And today's show is going to be under the IRA because these Trump... Accounts for children are IRAs, and so it's going to be under the IRA. There's a wonderful video there and show notes with all kinds of details about what we're talking about, links to everything we're talking about, the app, etc.
It's all there at cardinalguide.com. We'll be all right back. Oh, I should also tell you, as well as Hans's book, The Complete Cardinal Guide to Planning Foreign Living and Retirement, and of course, the contact Hans or Tom page, which believe me, they would love to hear from you, even if it's about this. Again, we'll be right back with a whole lot more finishing well. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM.
A registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
Well, welcome back to Finishing Well with Certified Financial Planner Hans Scheil. And today's show is the IRC Section 530 Savings Accounts for Children, or commonly referred to as the Trump Accounts. Hans?
Okay.
So in order to qualify, a child needs to be under 18.
So They need to be a U.S. citizen. and they need to have a Social Security number.
So if you meet those criteria. And the person opening the account needs to either be the legal guardian The parent or an adult sibling.
So If if if those first two don't really apply or It's a problem. And a sibling that's over 18 can open one for Who's under 18? And or a grandparent can do it if none of those other people are available, or the state child welfare agency. It's written right into the law. Yeah.
You you can go to uh Trump accounts. Or like I said, you just need to find this app. for Trump accounts. our savings accounts for children That kind of you shouldn't have any difficulty finding it. All these ladies found it up.
Up at our little get-together this weekend. No problem. But they couldn't. It really has to be the. child's parents unless they're deceased or something, right?
Correct. Correct. Right. Okay.
Now children born 2025 through 2028. qualify for A thousand dollars. from the government.
So once this account's open, the government is going to deposit one thousand dollars in there that is, no cost. To you or anybody else or the child.
So that's like free money.
So If you've got any grandchildren, Or children you care about. that fit those criteria, you might want to help their parents Get them qualified for that thousand bucks.
Okay.
Now That sent a lot of people that didn't meet the criteria, like my grandchildren. You know, they're two and a half. And five and a half, they're outside of that. I thought, well, they don't get that. I might still open them the account.
But then as I followed this, the Michael Dell foundation put six point two billion dollars toward this. And so Any children That opens an account that doesn't qualify for the $1,000, which would be 2024 and before. Birthdays from the Michael Dell Foundation, they're going to get $250.
Now there is a criteria that the zip code has to have a median income of one hundred sixty thousand Her last And so Tom is thinking, well, that's going to rule me out. And I said, Tom, I wouldn't be so sure. I said, that's a pretty high number. And so we looked it up. Yeah.
Both of our zip codes are very well to do zip codes, but they're We still anyhow, Tom qualified or Tom's kids qualified because they got that $250. In both of the older kids' accounts.
So You know, something when the when the 6.2 billion is gone, it's gone.
So and there are other organizations that talked about doing something. after Michael Dell. Just open the account. There might be some regional things. I mean, you really don't know, or things over time where there are going to be organizations.
that you need to say this or say that and they're going to put aside money. to fund these accounts.
So I'd get the account open for any grandchild under 18. Oh. Yeah, absolutely. It sounds like you're ready to do that, Robbie. I am.
Believe me, their parents are going to be getting calls from me immediately. But I did have one uh grandchild that did qualify'cause they were born uh under the threshold. And so they already s opened their account and already had them they got their thousand dollars already. Oh, so you've uh you've already got one that's gotten that.
So that's awesome. Yeah, the youngest one of all my grandchildren, they already hooked him up.
So now You can make a contribution to any of your kids once they get it open. You can put money in there. Yeah. There's a $5,000 limit, $5,000 limit annually.
So in other words if the other grandparents wanted to put Money in there, and you wanted to use the limit. I mean, you could each put in $2,500 or something or So there's a maximum of five grand that can go into these accounts. And I don't believe the thousand bucks counts against that.
So You know, so there's 5,000 bucks that can be putting in, put in. From either the parents the grandparents or others. Um You got to contribute by 1231.
So You know, in other words, this isn't something you can do in April for last year. It's not deductible.
So you you can't take this off your taxes. But the portion that goes in worth after tax money which is most of the contributions. is going to be later tax-free to the kids, who it's effectively going to be a Roth. Um Later. That makes sense?
Yes.
Okay.
So establishing a Trump account.
Well, we already talked about that. You just go to the app. Um We want to talk about withdrawal before 18. And you know, I went through Ed Slot's seminar and they studied these things. From one side, they said basically you can't take any money out of here before they're 18.
That's something that the government did. to really protect the kids' money from somebody else robbing it. Um And now the exceptions to that are excess contributions.
So if you stuff too much money in here. you can get the excess out, you have to get the excess out. Um You can roll it over from one custodian to another custodian. Um And you can transfer money in these things to an ABLE account.
So if it's you know, Able accounts, we could do another show on those, but they're For disabled Uh children Um And then death if the child dies. then there's a beneficiary on here that the money will come out. But other than those exceptions, The money is parked there and it can't be touched until they're 18 and I like that.
Okay.
Now What I want to just jump on, because some of the stuff I want to get through, like withdrawal. 18 plus is it just says the standard IRA Rules apply.
So, you know, these things in the beginning where people say, oh, people can save. And then they can go to trade school. or they can save and they can open a business or something.
Well, they sure can do that, but they're gonna have to pay tax. On the taxable portion of the money and possibly that 10% penalty because they're under 59.5%. No. There's some ways around that. When you get into what's called a possible Roth conversion.
So I don't want to get into it, we don't even have the money there yet, so let's not. Get too deep on what we're going to do after 18. But if one of the ways you'll be able to get around the IRA thing. Is to do a roth conversion or to teach this kid how to do this at 18, 19, 20 to convert it.
Okay.
Now I want to compare these real quick to Uniform Gifts to Minors Act. and Uniform Transfer to Minors Act, which is People putting money in the names of their kids, which we've done for years. Um, you know, as financial planners, is people want to get money into kids' names, it has tax implications, and one of the things I don't like. about that account is it all becomes the kids money at 18.
So I hid those accounts from my kids. I didn't tell them about them. Perfect. Because I figured, especially my oldest son, probably would have just gone in and drawn the money out. I would have probably done the same thing at 18.
But that's a downside. The upside to those Uniform Gift to Minors Act and Transfer to Minors Act is there are no restrictions at 18. You know, so if you want to pull the money out and educate them, so. It's kind of the good with the bad.
Now comparing to a 529 plan, which is is really an education fund. I actually like the 529 plan better than the Trump account. And I've opened them for my grandchildren. Because as long as you spend the money on education, you don't pay taxes on any of the earnings. Um And you also, it's not available to the kid at 18.
Like my kids couldn't go in and rob their own account at 18. They had to go through me. Yeah. We spend it all on education.
So If I was choosing between the three types of accounts, the Trump account, the Uniform Gift to Miners Act, and the 529, my choice would probably be the 529. But that doesn't mean that I'm not opening these accounts. Showman have both. And I think the Trump accounts, especially with the free money, is just something you need to take advantage of. And then once you get the account open, then we can sit down and talk about.
ways and where it would make sense to fund it and how we're going to do that. Yeah, that's beautiful. The one account where the kids have control of the money at 18 is not the Trump account, and it's not the 529C. That one is the Okay. Wagger or Uger or Let me let me just spell it out for you.
UTMA or a UGMA, a Uniform Gift to Miners Act. or Uniform Transfer to Minors Act. And it's just like opening a bank account for a miner.
Okay, while they're a minor They can't really make transactions. You as their parent. make the transactions for them. But it's and then the kids These have been around forever. The kids are taxed at their own rates.
Up to a certain level, and it's not very high. And as soon as they get over the certain level, Then they get taxed. At the parents' rates.
So, if you stuff a huge amount of money in there, you aren't accomplishing anything. If you put a smallish amount of money or a few thousand dollars in there. then the kids pay taxes at their own rates, which are pretty close to zero. Um You got full access to the money and at 18 they have full access to the money. If they know it's currently taxable.
So these things have been around forever. I don't particularly like them because the kids can go. clean them out at eighteen and go go to Las Vegas or something.
Well, I hate we've run out of Time before we ran out of show, but we want to remind you there's lots more details about these accounts, etc., at cardinalguide.com.
So, if you go to cardinalguide.com and you look under IRAs, there, you're going to find these IRC, Section 530A, Savings Accounts for Children, video, show notes, all kinds of resources, all there at cardinalguide.com, as well as the complete Cardinal Guide to Planning for and Living in Retirement. That's Hans's book and the workbook that goes with that. And of course, the contact Hans or Tom Page if you've got questions or something you want to do with one of these. And so, great show, Hans. Thank you, and God bless you.
The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk, and unless otherwise stated, are not guaranteed. Past performance cannot be.
Used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information Express does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered.
Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com.
CardinalGuide.com.
