Trump Accounts
Trump Accounts are a new type of investment account for all children under 18. The real winners of these accounts are children born between January 1, 2025 and December 31, 2028. All children born within that time will receive $1,000 seed money from the Federal Government just for opening the account. Similar to my message about 401K matches at work…take the free money. My concern with these accounts is the same I have with UTMA’s. As they are currently designed, you as the parent (or grandparent or guardian) are the custodian until the child turns 18. Once they turn 18 the account then falls under the child’s ownership. While investments do grow tax deferred, withdrawals are subject to ordinary income tax and, like an IRA, a penalty for early withdrawals. There is an explicit carve out for first time home purchases and higher education expenses to avoid the penalty but not the tax.
If you compare similar vehicles, these accounts do not have the same tax benefits as a 529 for college (withdrawals are not tax free, just penalty free) and they offer a lower annual contribution cap then IRA’s do ($5,000 for Trump accounts). Having said that, having the government give you $1,000 feels like a minor miracle so if you have a child born within that 4 year span, open the account and take the money. You do NOT need to fund the account at all to receive the $1,000. You can access the Trump account website directly here
Cybersecurity
Cybersecurity has been an issue in our daily lives now for some time. I think most of us are now familiar with phishing threats, using unprotected wi-fi and 2-factor authentication. But with the explosive growth of AI the scams are more convincing than ever—fake emails, copied voices, and urgent requests. To help better understand some of the threats that you could encounter, Judy participated in comprehensive training on cybersecurity over the course of four weeks in May. One of the big take aways was using a verbal password. In a real-life example, a grandmother received a call from her “grandson” needing money in order to bail him out from an arrest. The criminals in this case had used an AI voice of her grandson in an attempt to get hold of the assets. However, this family had instituted the verbal password. When the scammer didn’t know the answer, grandma could hang up in peace knowing her grandson was safe and so was her money. Schwab allows you to add a verbal password to your accounts with them. Simply call Schwab Alliance at 800-515-2157 and let them know you want to add one. Be sure it’s unique, not a password you use with anything else, and nothing that is easily guessed or public knowledge (i.e. what street did you live on if third grade).
We will continue to keep up to date on these threats and share what we learn, but in the meantime remember if something feels rushed or suspicious, pause: Stop, Think, Protect.
Money Movement
To help ensure requests are handled as smoothly and promptly as possible, please send all withdrawal requests by email to both Judy and I. Because there are days when I am in meetings for much of the day, same-day processing may not always be possible. However, Judy will be available and can execute the transaction. Anytime there is a request for a check to be sent to a 3rd party that does not have standing instructions on file, we will call you to verify the legitimacy of the request as protecting your money always our first priority
Website additions
Finally, I’m very excited about the “CALCULATORS” tab we have added to our website. We have added everything from Budget worksheets to RMD calculators to Mortgage comparison tools. These are tools I use often when I’m planning with everyone so I’m glad we have brought them in house now. Here is the direct link to our new page and feel free to share this with anyone else that may be looking at a major life or financial decisions.