Trump Accounts promise big returns, but experts urge caution on long-term projections
Trump Accounts offer a newborn seed and up to $5,000-per-year contributions with the aim of turning a child’s savings into a sizable sum, but four financial planners say the flashy projections assume long-term stock-market gains that are unlikely to persist. Using conservative 7% returns, maxed contributions could total about $1 million by age 45 (roughly $185,000 by 18), with time and compounding doing most of the work. Key caveats include tax treatment (tax-deferred, taxed as ordinary income on withdrawal), the risk of a child controlling the account at 18, and the need to treat the Trump Account as an addition to—not a replacement for—other vehicles like 401(k)s and 529 plans. Some advisers even suggest converting to a Roth IRA later. Employers’ contributions can help, but the bottom line remains: this is a useful tool with significant caveats, not a guaranteed path to wealth.
