AmeriServ Presents: Bank Chats

Trump Accounts Explained

• AmeriServ Financial, Inc. • Episode 30

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On this episode of 2 Cents, Drew and Jeff break down Trump accounts in plain language and explain how the $1,000 federal seed works, what happens at age 18, and why taxes matter when the money comes out. They also compare them to 529 plans and show how even small monthly contributions can compound into meaningful retirement savings over decades. 

Please check out our full library of episodes which can be found on the Ameriserv.com website.

Resources:
trumpaccounts.gov

Credits:
An AmeriServ Financial, Inc. Production
Music by SchneckMind
Hosted by Drew Thomas and Jeff Matevish

Thanks for listening! You can find out more about AmeriServ by visiting ameriserv.com. You can also find us on Facebook, Instagram, and Twitter.

DISCLAIMER
This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts, with the goal of helping to take some of the mystery out of financial and related topics; as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast, and any resources available for download from our website or other resources relating to Bank Chats is not intended, and should not be understood or interpreted to be, financial advice. The hosts, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The hosts of Bank Chats are not attorneys, accountants, or financial advisors, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation. AmeriServ Presents: Bank Chats is produced and distributed by AmeriServ Financial, Incorporated. 

Drew Thomas:

All right, so here we are once again. It's now officially spring.

Jeff Matevish:

It is officially spring.

Drew Thomas:

It's amazing.

Jeff Matevish:

Does it feel like it?

Drew Thomas:

No.

Jeff Matevish:

It depends on the day.

Drew Thomas:

It depends on the day. Especially around here, it depends on the day.

Jeff Matevish:

Yeah, this weekend, I was out on one day doing gardening, and then the day before, it was snowing. So, yeah.

Drew Thomas:

You're absolutely right. And my, my sinuses and everything are just wreaking havoc. I absolutely, my nasal passages have no idea what season it is. Because it's, today it's really kind of humid, actually, at least it is, at least it is in here. I don't know about outside, but in here it feels, it feels kind of muggy.

Jeff Matevish:

Yeah, and we're in that, you know, you need your jacket, your, your, your winter coat in the morning, but you, short sleeves in the afternoon. Yeah. Yeah, absolutely so.

Drew Thomas:

But hey, I guess, I guess it's better, well, I guess it depends on whether you like winter or not. I mean, if you're a winter person, then you're probably upset about this. But personally, I like being able to go outside without a jacket and a parka and everything else on, so.

Jeff Matevish:

It's a good happy medium.

Drew Thomas:

Yeah, yeah. I wish you know we live in a temperate climate, as they call it, like, we get all four seasons. But it seems like around here it's gotten a lot different. It seems like we have a very short spring, maybe a slightly longer but like our spring feels like it's about a month. A lot of times we go from having days in the 30s and 40s to days in the 70s and 80s pretty fast around here.

Jeff Matevish:

That's true, yeah.

Drew Thomas:

Fall's a little bit different, but.

Jeff Matevish:

And we definitely live in that like, you know, you have winter and then false spring, and then second winter and then second false spring.

Drew Thomas:

We're like, hobbits, yeah, first breakfast and second breakfast. So, so with spring upon us, I have no segue, because spring has nothing to do with what we're talking about today. It just happens to be spring.

Jeff Matevish:

Spring is tax season, and tax season has something to do with what we're talking about today.

Drew Thomas:

This is why we pay you the big bucks, right. So, we are going to talk about some stuff here that does relate to taxes. We're going to talk about Trump accounts, and we're calling them Trump accounts because that's the generic term that everybody's using in the media. I'm going to start this whole thing off by saying that this is not going to be a

Jeff Matevish:

administration. political discussion. We are not necessarily endorsing any political party or candidate or anything else. It just that's what they're called. They're called Trump accounts.

Drew Thomas:

Yeah. And so, in order to address them properly, so you know what we're talking about, that's what we got to call them, right? So, whether you find them positive or negative based on that name is completely up to you. What I will say is after, and I think that, I think that we're going to get through this pretty, pretty well. I think we're going to get this message across pretty well. Regardless of whose name is attached to this, don't get caught up in the politics. You know, if the, if it makes financial sense for you to do this, then you should do it, no matter whose name is attached to it. Yeah, right. And just as an example, did you know that Roth IRAs are not an acronym?

Jeff Matevish:

I did not know that before a conversation.

Drew Thomas:

Yeah, yeah. So, Roth IRAs are named after Senator William V. Roth, who was a long-time serving senator from Delaware, and he was the one that came up with the idea of the Roth IRA being a taxable IRA now and then, not having to pay taxes on it later. For those of you that want to know the difference between a traditional Roth, that's pretty much the basic difference is whether it's tax deferred now or tax deferred later, right? And so, we call them Roth IRAs, and that's just, it's just what it is.

Jeff Matevish:

So, who's traditional?

Drew Thomas:

That is, that's an excellent question. So, okay, so tell us what, what Trump IRA or yeah, Trump IRAs. Tell us what, very good, yeah. Tell us what Trump accounts are, basically, yeah.

Jeff Matevish:

So, Trump accounts are essentially IRAs. So, under the Trump administration, they're allowing you to open an account, and if you your, your child was born between 2025 and 2028, the government will seed that account with a $1,000 one time, one-time, seed. Deposit. That child cannot touch that money until they turn 18. You are the custodian of that account until they turn 18. Okay, at which time they take control of it, they can spend it on educational purposes, and they have some benefits if you, if you spend it on educational purposes versus something else, or they can let it ride until retirement age and take it out then. But once they turn 18, it converts to an IRA traditional IRA.

Drew Thomas:

Okay, so it is in their name, just to be, to be perfectly clear, from the from the word go, right, this is their account, right? You, as their parent, or guardian, or custodian, are the, you know, the you're the adult in charge until they turn 18, but it's their account. And then after they turn 18, they can basically do what they want with it. Now, much like any other savings vehicle, it's generally best to continue contributing to it and letting it, letting those dollars grow, sure however you could use it for education or something along those lines at the age of 18, if you chose to. Obviously, if you let it go until you're of retirement age, you're, you're looking at a significantly larger amount of money.

Jeff Matevish:

Hundreds of 1000s of dollars difference.

Drew Thomas:

Yeah, so. And I think...

Jeff Matevish:

Potentially, potentially, right?

Drew Thomas:

So, and I think that's where this comes down to, is that this was, this was put into place, I think, to help people who have not really done a very good job, and in this country, we do a relatively poor job, to be perfectly honest, in setting ourselves up for a comfortable retirement. And so, this is a way to try to help this new generation of Americans. And I say it that way because you specifically must be an American citizen in order to enjoy this.

Jeff Matevish:

You have to have a social security number, yep.

Drew Thomas:

To do, to start planning for retirement before they're even old enough to spell the word. Yeah. Now you recently had an addition to the family. I did Yes.

Jeff Matevish:

So, and I know I, and I signed up for the Trump Account, when, okay, whenever they, you know, open it up. Okay, so I should be getting some sort of correspondence here in May about it. I believe July 4 is whenever the government puts that money into that account, that $1,000.

Drew Thomas:

Yeah, okay, so when the when the country turns 250 that's true, yep, $1,000 goes into the, great birthday gift, yeah, reverse birth the gift. Yeah. Now let's, let's, let's talk about that, though, because you made a good point earlier when we were sort of discussing this off, off mic, and that is that nothing much like going to a casino, nothing is free. The government is going to get something out of this deal one way or the other, right? Yep. So, they're seeding the money, and they're putting that $1,000 in, and that is yours or not yours, but your, your son's or your child's, right? Yep, but it is taxable upon withdrawal, and there are penalties and things like that if you withdraw early and everything, just like any other IRA. So, the government's going to get at least some of that money back in terms of taxes. And probably, if you let it go, probably a lot more than that.

Jeff Matevish:

Oh, yeah, definitely.

Drew Thomas:

And that is taxable money that, quite frankly, they probably wouldn't have gotten otherwise, because if you never started an IRA, then they couldn't tax it, right? So, that's okay. So, in a way, it's, it is a way for the government to make money, but you're going to likely make more. Yeah, right. So, again, just because the government might make out on this deal doesn't mean that you should not do it. Because you're likely, or your child is likely, to make out a lot better than the government ever will.

Jeff Matevish:

Yeah, it's eventually going to be a win, win for both parties. Yeah, sure, yeah.

Drew Thomas:

So, let's talk a little bit about what happens when you contribute to that. Well, okay, let's do this. Let's pretend you never contribute. Okay, right? Let's, let's pretend that you, that $1,000 goes in and you never add another dime to it. Okay, what is your child likely to see in terms of a return? And we say likely because, just like anything else, this is all based around investments, the stock market and things like that, just like your regular, traditional IRAs are, because this is eventually going to become a traditional IRA. So, your mileage may vary. But in general, what are they likely to see by the time they turn, say, 18?

Jeff Matevish:

In general, if when they turn 18 and the stock market trends, how it has been trending, you know, year after year, $6,000ish.

Drew Thomas:

Okay, yeah, so, you know, by the time they turn 18, I mean, that's enough for a book in college.

Jeff Matevish:

Well, you're paying taxes on that too, so it's a little bit less. So, you know, maybe, maybe, you know, you might have to share books. But yeah.

Drew Thomas:

I mean, really, at the rate that colleges are increasing their fees, by the time it's 18, that $6,000 I don't know what that's going to buy you. Yeah, that's true.

Jeff Matevish:

Now you do have to check IRA laws and see what you can spend that on for educational purposes, because it's not everything. Okay, you know, I don't think it's, I don't believe it's like, room and board and that kind of thing stuff. It's for, like tuition and that kind of stuff specifically.

Drew Thomas:

Okay, yeah, all right, so that's a good point. It's also, I think, maybe a good time to mention that there seemed as with any new thing, there's confusion sometimes, whenever they're announced. And I think I can speak for myself, I was confused about this, I genuinely thought that these accounts were more for education when I first heard about them.

Jeff Matevish:

As did I, yes.

Drew Thomas:

I did not understand at the time, whenever they were first announced, that they were more of a, and would convert to a traditional IRA so they were for more long-term savings and investment. Not so much, I mean, to an 18-year-old, 18 years is long-term. But to an adult, long-term is 55, 65, whatever, right? I didn't realize that at the beginning. So, that's an important distinction to make, because there were a lot of people that were comparing these to 529 plans.

Jeff Matevish:

I think my tax prepper even called it a 529

Drew Thomas:

Yeah, so that's a concern, because it is a plan. concern, because your tax preparer isn't necessarily up to snuff on this yet either. True, right?

Jeff Matevish:

I've learned more just doing my own research than when I did my taxes, when you, when you initially say that you want to open one of these accounts, yeah.

Drew Thomas:

Okay, yeah. So, that's the reason why you should always listen to this podcast, because we're going to, we're going to give you the dirt. And I say that, and with, with all genuine, with, with all complete, genuine genuineness, we are doing our very best to give you the most accurate information, but we still always encourage you to do your own research, because things do change. These, these episodes, they get older. Things change from the time they were aired to the time that you might listen to it. So, you know, always keep

Jeff Matevish:

A professional, tax professional, yeah, yeah. that in mind. No matter what we're talking about on the podcast, you definitely want to be doing your own research or talking to...

Drew Thomas:

Absolutely, or financial advisor or whatever. But because I'm sure most of you don't actually stick around and listen to the disclaimer at the end of every episode...

Jeff Matevish:

We're going to start putting it at the beginning, right?

Drew Thomas:

Yeah, then and then nobody will listen. Okay, so, so, yeah, so that, that's, let's talk about the differences between this and something like a 529.

Jeff Matevish:

Okay, yeah.

Drew Thomas:

So, a 529 plan, now, both of these, both of these grow tax-free or tax deferred. Yes. Okay, yes. So, 529 plan contributions grow tax-free, withdrawals are also tax-free if used for a qualifying education expense.

Jeff Matevish:

Okay, so you're, you're the money that you're putting into that 529 plan is taxed prior to you putting in into that plan. That's what that means. So, your income is taxed,

Drew Thomas:

Your income is taxed, and then you're putting your, your... it, yeah, right, correct, right, yeah. Whereas with these Trump Accounts, the growth is tax-deferred, meaning that just like a traditional IRA, you can put the money in pre-tax, and then withdrawals are generally taxed as ordinary income upon withdrawal. Secondary difference, 529, funds obviously must be used for education, that is tuition, books, has to be used K through K through 12, like for example, if, I guess, I guess, if you were doing some sort of, like a private schooling, you might be able to use that, those funds for that again, if it's, if you're withdrawing the funds that early, I don't know how much you're really benefiting from the, from the investment portion of the plan.

Jeff Matevish:

Yeah, but, but so say your child does not go to school, doesn't want to seek higher education. Yes, I think that money can be rolled over into like a Roth IRA, yeah, it can. I'm sure you have penalties again, yes, but it at least can be rolled over to Roth IRA.

Drew Thomas:

Right, so having a 529 plan, because you make a Hint, hint, nudge, nudge. You can go back and good point. And I think we talked about this with George Kamel.

Jeff Matevish:

I think we did. listen to that if you want to. For all of you Dave Ramsey fans. 529 plans, you are making an assumption that your child is going to want a higher education at a relatively young age when you start these 529 plans, if you want them to be effective. And so, obviously, if your child makes the decision down the road, hey, I don't want a higher education for whatever reason, that money doesn't go to waste. You might not get your full dollar value the way you would if you used it for education expenses, but it's not going to be a waste of your money. And there, the government's not just going to take it all and say, sorry, you can't use this for anything. The money is yours. It's just that I think you can also roll that over into another child. If you had another child and you say, one goes to college and the other one does not, you had a 529, for both of them, I think you can roll one into the other, which, okay, I don't believe you can do that with, with a Trump account, but, I mean...

Drew Thomas:

Yeah, I don't think so. Because it's in their name on there and you're as the custodian or the, right, right, yeah. Other differences, obviously, 529, plans typically do not receive federal seed money, although some states, depending on your, depending on where you live, some states will sometimes offer a small matching grant of some sort. You'd have to look into your state to find out whether your state does or not. But again, a matching grant is different. You have to still front the money, and then the state might match what you put in up to a certain amount, gotcha. Whereas, as you pointed out with the Trump Accounts, children born between 2025 and 2028 are eligible for that one time, $1,000 federal grant deposited by the US Treasury. And then this is, I think, where the, where one of the big key differences is. A 529 plan has a high limit. Many states allow total balances that exceed$500,000 per beneficiary in a 529 plan, whereas with a Trump Account, you are capped at$5,000 per year per child until they turn 18, and then after that, the traditional IRA limits become imposed.

Jeff Matevish:

Yeah, that you can put in or family member or whatever. Yeah, now companies or you know your, your place of business, or your local municipality may decide that they want to put extra money in, and that doesn't count towards that $5,000 but it's still a lot lower than what a 529 plan is, sure, yeah, yeah.

Drew Thomas:

So, so even if you were, I did the, I did the math real quick before we started this. So, we said earlier that if you never put a dime into the Trump Account, that $1,000 is likely to be, you know, the investments and everything that is likely to grow to about$6,000 by the time they turn 18, right, even if you were to put in the maximum amount of $5,000 per year per child, until they turn 18. The Trump account is likely to be, and now this does not, this doesn't, this doesn't take into account the investment side. This is just how much, this is what you're depositing, right, is likely to be worth about $90,000, okay, when they turn 18, plus whatever the investment would be. So, if you take 10% return per year on that$90,000 I mean, but you're still not, I guess my point is, you're still not likely to hit$500,000.

Jeff Matevish:

No, yeah, you're, you're, if you put in $5,000 a year, up until the age of 18, you would have roughly $271,000.

Drew Thomas:

Okay, yeah. So, there you go. So, that's with interest and everything, yeah, so and so, so, so you did the math and I didn't, so that's good. So, so you're talking a little more than half, like you're talking not, not even say like 55%. Now that's assuming that you have that amount of money to put in the first place, right? Just because the 529 allows you to have $500,000 per beneficiary doesn't mean you have the money to put into to reach that number. But all things being equal, if you can afford to put the maximum amount of money into either of those two plans, and your intent is for your child to use it for education, the 529 plan is your better bet. Absolutely. That is also not to say that you shouldn't still open a Trump Account for them, because, I mean, it's designed for long term retirement savings, not education, right?

Jeff Matevish:

So, free money, essentially, yeah, too, yeah.

Drew Thomas:

So, you know again, even now, let's, let's do this. Let's talk about the long-term effects. So, you said retirement. How much is the Trump Account likely to be worth again, assuming you put nothing into it, how much is it likely to be worth at retirement, or say, like age, like 55?

Jeff Matevish:

55, that would be worth $243,000 having put nothing to it, nothing in. If you, if you put in the $5,000 a year, from, you know, from when you opened it, till 55, that would be roughly $13 million.

Drew Thomas:

That's, that's crazy. That's good. I mean, that's crazy, yeah, especially for people that realistically have never put away a significant amount of money for retirement. Having 13, I would love to have $13 million available to me at the time I retire. I won't, I can guarantee you that right now, I won't.

Jeff Matevish:

Because I didn't have a Trump Account.

Drew Thomas:

Really, yeah, what, okay, so let's do something a little more realistic, because honestly, not everybody has$5,000 a year to put into this, especially, I don't know about you, but when I turned 18, I was not making, I don't know if I made $5,000 that first year when I was starting to work, right? I mean, I probably did, but adjusted for inflation, I definitely did, but I don't know if I realistically did in real dollars.

Jeff Matevish:

And if you had it, you probably wouldn't put it away like that anyway.

Drew Thomas:

No, no, I, I literally remember I, so I'll segue this. I literally remember one of my first jobs, I was working for an electronic I'll say it, it was Circuit City, because they're defunct and they can't sue me now. Actually, I guess the name was bought, but I'm not talking about the current version of Circuit City. I'm talking about the old one. So, I worked for them, and I remember one of the district managers was going around, and they were doing the sort of stump for the retirement savings accounts at the store. And they were doing at the time, as I recall, something they, something pretty generous. I think they were matching up to 4% or 5% or something.

Jeff Matevish:

That's pretty good.

Drew Thomas:

I mean, like, it was, it was pretty, it was pretty nice. Yeah, and the, the district manager, I remember telling me, they pulled me aside and they're like, you know, like, you need to put into this. And I said, look, I can't afford to put into this, I'm working part-time. Or maybe I had just, maybe I just turned full-time, I don't know. But regardless, I wasn't making enough in my mind to put money into this. And they said, listen, at your age, if you were to put in just, I don't remember what they said, probably like, $100 out of every pay or something like that. Yeah, it would just exponentially grow. And I didn't fully appreciate it at the time. I wish I would have done it.

Jeff Matevish:

I was in the same boat, you know?

Drew Thomas:

Yeah, I really wish I would have done it and but, but to be fair, when you're, when you're that age, and you're deciding, well, do I put $100 into my retirement savings for something that won't happen to me for the next 50 years?

Jeff Matevish:

Yeah, that's so far down the road I can use that money now, yeah, or I'll make up that difference down the road, right? Yeah, right.

Drew Thomas:

Or, you know, can I go out with my friends tonight and eat pizza and, you know, drive around and have a good time? Yeah, you're, going to likely pick that, yeah, unless you're super, super disciplined, and I'm here to tell you, be super, super disciplined if you can. But I understand that it's not likely to happen. So, let's, let's pretend that you, you contribute far less than $5,000 okay, what number would you say is still a reasonable number.

Jeff Matevish:

$250 a year.

Drew Thomas:

Okay, okay, so $250 a year into a Trump account, okay? For the next 50-55, year, right? 55 years, right? Okay, yeah. So, assuming that you and or your parent guardian, until you're 18, puts $250 a year into this, what are they likely to have, you said, age 55 age 55 what are they likely to have at 55?

Jeff Matevish:

$878,000. Wow, yeah, so for as little as $250 a year, yeah, yeah.

Drew Thomas:

And I can tell you right now, $250 a year is nothing.

Jeff Matevish:

I have subscriptions that are more than that.

Drew Thomas:

Yeah, right. I mean, really, if you have a job, even if it's a part-time job, yeah, there's a pretty solid chance that you could manage to scrape together $20 a month, sure, yeah, right, to put into this because that's really what it comes down to, yep. Is if you could put $20 a month into this account you're, you know, consistently for that time,

Jeff Matevish:

That would help you with the retirement, that you're looking in the excess of three quarters of a million dollars waiting for you at the other end when you retire. would help you with the budgeting. Yeah. I mean, it's a great discipline to have.

Drew Thomas:

Yeah, yeah. And it's certainly better than any savings account you're going to put $250 a year into. Yeah. I mean, realistically speaking.

Jeff Matevish:

Even a high-yield savings account is only about what 5% I mean, that's pretty good.

Drew Thomas:

Yeah, that's really good. That's like your, I don't even know what bank would offer a 4% or 5% on a savings account these days. I'm sure there are probably some that do. I know we don't. We do not, not on a traditional savings now, that's more like a CD rate or something like that. And even then, depending on, that's tough too. Yeah, depending on what the Wall Street Journal prime rate is doing and all that stuff, finding a CD rate in excess of 5% consistently over the next 55 years, true is going to be hard. Yeah, that's, that's going to be tough. So, yeah, this is, this is definitely something that, you know you should, you should seriously consider for your child at this stage of the game. Even if you can't afford to put anything into it now, take the seed money and then, you know, try and put something into it later. But my gosh, I mean, if you open one of these up and you can afford that $20 a month to put into that your child will thank you, even if it's taxed at whatever the going tax rate is 55 years from now, yeah, they're still likely to come away from this with, you know, well over a half a million dollars.

Jeff Matevish:

Oh, it's going to help them regardless.

Drew Thomas:

no matter how you, no matter how you slice it, yeah. So, I guess the question is, now, how did so, how did you go about getting one of these? Like, how did you open one?

Jeff Matevish:

When I, when I went and had my taxes prepared, okay, that was a question. Do you want to have, do you want to open a Trump Account? And that was as simple as that. I mean, okay, I'm sure that they did all of the paperwork in the background. But there's a form a 4547? Yeah, IRS Form 4547 that you would need to fill out to initiate that, that account, and then, like I said, in May-ish, you would get a some sort of correspondence with instructions on how to actually open that account and manage it and all that.

Drew Thomas:

Okay, so do you, I don't know you may not know this yet. Did you just open this at your local bank, or do you have to open it online? Like, is there a bank that handles it through the federal government?

Jeff Matevish:

The Treasury, they have a specific broker that they use, I'm assuming, okay, I believe you can roll that over into your broker of choice later on. But I think everything initiates under the Treasury.

Drew Thomas:

Okay, yeah, all right. Well, that makes sense. And these are actually called, these are actually under section 530a, of the Internal Revenue Code. So, if you're looking for that information, it's you know, you're looking for something beyond Trump Account, these are a 530a under the, under the Internal Revenue Code. It is possible as well, from what I've read, that employers may be able to contribute to this. I don't know that any employers have taken that step at this point, because these are so new.

Jeff Matevish:

Oh yeah, they're not. I mean, not even open yet.

Drew Thomas:

Yeah, yeah. So, I don't, but I don't know if any,

Jeff Matevish:

I was going to say it would be another nice I mean, some employers may be having these conversations already to say, okay, well, if we have employees that are parents that want to open these, you know, could we, you know, find a way to make that a benefit? perk, another nice benefit to offer your employees.

Drew Thomas:

Yeah, yeah. So, you know, you might want to look into that again. Not, not necessarily right now, because, as Jeff pointed out, these aren't really open yet, but maybe next year. You know, you, you know, in 2027 you may want to broach the subject with your employer and just ask, like, hey, are you know, are you having, are you making any plans to contribute to these, you know? And some employers, I'm sure are, and some may not.

Jeff Matevish:

I'm sure it's a benefit to them too. I'm sure they get some sort of tax break on it.

Drew Thomas:

You'd like to like, you'd like to think so, yeah, I just, I think it goes back to what we talked about at the beginning of this, which is, you know, I was reading a story that there was a woman that was having a conversation with somebody about these and they said that they refused to open it based on the fact that it was called a Trump Account, and that it was a Trump thing. And I mean, I, I'm not trying to come down one side or the other on the political fence here, I will say that, in general, I understand the human desire to spite the person you don't like, right? Whether it's you know, I'm not going to, I'm not going to attend that function, because so and so is going to be there. My ex is going to attend, so I'm not going to so and so's birthday party. I mean, in reality, you're probably cutting off your own nose to spite your face. At that point, you're missing out on a great party because your ex is going to be there that you probably would just be able to stay on the other side of the room of and avoid.

Jeff Matevish:

And this is the same thing. Yeah, yeah. You're only hurting not yourself. You're hurting your child, yeah.

Drew Thomas:

So, definitely, you know, we're not, we're not advocating that you definitely do this. We certainly can't say that the numbers we've put out there today are hard and fast, yes this is what it's going to be worth. But you know, they always say, if you look at the return on the stock market over time and this, we say this all the time on the show. When you're talking about savings, time is your friend. Starting early, don't touch the money, contribute as much as you can, don't look at your balance, right? Because you don't want to get tempted at like, oh man, I'm 45 years old, and I could take out $100,000 and go nuts with it. Then you'll never recover. To go back to what you were saying earlier, about I'll make it up later. Oh yeah, right, right. You know, in reality, you'll never recover, because it's the law of, of exponents. You're exponentially adding interest and return on that money. If you stop in the middle and take it back out and start from zero again, you'll never make up that time. Yep. So, keep that in mind. You know, the earlier you start, the better with any kind of savings vehicle. And this, I, I have a hard time finding a bad side.

Jeff Matevish:

It's, it's a new product, it's a new account. It's, I'm sure, going to keep evolving. I'm sure rules are going to change and features are going to change. And, you know, hopefully all for the good of the account holder. But you never know, right?

Drew Thomas:

But ultimately, too it is your money, so or your child's money. So, you know, if things do change from now, when it's brand new, and by the time they're 18, the account is no longer as viable or equitable as we think it's going to be. Take your lumps, take your money and go do something else with it, but you're not going to have zero. Yeah, that's the thing about any savings account, is you're, a savings account will never be zero. You might not get the return on that money that you think you're going to get in terms of the investment side, but it's never going to be worth nothing. It's kind of like gold or commodities that we talked about, they're never going to be worth zero, short of a meteor hitting the Earth and the monetary system of the globe. And I don't care. Yeah, yeah, yeah. Exactly which point I don't care. All right, I think this was a good discussion.

Jeff Matevish:

I learned a lot. Yeah, yeah, definitely.

Drew Thomas:

And if you have questions, you can go to trumpaccounts.gov, we'll put the link in the description. Okay, yep, along with, I'm sure there are other verifiably, I'm sure the IRS probably has some stuff out there too. They do. We'll put links in the description if you want to research this stuff on your own, as you should. But I think that you know, if any of this appeals to you, just, just think of the potential return on even zero, even if all you do is let the $1,000 the government hands you ride, you're likely to come out of this way, way or your child is likely to come out of this way, way ahead. And if you contribute literally almost anything on a regular basis to this only to your benefit. Yeah, I mean, it's, it's awesome stuff. So, yeah, oh, you know what we almost forgot to mention. So, let's just real brief. Okay, let's talk about this, this, this Dell grant.

Jeff Matevish:

Oh, I thought we did. Okay, no, we didn't mention that.

Drew Thomas:

I wanted to make sure we mentioned that too, because that was brought up in the State of the Union about Dell computers, right? Or the owners, or whatever, yeah, where could you but let's talk about that too, because there are some caveats to that.

Jeff Matevish:

Yeah, so what, so Dell agreed to donate $250 to children ages 10 and under who were born before 2025 so outside of that window of the $1,000 seed money, so they wanted to hit, you know, the children that didn't get anything, essentially, okay, and they're hoping that other companies are going to do the same thing that Dell is doing. And would, you know, contribute seed money as well.

Drew Thomas:

Yeah, but that was definitely something I wanted to talk about, because, again, when we started researching this, we kind of had the impression that you were giving the $1,000 and that I was under that impression that grant. You know, that's not really it. It's sort of an either or thing. You're either getting $1,000 from the government or you're getting this $250. Now, as you pointed out, other benefactors may be out there looking to create these grants, and you may see those numbers go up, even for people 2025 to 2028 whatever.

Jeff Matevish:

But you might, yeah, yeah.

Drew Thomas:

But we don't know that, right. So, in this particular case, if you have a child that was born in 2024 back to essentially 2014-ish, yeah, you may, you may benefit from opening one of these accounts and getting that $250 which, again, it's free money. And right, you're, again, your mileage is going to vary, but it's, yeah, like you said, it's free money. Yeah, take it if you can. And, you know, give your child a leg up. So, yep, because, you know, I mean, as parents, I mean, that's what we all want, I think.

Jeff Matevish:

And times, you know, but they you know, trend, you know, not always positive, so you know, yeah, give them a little fighting chance.

Drew Thomas:

Fair. All right, thanks, Jeff. I appreciate it.

Jeff Matevish:

Hey, thanks, Drew.

Drew Thomas:

Alright.

Jeff Matevish:

This podcast focuses on having valuable conversations on various topics related to banking and financial health. The podcast is grounded in having open conversations with professionals and experts with the goal of helping to take some of the mystery out of financial and related topics as learning about financial products and services can help you make more informed financial decisions. Please keep in mind that the information contained within this podcast and any resources available for download from our website or other resources relating to Bank Chats is not intended and should not be understood or interpreted to be financial advice. The hosts, guests, and production staff of Bank Chats expressly recommend that you seek advice from a trusted financial professional before making financial decisions. The hosts of Bank Chats are not attorneys, accountants, or financial advisors, and the program is simply intended as one source of information. The podcast is not a substitute for a financial professional who is aware of the facts and circumstances of your individual situation. Thank you for listening. Please check out our full library of episodes, which can be found on the ameriserv.com website. You can also download or stream the podcast from your favorite podcast app.

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