Advisors question Trump Account return projections as corporate perks emerge
Financial advisors warn that the US government's projected returns for the newly launched Trump Accounts are overly optimistic, even as major corporations begin offering the accounts as employee benefits.
The US Treasury launched Trump Accounts on July 4, offering tax-advantaged investment vehicles for children that include a $1,000 government seed deposit for eligible babies born between 2025 and 2028. The accounts allow up to $5,000 in annual after-tax contributions and function like a traditional IRA during an 18-year growth period.
The official TrumpAccounts.gov portal projects that maxed-out contributions could grow to $13 million by age 55. This assumes the S&P 500 will sustain its historical annual return of more than 10% uninterrupted for over half a century. Financial planners strongly dispute this baseline.
Advisors including Pam Krueger of Wealthramp and Mitch Hamer of Intersecting Wealth model the accounts using a 7% long-term return. Under that assumption, a family contributing the maximum $91,000 by age 18 would see the account reach roughly $185,000 at that point, and over $1 million by age 45. "The real engine isn't the deposits—it's time," Krueger said.
For employers, the accounts are emerging as a new frontier in benefits. Uber, Intel, IBM, and Nvidia have pledged to contribute up to $2,500 per year per employee. "We know free money is the best kind of money," said Adam Vega, managing partner at Avance Private Wealth Management. These corporate contributions count toward the $5,000 annual limit.
The accounts carry structural risks that investors must weigh. Unlike a Roth IRA, withdrawals are taxed as ordinary income, and the account legally transfers full control to the child at age 18. "The day they turn 18, you go from being in charge of that account to being on the sidelines," warned Matthew Chancey, founder of Tax Alpha Companies.
Planners stress the accounts are additive, not replacements. Chancey noted that funding a Trump Account before capturing a 401(k) employer match is "an expensive mistake dressed up as good parenting." The accounts hold a specific advantage over custodial Roths because they require no earned income, but advisors suggest converting them to a Roth in early adulthood when tax rates are low.
