Captain’s Log

UTMA Accounts vs. Trump Accounts: What Families Should Know

For families who want to save and invest for a child or grandchild, UTMA accounts and Trump Accounts can both play a role, but they are built for different goals. UTMAs offer broad flexibility and simple setup, while Trump Accounts are more retirement-style accounts with tax-deferred growth, stricter rules, and government seed money for eligible children.

A UTMA account is a custodial account that lets an adult manage assets for a minor until the child reaches the age of majority under state law, at which point the assets belong to the child outright. A Trump Account is a new IRA-like account under Section 530A for children, with investments limited to low-cost broad U.S. equity index funds or ETFs and regular contributions beginning July 4, 2026.

Why families consider UTMAs

UTMAs are popular because they are easy to open, have no account-specific contribution limit, and can generally be used for any expense that benefits the child rather than only education or retirement. They also allow broad investment flexibility through a standard brokerage platform, which makes them familiar and easy to manage for many families.

The trade-off is control and tax efficiency. Contributions are irrevocable gifts to the child; the beneficiary generally takes control at adulthood, and investment income may be taxed annually under kiddie-tax rules. UTMA assets can also weigh more heavily in college financial-aid calculations because they are considered the child’s assets.

Why families consider Trump Accounts

Trump Accounts may appeal to families because eligible children born from 2025 through 2028 can receive a one-time $1,000 federal contribution, and the account grows tax-deferred instead of creating annual taxable investment income. The structure is also designed to encourage disciplined long-term investing through low-cost broad-market funds with capped fees.

The trade-off is that Trump Accounts are less flexible. They function more like traditional IRAs over time, with special rules on contributions, investments, and distributions, and withdrawals generally follow traditional IRA tax treatment. That means families giving up flexibility today may face ordinary-income taxation and potential early-withdrawal restrictions later.

Side-by-side differences

• Best use case: UTMA for flexible gifting and general child-related goals; Trump Account for long-term, retirement-style savings.
• Taxes while growing: UTMA earnings may be taxed annually; Trump Accounts generally grow tax-deferred.
• Access to funds: UTMA funds can be used for the child’s benefit before adulthood; Trump Accounts are more restricted and IRA-like.
• Control: UTMA assets become the child’s outright property at the age of majority; Trump Accounts remain rule-based accounts with custodial oversight until age 18.
• Contribution structure: UTMAs have no account-specific annual cap; Trump Accounts have annual contribution caps, though the pilot government deposit does not count toward that limit.

What this means for families

For parents and grandparents who want maximum flexibility, a UTMA may be the better fit, especially if the goal is to help with a car, a first home, or general financial support in early adulthood. For families focused on building a long-term nest egg and capturing available government seed money, a Trump Account may work better as a supplemental tool.

In many cases, the decision is not either-or. A family could use a Trump Account for long-horizon, retirement-style savings and a UTMA for more flexible goals, depending on how much control, tax deferral, and access they want along the way.

Adam
CEO/Wealth

How to Vacation on a Budget (Without Sacrificing the Fun)

Vacation should be something you look forward to — not something you’re still paying off months later. With a little planning and intentional spending, you can enjoy a memorable trip without blowing your budget or setting yourself back financially.

In fact, a successful, stress-free vacation often starts with the same habits you build at home: organization, planning, and clarity around your goals — much like we discuss in Spring Cleaning Your Finances: Decluttering and Organizing for a Stronger Year. When your finances are organized, it’s much easier to plan ahead for things like travel and actually enjoy them.

CLICK HERE to finish reading Dan Leonard’s Blog for June

Calling All Teachers! Let’s Talk TRS

Hey educators! We know that Tier 1, Tier 2, and “retirement math” can be a bit of a headache. Bring a friend and join us for a relaxed morning where we’ll break down your Teachers’ Retirement System (TRS) benefits in plain English with TRS Outreach Coordinator Sandie Benhart. No jargon, just clear steps to help you feel good about your future.

The Details:

• When: July 16th @ 9:00 AM
• Where: Our Rockford Office (4949 Harrison Ave, Ste. 210, Rockford, IL)
• Who: You and fellow teacher friends!

Adam’s Nightstand

have recently started reading How to Get a Return on Failure – Return Smarter – Return Stronger by John Maxwell. Of any author, John Maxwell is the one I’ve read the most over the years. It makes sense, since this is his 92nd published book.

In this book, Maxwell argues that failure is not a dead end but an investment, and the “return” you get depends on how quickly and honestly you learn from it. He offers simple, practical principles for turning setbacks into growth, giving readers a clear roadmap to come back from mistakes not just recovered, but smarter and stronger than before.

The mindset we need is that failure will always be part of our lives and our journey. We cannot avoid it, but we can learn from it. Let’s follow Maxwell’s advice, and we’ll never look at failure the same way again.

CLICK HERE for additional information

Happy 250th Birthday, America!

This July, our nation marks an incredible milestone—its 250th Semiquincentennial birthday! As we reflect on two and a half centuries of freedom, growth, and community, we want to express our deepest gratitude for the trust you place in us every day.

In observance of Independence Day and to allow our team to celebrate this historic milestone with their families, all Anchor Wealth Management offices will be closed on Friday, July 3rd. We will resume normal business hours on Monday, July 6th.

Need assistance before the holiday? Please feel free to reach out to us early in the week at any of our offices so we can address your needs before the long weekend.

We hope you have a safe, wonderful, and star-spangled Fourth of July weekend!