Trump Accounts Are a Poor Choice for Most People — The author strongly advises against putting money into Trump accounts, arguing that 529 plans are far superior because they allow early withdrawals (with penalty) in emergencies, while Trump accounts lock the money until the child turns 18.

Trump Accounts Primarily Benefit Higher-Income Families and the Financial Industry — Lower-income households get little or no tax benefit, while the accounts create unnecessary fees for financial managers. The 0.1% fee cap is better than many options but still unnecessary compared to low-cost index funds.

The $1,000 Government Contribution Should Be Used, But Not in Trump Accounts — People should take the free $1,000 per child but put it into a 529 or donate it, as the Trump account structure is flawed and inferior for saving for education or other needs. The author prefers direct public funding for education over tax-sheltered accounts.

I’m serious, and this is not just my disgust with everything Trump. There is no good reason for the overwhelming majority of people in the country to ever put a dollar in a Trump account for their kids.

To be clear, I’m not in favor of tax-sheltered accounts in general. They strike me mostly as a very inefficient way to accomplish public goals, in this case making education more affordable. The more efficient route would be to have more public funds go to support public colleges and community colleges.

The tax-sheltered account route also favors higher-income people. Over a quarter of households owe no income tax, meaning they would get no benefit whatsoever from putting money in a tax-sheltered account. Another 20 percent are in the 10 percent bracket, meaning the account would just save them just 10 cents on every dollar invested. By contrast, the highest income households save 37 cents on every dollar........

© Eurasia Review