For the most part we love any tax-deferred savings and investment vehicle that comes out of the US as it usually gives you the opportunity to build up a sizable nest-egg for a particular purpose and then fine-tune your access modalities at a later point in life.
The TRUMP account as established under the 2025 One Big Beautiful Bill Act is no different and we love the thing just for the mere fact that it allows parents and employers to contribute up to $5,000 per year to individual retirement accounts on behalf of children under the age of 18, regardless of their parents’ income.
From a German tax perspective, this sounds an awful lot like the new TRUMP account will actually need to be treated like a TRUMP IRA – which would be phenomenal in two ways:
- Any funds invested thereunder can grow tax-deferred until you decide to withdraw. Unlike many other tax-deferred investment vehicles (HSAs, 529 plans…) they would function like real IRAs. At this point we would like to point out that – as is with other retirement plans – from a German tax perspective it is absolute key to have your entire contribution and distribution history figured out and documented!
- It allows US expat parents to contribute towards their children’s future wealth by having their (foreign) employer foot the bill. Since this would be done through the employer’s payroll system the amounts would be subject to (foreign) withholding taxation already, hence likely suspending questions as to whether or how this transfer would need to be subject to any (cross-border) gift taxation!
Overall, the TRUMP accounts are a remarkable tool which
- open a new source of IRA contributors for your children
- provide new means to structure cross-border wealth and asset transfers
- will likely allow for any funds invested thereunder to grow tax-free
While the TRUMP accounts have not yet been tested in any way under the German court system (and won’t before several years), we are optimistic that the odds are in your favor! Regardless, we also believe now is a good time to approach your employer about a different type of pay raise – in favor of your kids.
Please reach out to the taxperts if you want to brainstorm on this subject.
