In the second quarter of 2026, markets and the economy rebounded from the doldrums we experienced toward the end of last quarter, as Middle East tensions eased, economic growth proved resilient, and the AI-driven growth story remained intact. The cease fire with Iran, while still very fragile, set the stage for oil prices to drop back to pre-conflict levels thus avoiding a worst-case scenario for consumers and businesses.
Markets witnessed a significant milestone when SpaceX completed the largest initial public offering (IPO) in history on June 12, 2026, raising an eye-popping $85.7 billion while making Elon Musk the world’s first trillionaire! The debut of SpaceX created somewhat of a frenzy, breaking retail trading records, as investors purchased share volumes far exceeding prior records set by others, such as Facebook and Alibaba.
There was a changing of the guard at the Federal Reserve with Kevin Warsh becoming the new Fed chair on May 22, 2026, replacing Jerome Powell. All eyes were on Chair Warsh in his first FOMC meeting, who had promised a new direction for the Fed during his confirmation process pledging less transparency and a renewed focus on price stability over full employment. Despite the tone set by President Trump’s constant pressure on the Fed to reduce rates, Chair Warsh has remained steadfast in his conviction in an independent Fed. As expected, the FOMC voted unanimously to hold the target range at 3.50% to 3.75%, yet true to his promise, the official Fed statement was far shorter than those of the former chair Powell.
For the quarter, emerging markets (MSCI Emerging Markets Index) were the top performing asset class up a whopping 24.05% due to broadening economic strength and their exposure to the rally in semiconductor stocks. U.S. small cap stocks (Russell 2000 Index) were not far behind producing returns of 21.49% driven by a rotation out of mega-cap tech into cheaper, cyclical, domestic holdings. Real estate (Dow Jones U.S. Real Estate Index) also had a positive quarter up 8.55% supported by robust balance sheets and demand in areas such as data centers and lodging.
Fixed income recorded a modest return of .67% for the quarter due to continuing pressure on rates from recent oil spikes and carry-through inflation. The fixed income markets will most likely experience additional volatility for a period of time due to the transition to Kevin Warsh, as markets have a history of testing the new Fed Chairman.
As we enter the second half of the year, markets seem less responsive to the daily news on the Iran conflict and are more focused on general market conditions, which appear to be that of a late-cycle expansion with growth moderating, yet buoyed by continued AI infrastructure spending and healthy corporate earnings.
This quarter will also witness the advent of the Trump Account, so we thought we would explore this new savings vehicle and how it may fit into your family’s saving plans.
Trump Accounts
The Trump account is the first federal child savings program in the U.S. and is intended to increase participation in savings and investment for our youth. Brad Gerstner, the CEO of Altimeter Capital and founder of the Invest America Foundation, has been credited with the basic concept of the Trump Account. President Trump developed this concept and integrated it into a component of the the One Big Beautiful Bill Act (OBBB) called the Working Families Tax Cuts. However, this provision did not become effective until July 4, 2026.
What is a Trump Account?
A Trump account is a type of traditional IRA that can be established for any child who has a Social Security number, as long as it is opened before the calendar year in which the child turns 18. Trump accounts may be opened on the child’s behalf by legal guardians, parents, adult siblings, or grandparents, and there can only be one Trump account per child.
Individuals, employers, nonprofits, and governments can contribute to Trump accounts. Individual and employer contributions are subject to a $5,000 combined annual limit, which will be adjusted for inflation periodically. Contributions from nonprofits and governments have no limit.
Employer Contributions
Employers can contribute to the Trump account of their employees or their dependents. These contributions are not considered taxable income for the employee, and they are deductible to the employer as compensation. There is a $2,500 annual limit per employee, and these contributions will count toward the $5,000 annual limit. Many corporations are already offering matching contributions to employee accounts including IBM, Goldman Sachs, JP Morgan Chase, and BlackRock.
Nonprofit and Government Contributions
Tax-free contributions from state or local governments and from 501(c)(3) tax-exempt organizations are also allowed through the Treasury Department, provided the state, locality, or organization contributes an equal amount to the account of each child in a qualified group of either all children, all children in a certain geographic area, or all children born in one or more calendar years.
Some very prominent foundations have already stepped forward to contribute. The Michael & Susan Dell Foundation pledged $6.25 billion giving $250 to every child under the age of 11 living in zip codes with median household incomes under $150k This gift is limited to the first 25m to enroll. Legendary investor, Ray Dalio, and his wife, Barbara, plan to add an additional $250 to approximately 300,000 children living in Connecticut. SpaceX President, Gwynne Shotwell and her husband, Robert, just announced a donation of $325 million in SpaceX stock to more than two million lower-income families mostly in Texas.
Special One-time Contribution
For every child born between January 1, 2025, and December 31, 2028, the U.S. Treasury will deposit $1,000 into the beneficiary’s Trump Account. This seed deposit will be funded by taxpayers through the U.S. Department of the Treasury. Children born outside this limited timeframe will not receive these funds.
All other special contributions, such as the Dell Foundation, will be automatically deposited into eligible Trump Accounts once established without additional paperwork. Even if other alternatives seem more viable, opening a Trump Account may present opportunities to receive contributions from existing or future donors to this program.
Eligible Investments
The period prior to the year in which the account beneficiary turns 18 is referred to by the IRS as the “growth period.” During this period, eligible investments, as defined by law, must include mutual funds or exchange traded funds, which track either the Standard and Poor’s 500 (S&P 500) stock market index or another index tracking the returns of equity investments in “primarily United States companies.” The IRS says it intends to issue regulations that would consider an index “primarily” invested in U.S. companies if at least 90% of the weighted value of the index is in such companies.
Currently, the default investment option is the State Street SPDR Portfolio S&P 500 ETF (ticker: SPYM), and the Treasury has selected iShares Core S&P 500 ETF (IVV), Vanguard Total Stock Market ETF (VTI), iShares Core S&P total U.S. Stock Market ETF (ITOT), and State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) as alternatives, which will be launched in the coming months once functionality is established.
While regular individual contributions must be made in cash, the U.S. Treasury and the IRS will allow large philanthropic and corporate transfers of public stock, such as the SpaceX stock pledge by The Shotwell family.
Once the growth period ends, these investment restrictions will no longer apply.
Qualified Withdrawals
Beneficiaries are generally prohibited from withdrawing funds from Trump Accounts before the end of the “growth period.” After this period, withdrawal rules for non-deductible IRAs apply with certain statutory exceptions. Any withdrawal exceeding total contributions will be subject to ordinary income tax and will be subject to a 10% penalty if made before the beneficiary reaches age 59 ½.
How do you open a Trump Account?
You can open a Trump Account online at TrumpAccounts.gov or by downloading the official Trump Accounts app from the App Store or Google Play. To open the account, you will need to verify your identity with the IRS (e.g., via ID.me) and submit IRS Form 4547.
The U.S. Treasury has chosen the Bank of New York Mellon (BMY) as the designated financial agent for all Trump Accounts. All new accounts are established and initially managed by BNY, in partnership with the brokerage firm, Robinhood. However, once the account is opened, account owners are free to transfer the account to other approved financial institutions, such as Fidelity and Coinbase.
Trump Accounts Vs. Other Vehicles
If eligible for one or more of the special contributions, it is hard to make a case not to open a Trump account. Yet, how do Trump Accounts compare to other investments if donors have money to invest for an eligible family member?
Individuals do not receive any tax benefits for contributing to a Trump account. In the case of corporate contributions, employers can deduct them, but it will add to the taxable portion of the account when distributed. Long term capital gains and qualified dividends in taxable brokerage accounts have lower rates than the ordinary income from Trump Accounts. Whether their higher rates outweigh the deferral feature will depend on how long the assets are held, the type of income generated, and how the beneficiary takes advantage of the ability to rebalance without paying current tax.
One could argue that donors could simply take an equivalent amount each year to build a diversified portfolio using low cost/low turnover Index ETFs in a taxable brokerage account. This portfolio will most likely have very little annual taxable income and will not be subject to the restrictions of a Trump account. Once the minor becomes of age, these assets could be gifted to them without paying any tax (subject to gift tax rules) to use as they see fit.
529 plans present another choice for donors. While Trump accounts provide more flexibility in their intended use, 529 accrual and distributions are tax free giving them a higher after-tax return over time. In addition, under the SECURE 2.0 Act, participants can roll over 529 unused funds directly into a Roth IRA without federal taxes or penalties up to a $35,000 lifetime limit, subject to some restrictions.
To the extent the minor has any work-related income, using a Roth IRA would clearly be better, as the assets will grow and be distributed tax free. However, most minors do not work before their teenage years, and Trump Accounts allow for savings without working. Further, if a Trump account is funded until the beneficiary graduates and begins working, they could do a series of conversions to Roth to keep their tax bracket low through the conversion period. On paper, this seems to be the most impactful choice.
One other important aspect to consider is control. A Trump account belongs to the beneficiary, so donors need to be confident that the beneficiary will be wise with what could be a sizable amount of money over time. Further, once they are out of the growth period, they are free to invest as they please. Once again, donors need to be mindful about putting investment allocation decisions in the hands of a young adult.
While we applaud efforts to increase savings and allow our youth to participate in our capital system, there are many circumstances where other vehicles may have an advantage over Trump Accounts. That said, Trump Accounts are another viable tool for donors to use in lieu of or in addition to these alternatives on behalf of beneficiaries.
Stay the course!
– The Wealth Dimensions Team
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The S&P 500® Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 large publicly traded companies in the U.S.
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For informational purposes only. Not intended as investment advice or a recommendation of any particular security or strategy. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. For more information about Wealth Dimensions, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov or contact us at 513-554-6000. Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.