Finance
Why investing in a Trump Account could complicate your taxes
Parents who put money into their children’s “Trump Accounts” might face a headache come tax time: Even the smallest contributions may require them to fill out a little-used gift tax form that can take hours to complete.
Several tax experts have raised concerns about the new savings vehicles, which were created in Republicans’ massive tax and spending bill this summer, and have urged Congress to pass a new law so that families who use it won’t have to file gift tax returns.
“It’s going to create a compliance nightmare,” said Amber Waldman, senior director for estate and gift tax for RSM US, a tax and consulting firm.
Under the terms of the One Big Beautiful Bill law that created it, the federal government will seed each Trump Account with $1,000 for every U.S. citizen born from 2025 through 2028. Much like an individual retirement account, the money will be invested in funds that track the stock market. The idea is that children’s growing pot of money will eventually help them pay for education or a home purchase when they become adults.
Parents, relatives, employers and nonprofits also can contribute to the accounts. Businessman Michael Dell and his wife Susan have pledged to put $250 in each of the accounts of 25 million children who are younger than 10 today.
But some tax experts think lawmakers overlooked a tax requirement that could make the accounts too burdensome for most parents.
A contribution to a child’s Trump Account is a taxable gift, which requires the giver to fill out one of the IRS’s more complicated tax forms, Form 709. The 10-page document takes the average filer or their accountant more than six hours to complete, and the government has only accepted mailed submissions; that changes this coming tax season, when e-filing will become available.
It’s used by fewer than 225,000 households a year, federal data show, and is so obscure that commercial tax software like TurboTax doesn’t include it.
“If you want to apply for the $1,000 because your kid was born within the time period, fine. If your employer wants to make a contribution or you qualify for a contribution from a charitable organization … fine. But don’t put your own money in until this is clarified,” said Susan Bart, a lawyer who specializes in estate and gift tax.
Most gifts aren’t nearly this complicated. Under long-standing law, most people can give cash gifts to one another tax-free. But if it’s a sizable amount – more than $19,000 – the IRS requires the donor to file Form 709. Over time, if those gifts add up to more than $15 million in the giver’s lifetime, they need to pay certain taxes. The whole system is meant to prevent very wealthy people from doling out large cash gifts during their lifetimes so their heirs can avoid estate taxes later.
But because there’s no provision for contributions to Trump Accounts to count as exempt gifts under current tax law, donors would have to declare every contribution, several tax experts say. This applies whether the donation is $25 or as much as the $5,000 annual cap. That’s because to be considered a tax-exempt gift, the recipient has to be able to access the money right away. Trump Account beneficiaries cannot withdraw the money until they turn 18.
Asked whether Trump Account contributions are required to be reported, an IRS spokesman referred questions to the Treasury Department, where several officials did not answer questions from The Washington Post.
The American College of Trust and Estate Counsel, a lawyers group, sent a letter raising the issue to the congressional tax-writing committees last month. The group’s Washington affairs chair Kevin Matz said his group received no answer beyond acknowledgment that the letter was received.
Congress has dealt with a problem like this before. Lawmakers approved a clause exempting 529 accounts – the tax-advantaged savings accounts for a child’s education – from the requirement that the recipient have present use of the gift. That means parents, grandparents and others can put money in 529 accounts without filing gift tax returns.
The experts who raised the issue are calling on Congress to make the same legislative fix for Trump Accounts.
“It seems like legislators accidentally left that out,” Waldman said.
The 10-page tax form asks a series of questions that are nearly indecipherable to the uninitiated. It distinguishes gifts that are “generation-skipping” – such as a grandparent giving money to a grandchild. When a married couple makes a gift, it probes whether the amount can legally be considered split between them, or attributable to just one.
Even experts scratch their heads. “Not all accountants necessarily have the experience and background to be able to complete it without extensive study,” Matz said.
Bart agreed: “It’s not a DIY form by any means.”
She said she’s seen lawyers befuddled by Form 709 before. “Sometimes my partners in other practice areas who are very, very smart people, they think: I can do this for my own kid or grandchild. They come running back after they look at the form a while. You need to be a specialized attorney with a lot of experience in the area.”
Many people might contribute to Trump Accounts without knowing that they are supposed to file Form 709, and aren’t likely to file it. But experts believe that skipping the form could create problems for the parents if they’re ever audited. Or if tax software like TurboTax starts including Trump Account questions, the taxpayer might not be able to submit their returns through the software if they indicate that they gave to the accounts.
Parents can still create Trump Accounts for their children to receive money from the government and charities like Dell’s without triggering the tax form problem.
“Of course if the government’s giving you a free $1,000, go ahead and take it. That’s not going to hurt you,” Waldman said. “If you’re thinking about personally contributing, consider your other options.”
Even without the tax-filing complications, Trump Accounts might not be the best way for most parents to save money for their children, experts say. The 529 plans offer much better tax benefits – unlike Trump Accounts, parents can often take some state tax deductions when they put money into the account, and if the child uses the money to pay for education, the earnings inside the account are never taxed.
If parents want a multipurpose savings vehicle for their kids that is not just limited to education spending, an ordinary taxable brokerage account might also be a better choice, tax professionals say. Trump Accounts are untaxed during the beneficiary’s childhood, when the money is growing in the account, unlike a brokerage account that could require paying taxes on any dividends. But the tax treatment when the child does withdraw the money could be much more favorable on the brokerage account – that money gets the lower capital gains tax rate, while Trump Account withdrawals are taxed at the same rate as ordinary income, and even come with a 10 percent tax penalty if the child doesn’t use the money for a qualified purpose. And the brokerage account offers a much wider range of investment options.
“As a tax-advantaged account, it’s a terrible tax-advantaged account,” said Greg Leierson, senior fellow at New York University’s Tax Law Center.
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By Samira Mensah, Head of Analytics & Research Africa, S&P Global Ratings
Efficient capital markets can transform Africa’s limited domestic financial assets into investments that spur economic growth. By connecting institutional investors, pension funds and foreign investors, capital markets enhance economic development by increasing the availability of funding for long-term projects.
Efficient domestic capital markets can not only address governments’ significant funding gaps but can also ensure that critical infrastructure developments—such as transportation, energy and telecommunications—are adequately financed, ultimately driving economic growth and employment. Supported by transparent and comparable risk frameworks, efficient domestic capital markets can build confidence among domestic and foreign investors and enhance resilience during periods of global risk aversion.
In our view, African capital markets currently lack two key building blocks.
In our view, African capital markets currently lack two key building blocks. Firstly, with limited exceptions, regulatory frameworks generally lag the International Organization of Securities Commissions’ (IOSCO’s) global standards, which cover listing standards on securities exchanges, development of digital market infrastructure and improvements in the timeliness and transparency of regulatory disclosures of issuers’ financial results, including environmental, social and governance (ESG) factors and green-finance taxonomies.
Some countries, such as South Africa, Kenya, Morocco and Mauritius, are more advanced than others. The misalignment of regulatory frameworks with international norms stems from the gap between adoption and implementation through legislation, which deters international and local investment.
Secondly, the absence of standardized risk assessments leads to information gaps and limits investor participation in primary and secondary bond markets. Credit benchmarks—such as sovereign-yield curves, credit ratings and market-implied risk measures—can help in this regard. They distill complex financial, macroeconomic and institutional information into consistent and comparable signals.
As such, these benchmarks provide a standardized framework for assessing creditworthiness, supporting consistent credit analysis and facilitating decision-making based on transparent and comparable data. They are relevant to investment vehicles with specific investment mandates and may influence the availability of capital, which is crucial for infrastructure projects.
Capital markets can spur economic growth
Capital markets can play a central role in turning domestic savings into productive investments. This is particularly the case in Africa, where development needs are high and incomes are rising from a low base. Additionally, innovative financial technologies, such as fintech platforms, attract more small savings—including money sent home by migrants—that can also fund investments. However, mobilizing domestic savings for investments in local economies remains a significant challenge because many transactions are in cash and outside the financial system.
According to the Africa Finance Corporation (AFC), African sovereign-wealth funds, pension funds, insurers, central banks and commercial banks hold an estimated US$4 trillion in financial assets, representing 130 percent of Africa’s gross domestic product (GDP) in 2025. Long-term institutional capital accounts for $1.1 trillion of the $4 trillion, while African sovereign-wealth funds manage only about $145 billion in assets under management (AUM)—less than 1 percent of global sovereign-wealth funds’ AUM.
Although banking assets comprise the majority of financial assets, they are typically short-term, and banks rely on customer deposits to fund lending activities. This underscores the mismatch between banks’ short-term funding profiles and the economy’s long-term financing needs, particularly in underdeveloped financial systems.
South Africa holds the largest share of Africa’s financial assets, followed by Egypt and Nigeria. South Africa contributes 20-25 percent to Africa’s financial assets. This reflects the country’s outsized role within the continent’s savings pools, its large and mature pension system and its highly developed banking sector. We estimate that the South African banking sector’s assets amount to nearly 100 percent of GDP, while nonbank financial institutions—including pension and insurance funds—account for close to 120 percent of GDP.
Smaller economies that are important regional financial hubs—such as Morocco, Mauritius and Kenya—also play a meaningful role. Aggregate financial assets represent 80 percent to more than 200 percent of these economies’ respective GDPs. Yet a significant portion of this capital does not flow into long-term productive investments.
In several countries, the economic effects of financial assets are muted because large shares are either invested in government securities or placed offshore. For example, the bank-sovereign nexus remains particularly high in Egypt and Kenya, where government securities account for 30-60 percent of banking assets. This contributes to crowding out private investments and increases fiscal-financial linkages. Pension funds are further constrained by specific investment mandates. We understand that only 5 percent of their assets are allocated to alternative investments.
Capital allocation rules could channel domestic savings into real sectors
Regulations across various jurisdictions permit pension funds and sovereign-wealth funds to invest abroad, albeit to varying degrees. For instance, South Africa, which holds the largest share of the continent’s institutional savings, allows its pension funds to invest up to 45 percent offshore, while Nigeria’s regulatory framework limits pension funds’ aggregate offshore exposure to 20-25 percent.
While this facilitates diversification, it also means that a significant portion of domestic savings is invested in fixed-income securities outside Africa, thereby curbing the potential for local economic development. Similarly, when African sovereign-wealth funds invest internationally, their portfolios tend to be diversified away from African assets, further diluting the potential developmental benefits of domestic savings.
Intra-African investment remains limited
However, existing cross-border banking and investment activity points to significant untapped potential. Pan-African banks are important for regional financial connectivity, but their cross-border activities are limited by risk-return considerations, leaving significant potential for greater mobilization of long-term investment. These banking groups’ networks facilitate payments, trade settlement and sovereign financing, but remain only partially leveraged for long-term investment mobilization.
For example, Moroccan banking groups have built extensive footprints across francophone West and Central Africa but their assets outside Morocco account for less than 10 percent of their consolidated assets. Although Nigerian and Kenyan banks support trade finance and corporate lending across regional trade corridors, their home markets hold the lion’s share of their consolidated assets.
Cross-border institutional capital flows remain modest. Pension funds and insurers largely invest domestically—often in government securities—or allocate savings offshore. This reflects regulatory fragmentation, currency risks, shallow capital markets and limited regional investment-vehicle opportunities. Joint investments in infrastructure, productive sectors and regional value chains remain low.
The African Continental Free Trade Area (AfCFTA) aims at deepening financial integration. By seeking to expand intra-African trade and regional value chains, the AfCFTA aims to increase demand for cross-border financing, risk-sharing and long-term capital. This, however, will require more regional capital-market integrations, harmonized regulations and co-investment platforms that pool African savings.
Leveraging existing pan-African banking networks, regional bond markets, infrastructure funds and blended-finance vehicles could redirect Africa’s capital toward continental growth. This could, in turn, reduce reliance on external financing and strengthen the links between domestic savings and productive investments under the AfCFTA framework.
The catalytic role of MLIs in capital mobilization
Multilateral lending institutions (MLIs) can mobilize long-term funding, provide credit enhancement and support the introduction of new financing structures. To improve capital efficiency and preserve lending capacity, several MLIs have increasingly used balance-sheet optimization tools in recent years, including portfolio risk-sharing and originate-to-distribute-type arrangements.
More broadly, MLIs’ engagement extends beyond direct financing to include policy support, institutional and capacity-building development and infrastructure. These measures may support longer-term improvements in market functioning and economic integration.
Afreximbank’s (African Export–Import Bank’s) push to implement the Pan-African Payment and Settlement System (PAPSS) aims to accelerate regional trade integration under the AfCFTA. The PAPSS seeks to facilitate cross-border settlements in local currencies and reduce trade costs, while the Africa Trade Gateway plans to ease cross-border trade and payment flows. The benefits of these platforms for intraregional trade and transaction costs will likely emerge gradually.
Even so, structural constraints remain. In particular, the limited availability of first-loss concessional capital and uneven risk appetite in the private sector continue to constrain the scale and pace at which blended-finance solutions can be deployed. Although MLIs’ continent-wide initiatives could support the gradual expansion of public-private partnerships and risk-sharing structures, their effectiveness will likely depend on sustained policy support, transaction standardization and stable macro-financial conditions.
Strengthening Africa’s capital markets
We believe the development of capital markets is crucial for the growth of African economies and their private sectors.
We believe the development of capital markets is crucial for the growth of African economies and their private sectors. Unlocking Africa’s abundant funding potential would benefit from establishing effective regulatory regimes that encourage listings without overburdening issuers. Strengthening capital markets by facilitating both debt and equity raisings and listings can broaden market access and deepen market liquidity.
Excluding South Africa, capital markets across Africa remain fragmented and shallow. The Johannesburg Stock Exchange (JSE), the largest African stock exchange by market capitalization, has a total market capitalization of South African rand (ZAR) 24.6 trillion (about US$1.5 trillion)—more than three times South Africa’s GDP. It ranks among the top 20 stock exchanges worldwide.
In contrast, other exchanges are more modest, as their private sectors’ funding profiles rely primarily on bank loans rather than accessing capital markets. Countries such as Nigeria, Egypt, Côte d’Ivoire, Kenya and Morocco have significant domestic financing sources, but these often come at high costs.
Governments largely define these domestic bond markets because they are the largest issuers, and commercial banks are the primary buyers of government bonds. South Africa has the most liquid and diverse bond market, but government securities dominate local-currency issuances (270 percent of GDP).
Countries such as South Africa and Nigeria have introduced reforms to unlock nonbank domestic capital, notably through pension-fund reforms that allow greater capital allocation to alternative assets. Other reforms aim to develop new financing platforms, facilitate green financing and set benchmarks for how capital markets can price climate and infrastructure-related risks.
In 2022, the African Development Bank (AfDB) issued its inaugural local-currency ZAR200-million green bond, which was listed on the JSE. The JSE is advancing sustainability-linked financial instruments and improving ESG disclosures, aligning African capital markets with global best practices.
In 2026, the JSE launched its nature platform and listed Africa’s first nature-linked performance-based bond—a ZAR2.5-billion issuance by FirstRand Bank, one of the country’s top banks. In 2025, the Rwanda Stock Exchange (RSE) launched its Green Exchange Window (GEW), supported by the Luxembourg Stock Exchange (LuxSE).
Collectively, these labeled debt instruments can act as catalysts for blended-finance structures, mobilizing more private capital.
Governments play a vital role in equalizing access to information and developing deep, transparent sovereign-bond markets. Well-established government-bond yield curves in these markets serve as important pricing benchmarks for corporates and the wider economy. This enhances investor confidence and facilitates more informed investment decisions. Ongoing efforts by governments to increase transparency, provide timely information disclosures and maintain robust regulatory oversight will maximize the benefits of sovereign-bond markets.
Clear and credible credit signals further enhance pricing transparency, enabling investors to better assess risk and return. Greater confidence in valuations supports active participation, improves secondary-market liquidity and strengthens price discovery. Over time, this creates a virtuous cycle—whereby increased participation reinforces market efficiency and resilience, ultimately supporting sustainable economic growth in Africa.
Despite structural shortcomings, domestic investors have increasingly stepped in to meet financing needs. Infrastructure projects are now more often financed through domestic local-currency capital markets and financial institutions, including development-finance institutions. We believe that Africa’s economic integration will be intrinsically linked to more developed domestic capital markets.
ABOUT THE AUTHOR
Samira Mensah is Managing Director, Research & Analytics Africa, and Country Head for South Africa at S&P Global Ratings, based in Johannesburg. She leads thought leadership and market outreach initiatives across Africa, with a particular focus on African credit markets and Islamic finance. A frequent speaker at industry conferences and contributor to research publications, Samira recently presented at The Africa We Build Summit in Nairobi.
PROVIDENCE, R.I. (WPRI) — Dozens of workers at Care New England have been laid off due to ongoing financial pressures amid Rhode Island’s “escalating” healthcare funding crisis.
Care New England announced the elimination of more than 30 leadership and non-clinical positions Tuesday, citing unprecedented economic challenges placing a continued strain on hospitals across the state.
According to CNE President and CEO Michael Wagner, the healthcare group has been “aggressively pursuing margin initiatives” in order to offset a $20 million budget deficit.
“Current financial conditions have made additional cost-saving measures unavoidable, but decisions like these that affect our workforce are especially difficult because they impact valued employees, colleagues, and the patients and communities we serve,” Wagner said in a press release.
He pointed to rising labor and supply costs, the increasing need to provide uncompensated care, low Medicaid reimbursement rates, as well as proposed federal changes that threaten uninsured Rhode Islanders as the primary reason for the system “restructuring.”
CNE said it will “work closely” with affected employees, offering resources and assistance.
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UCFB academic Professor Rob Wilson has contributed to a new report examining the changing financial landscape of elite golf, with the findings highlighting the growing impact of external investment, rising player earnings and shifting commercial models across the sport.
The Leonard Curtis Golf Finance Report, authored by UCFB’s Professor Rob Wilson and Dr Dan Plumley, explores the finances of the PGA Tour, DP World Tour and LIV Golf at a pivotal moment for the game following the decision by Saudi Arabia’s Public Investment Fund (PIF) to end its funding for LIV Golf at the conclusion of the 2026 season.
The report, launched by Leonard Curtis on 21 May, provides detailed analysis of tournament prize money, player earnings, broadcast rights and tour finances, offering insight into the economic sustainability of elite golf and the wider implications for the global sporting landscape.
Rob, Professor of Applied Sport Finance and Dean at UCFB, said the sport is entering a defining period of financial change.
“Elite golf is now at a defining financial crossroads, with the traditional economics of the sport being fundamentally reshaped by external investment, escalating player earnings and changing commercial models,” he said.
“The withdrawal of PIF funding from LIV Golf creates major questions around the long-term viability, governance and future structure of the global game.
“The Leonard Curtis Golf Finance Report positions golf beyond a sporting contest, and is a live case study in sports finance, sustainability and strategic disruption playing out right before our eyes.”
The report’s findings reveal the scale of financial disparity within the men’s professional game. Analysis of financial data from 2020 to 2024 shows the PGA Tour generated average annual revenues of approximately $1.4 billion during that period, with revenues more than three times higher than those of the DP World Tour.
Meanwhile, LIV Golf’s revenues rose from $31.5 million in 2022 to $92.6 million in 2024, although the report highlights that the breakaway tour still remains significantly behind its established rivals commercially.
The research also demonstrates how competition from LIV Golf has contributed to rising costs across the sport, with both the PGA Tour and DP World Tour recording increasing losses amid surging tournament purses and intensified competition for elite players.
Professor Wilson and Dr Plumley’s analysis also examines how player earnings have been transformed by LIV Golf’s emergence, particularly for players outside the traditional top tier of the sport. The report highlights examples including Jon Rahm, Joaquin Niemann and Talor Gooch, whose earnings through LIV Golf have significantly altered the established financial structure of professional golf.
The report includes a foreword from former European Tour coach and Sky Sports Golf commentator Simon Holmes, who reflected on the wider implications of golf’s financial evolution.
“Capital can accelerate change, but it cannot manufacture meaning,” Holmes said. “If golf loses the emotional connection between the professional game and the millions of people who play it then no amount of money will fully compensate for that loss.”
The Leonard Curtis Golf Finance Report is the latest in a series of Business of Sport publications produced by Leonard Curtis, complementing its annual reports on rugby and cricket finance.
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