“Your time is limited, so don’t waste it living someone else’s life.”
-Bill Gates
Here’s what you need to know this week:
- Stocks rise ahead of a key Federal Reserve meeting
- A quick explainer on the new “Trump Accounts” for children
Feeling Jolly
Stocks continued their rise last week in anticipation of an interest rate cut from the Federal Reserve later this afternoon. The S&P 500, Dow Jones and NASDAQ were all within 1% of their respective all-time highs as of Friday’s close. Expectations of a rate cut were bolstered by the release of September’s Personal Consumption Expenditures (PCE) report for the month of September. This report was delayed due to the prolonged government shutdown, and showed annualized inflation increasing to 2.8%:
While this report extended the streak of rising inflation since the announcement of President Trump’s tariff plan in April, the number was below the 2.9% that analysts’ expected[1]. The PCE report is the Federal Reserve’s preferred measure of inflation, so this lighter-than-expected report has increased hopes of a 25 basis point (0.25%) interest rate cut when the Federal Reserve concludes their meeting this afternoon. As of writing, the bond market is assigning a 90% chance of a rate cut[2]; barring any major surprises, the rate cut is expected to provide the market one final tailwind as we head into the end of the year.
Trump Accounts
You may have seen news stories about “Trump accounts”, a new type of investment account aimed at building wealth for children. Today I’m writing a quick explainer on how they work, rules and restrictions, and eligibility for receiving funding from the government or others.
The Section 530A accounts, more commonly known as “Trump accounts”, were created as part of the One Big Beautiful Bill Act (OBBBA) as a type of individual retirement account (IRA) for eligible children. Any child who does not turn 18 years old within a given calendar year is eligible for a Trump account. The accounts will grow tax-deferred similar to existing IRAs but will have a smaller variety of investment options than traditional IRAs; specifically, there will be an approved list of funds for Trump accounts although the list has not yet been finalized[3].
The child for whom the account is opened is legally considered both the beneficiary and the owner; These accounts will not allow for distribution (withdrawal) of funds until the beneficiary turns 18 with a few exceptions mostly related to rolling the funds into a different Trump account. Once the owner turns 18 years old, the account is treated like a traditional IRA account, meaning any withdrawals will be subject to ordinary income tax and an additional 10% penalty if the withdrawal is before age 30, unless the withdrawal is for a qualified exception. The two main qualified exceptions are:
- Qualified higher education expenses
- First home purchase
There are a few options for funding these accounts. Every account may be funded up to $5,000 per year, and the contributions to the accounts are tax-deductible to the individual making the contribution. Employers are allowed to contribute up to $2,500 per year to these accounts, but it is important to note these contributions count towards the $5,000 cap per year.
There are two additional federal contribution options. The first is a one-time contribution of $1,000 to accounts owned by children born during the calendar years of 2025-2028. The second is a program generously funded by Michael and Susan Dell through a $6.25 billion donation to the program. This program will offer $250 to any child under 10 years old who does not qualify for the $1,000 federal stipend as long as they live within a zip code where the median household income is less than $150,000[4].
There are still some rules and regulations to be decided before these accounts go live. The accounts themselves can be opened starting in 2026 but are not eligible to be funded until July 4th, 2026. If you have any questions on opening or planning for these accounts, please reach out to us here at Eternal Wealth Management and we will be more than happy to help.
What Else
- Congress is currently negotiating the contours of a new $900 billion defense bill
- Netflix has announced an attempted acquisition of Warner Bros. for $72 billion, but regulators may challenge the deal on antitrust grounds
- Israeli Prime Minister Benjamin Netanyahu announced that Israel and Hamas are approaching “phase two” of their Gaza ceasefire plan
- President Trump announced a $12 billion aid package to US farmers to counteract low prices and sales
- OU will play Alabama in the College Football Playoff next Friday, December 19th on ABC & ESPN
What We’re Reading
Can volcanoes cause a plague? The Black Death is the most famous plague in human history, wiping out more than half the population of Europe in 1347. Scientists believe the plague spread due to fleas on boats shipping grain from overseas. New research suggests that a massive volcanic eruption in 1345 lowered global temperatures which reduced crop yields and forced European countries to import their grain, bringing the plague-ridden fleas to the continent. Click below to learn more:
What’s Happening Downtown
This Saturday marks the final Lights on Broadway in Automobile Alley. This Saturday’s event will run from 3:00 to 7:30 PM and will feature the Salvation Army Brass Band, a car show, an artist market, photos with Santa, discounts and specials from dozens of shops on Broadway, and more! Click below for a map of the activities and a list of all participating businesses:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess