By John H. Robinson, Financial Planner (December 2025)
Meet the Trump Account
The OBBBA created this intriguing, unique new investment account aimed at combatting systemic multigeneratinal poverty. The Act provides for a $1,000 deposit from the federal government to an account for children born between January 1, 2025 and December 31, 2028. Accounts and additional contributions cannot be made until after July 4, 2025. For more details about how these accounts will work, read the following links:
How to Open A 2025 Trump Account for Your Child (Landmark CPAs)
What to Know About Trump Accounts (Charles Schwab)
Dell family to give $6.25 billion to create 25 million additional Trump Accounts (NBC News)
The Education IRA Rollover to Roth IRA
The ability to roll unused 529 Plan money into the beneficiary’s Roth IRA is a quirky little provision in the SECURE Act 2.0 that generated considerable chatter (and misguided advice) from “ finfluencers” (armchair social media financial advisors). The rules are complex and some aspects still require IRS clarification. Nonetheless, if you (or your financial planner) is shrewd enough to know the rules, there are some neat opportunities for consumers who have leftover 529 Plan money.
529 Plan To Roth IRA Rollover Rules: What To Know (The College Investor)
529 Plan Rollovers: Think Twice Before Getting Your Advice from TikTok (FPH Blog)
Mega Backdoor Roth Conversions for Solo 401(k) Plans
Small business owners with no employees and the ability to contribute as much as $72,000 ($80,000 for age 50+) annually to a qualified plan, would do well to understand the opportunity that may be available to make substantial after-tax contributions to a “Solo” 401(k) over and above the annual salary deferral limit and the employer profit sharing contribution. For more details on this topic, read the following articles.
After-Tax 401(k) Contributions Shoudn’t be an Afterthought (Ed Slott & Co)
The Mega Backdoor Roth IRA Strategy and Solo 401(k) Plans (Ed Slott & Co)
Make Yourself Eligible for BackDoor Roth IRA conversions by transferring your pre-tax traditional IRA Money to into your 401(k) plan
The Backdoor Roth Conversion strategy applies to consumers whose income levels make them ineligible to make annual Roth IRA contributions. The basic concept is that current IRS rules permit any taxpayer with earned income (or who has a spouse with earned income) to make a non-deductible contribution to a traditional IRA (as documented on IRS Form 8606) and then immediately convert it to a Roth IRA, thus effectively circumventing the ineligibility rules.
However, this only works as a tax-free conversion if the taxpayer does not have any existing pre-tax IRA money (including SEPs and SIMPLEs). If these IRAs exist, then the backdoor conversion money will be subject to pro-rata taxation. A work- around for the pro-rata rule is to transfer one’s existing pre-tax IRA money into an employer qualified plan. NOTE: This may not be an optimal choice for all taxpayers as there are limitations to employer plans that may offset the attractiveness of the backdoor conversion.
Backdoor Roth IRA: What it is and how to set it up (Vanguard)
How to Do the Backdoor Roth and Avoid the Pro Rata Rule (Thomas Koppleman)
Forget the Annual Gift Limits!
For 2026 the annual federal gift (exclusion) limit is $19,000. This represents the amount of money that any U.S. taxpayer may give to any number of people an a given calendar year without having to file a gift tax return (IRS form 709). Most consumers hear or read this and interpret it to mean that either the donor or recipient of a gift in excess of $19,000 will owe taxes on the gift. Nothing could be further from the truth.
All that is required on Form 709 is to report the amount of the gift you have made so that it can be counted against your lifetime gift exclusion of $15,000,000 ($30,000,000). The lifetime gift exclusion mirrors the federal estate tax exemption limit, both of which are indexed for inflation and have been made permanent by the OBBBA.
Most of the families for whom I work at Financial Planning Hawaii have net worths well below $15,000,000 or $30,0000. So if you want to gift your kid $200,000 for a downpayment on a house, go for it!
In my experience this misunderstanding of the gift rules prevents many people for making gifts to help their children and grandchildren. This is unfortunate because most of the donors prefer and would feel a greater sense of satisfaction from gifting their family members money when they need it most.
Gifting While You are Alive and Kicking: Tax Benefits and Tips (Kiplinger)
Planning for giving to heirs can involve nuance (Spokane Journal of Business)
BONUS TIP!
IMO, This four page document is the BEST 2026 Tax Rules “Cheat Sheet.” Click below to view and download.Charles Schwab’s 2026 Tax & Retirement Reference Guide
John H. Robinson is the founder of Financial Planning Hawaii and Fee-Only Planning Hawaii and a co-founder of retirement simulation software-maker, Nest Egg Guru.
Although representatives of Financial Planning Hawaii may review client tax and legal documents, deliver tax-reporting documents, and raise awareness of potential tax and/or estate planning related mistakes or opportunities, none of this information should be construed as constituting specific tax or legal advice. All clients are encouraged to consult with their respective CPAs and/or attorneys for such guidance.
