By Sean Thompson, Prime Capital Financial
Key takeaways
- Confirmed gift: About 2 million children ages 11 to 17 in qualifying ZIP codes may get a SpaceX share starting in December.
- Proposed gift: Musk’s 2027 pledge has no confirmed details yet.
- Holding rules: Donated stock generally cannot be sold for five years or until the growth period ends, if sooner.
- Concentration risk: One hard-to-sell stock may add volatility.
- Taxes at 18: Withdrawals generally follow traditional IRA rules, with a possible 10% penalty before 59½.
- Next step: Confirm your child’s account is claimed.
Imagine opening an investment account for your child and discovering a little piece of SpaceX waiting inside. For roughly 2 million children, that could soon be a reality. SpaceX’s president is making a private gift of company shares to eligible children through their Trump Accounts. And Elon Musk has raised the stakes, pledging to extend the opportunity to every child in 2027. It’s an exciting prospect, but before parents start celebrating their child’s future as a SpaceX shareholder, there’s an important distinction to understand: One gift has been announced, while Musk’s broader promise has yet to become a reality.
And while the prospect of owning a piece of one of the world’s most talked-about companies is certainly exciting, there’s more to this story than a generous gift. Treasury rules place restrictions on when children can access these investments, making it important for parents to understand both the opportunity and the fine print. Still, there’s something compelling about introducing the next generation to investing before they’ve even earned their first paycheck. In a country where so many Americans get a late start building wealth, giving children a head start could be a gift that pays dividends well beyond the shares themselves.
How donated stock works inside the account
If you need a recap on how Trump Accounts work, our guide covers the basics, including the one-time $1,000 government contribution children born 2025 through 2028 may receive. It’s worth noting that, since being announced, the rules have changed somewhat in regard to what these accounts can contain. They are still primarily for index funds, but under Treasury’s temporary regulations, the accounts may also hold donated shares of individual publicly traded U.S. companies.
There’s one important catch: Donated shares generally cannot be sold for five years, unless the child turns 17 sooner. In that case, the restriction ends on December 31 of the year they turn 17. Even then, selling the shares doesn’t necessarily mean the child can withdraw the money, since Trump Accounts are subject to additional rules governing distributions.
If shares are sold early, the trustee must buy back the same number as soon as practicable, with limited exceptions such as an acquisition or delisting. Families also cannot refuse the gift.
What does it mean to have SpaceX in a Trump Account?
SpaceX has significant long-term growth potential, and many believe it has tremendous upside. The main risk is volatility and the uncertainty of owning any single company.
Because children generally have to hold these positions in their accounts for five years, the risk of a concentrated stock grows if it makes up a meaningfully large part of the portfolio. Trump Accounts are meant to contain diversified, long-term holdings, so talk to your children about risk tolerance and the potential downsides of putting all their eggs in one basket.
For most families, a combination of accounts would be appropriate. A Trump Account gives a child a head start on long-term investing, especially with possible government, employer or philanthropic contributions. A 529 plan remains attractive for education, with tax-deferred growth, tax-free withdrawals for qualified education expenses and some state tax benefits. A custodial brokerage account offers more flexibility and fewer limits on how the money is used.
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What is confirmed, and what is still a pledge?
Gwynne and Robert Shotwell are giving more than 2 million SpaceX shares, providing a share apiece to Trump Account holders ages 11 to 17 in ZIP codes with a median family income of $57,000 or less, or with too few residents to report. A later round is planned for children in military families serving overseas, children in foster care and children in some Texas-area counties. The shares are a personal gift from the Shotwells.
Musk’s pledge is less defined. On Oct. 19, he said on X he would give every kid in America a share of SpaceX in 2027, adding, “This will be the first of many.” He did not say how, though President Trump later said it would go through Trump Accounts.
What should you do now?
The opportunity to build wealth early in life is fresh and exciting. Trump Accounts offer a promising way to introduce the next generation to investing and give young people something incredibly valuable: time for their investments to grow.
If you haven’t already, now is a great time to check your child’s Trump Account status. U.S. children under 18 with a Social Security number are generally eligible, and according to the Treasury Department, approximately 70 million accounts have already been created, many through automatic enrollment. Your child may already have one! Parents can explore eligibility for the Shotwell gift through Invest America and monitor account activity through the Trump Accounts app.
A little head start today could make a meaningful difference in your child’s financial future. And that’s an opportunity worth exploring.
Have questions about Trump Accounts or how they might fit into your family’s broader financial plan? Connect with your Prime Financial advisor. We’re here to help you make the most of every opportunity to build lasting wealth.
Past performance of the S&P 500 Index is historical and no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. The 10.4% historical benchmark does not reflect the deduction of advisory fees, management fees, or brokerage expenses, which would reduce an investor’s actual return over time. Prime Capital Financial does not provide legal or tax advice; consult with a qualified professional before executing an account election.
This information does not constitute legal advice. Prime Capital Financial and its associates do not provide legal advice. Individuals should consult with an attorney regarding the applicability of this information for their situations.
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite 150, Overland Park, KS 66211. PCIA doing business as Prime Financial | Wealth | Retirement | Wellness | Family Office | Tax Advisory | Endowments & Foundations. Tax planning and preparation services are offered through Prime Capital Financial Tax Advisory.
