TD Wealth Retirement Insights: Spring 2026

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .91%
  • Median Property Tax: $3,718
  • Average Combined State and Local Sales Tax Rate: 1.82%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .74%
  • Median Property Tax: $2,793
  • Average Combined State and Local Sales Tax Rate: 6.98%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? YES: However, retirement income from pensions and retirement account distributions are exempt. 
• State Capital Gains Tax? YES: Capital gains are taxed as ordinary income. 

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .58%
  • Median Property Tax: $1,177
  • Average Combined State and Local Sales Tax Rate: 7.06%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .49%
  • Median Property Tax: $2,037
  • Average Combined State and Local Sales Tax Rate: 8.24%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: 1.41%
  • Median Property Tax: $6,285
  • Average Combined State and Local Sales Tax Rate: 0% (No Sales Tax)

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .99%
  • Median Property Tax: $2,712
  • Average Combined State and Local Sales Tax Rate: 6.11%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .49%
  • Median Property Tax: $1,420
  • Average Combined State and Local Sales Tax Rate: 9.61%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: 1.36%
  • Median Property Tax: $4,274
  • Average Combined State and Local Sales Tax Rate: 8.20%

• State Inheritance or Estate Tax? None

• Tax on Social Security Benefits? None
• Individual State Income Tax? None
• State Capital Gains Tax? None

• Property Tax and Sales Tax
  • Average Rate as a Percentage of Home Value: .55%
  • Median Property Tax: $1,793
  • Average Combined State and Local Sales Tax Rate: 5.56%

• State Inheritance or Estate Tax? None

Trump Accounts are essentially custodial IRAs for children with distinct contribution, investment, and distribution rules.

Trump Account Eligibility

• Age and Social Security Number
  Trump Accounts can only be opened for children prior to the year they turn 18. Additionally, the child must have a Social Security number to be eligible.
• Who Can Open a Trump Account for an Eligible Child? 
  A Trump Account can be opened by a legal guardian, parent, adult sibling, or grandparent of the child, in that order of priority.

Contribution Rules

• Who Can Contribute to an Established Trump Account?
  Contributions can be made by individuals (including family and friends), employers, charitable organizations and the government.
• What is the Annual Contribution Limit?
  Contributions from individuals and employers cannot exceed $5,000 per child per year in the aggregate. After 2027 this limit will be indexed for inflation. Certain contributions from charitable entities and the government will not count against this annual $5,000 limit per child.
• Only One Trump Account Per Child
  It is not possible to expand the annual contribution limit by opening multiple Trump Accounts for a child. Only one Trump Account per child is allowed.
• No Earned Income Requirement
  Unlike standard IRAs, there's no earned income requirement for Trump Accounts.

Investment Restrictions: Trump Accounts can only be invested in low-cost mutual funds and ETFs that track a major U.S. equity index (e.g., the S&P 500)

Tax Treatment of Trump Account Contributions

• Tax Implications: Contributions from Individuals
  Unlike Traditional IRAs, Trump Account contributions from individuals are made on an after-tax basis (no upfront deduction). This means that future withdrawals will only be taxed to the extent they include earnings on the after-tax contributions.
• Tax Implications: Contributions from Non-Individuals
  Trump Account contributions from employers, charitable entities, and the government are made on a pre-tax basis and are taxable when withdrawn.
• Tax Deferred Investment Growth
  Like other IRAs, Trump Account investments grow and compound on a tax deferred basis until withdrawals are taken

Distribution Rules

• Account is Restricted Until Age 18
  Distributions from Trump Accounts are generally prohibited until the year the beneficiary turns 18. At age 18, the beneficiary will assume ownership and control of their Trump Account and can roll the funds into a Traditional IRA.
• Taxes on Distributions
  Distributions of pre-tax contributions and investment returns will be taxed as ordinary income. Taxes will not be owed on distributions of non-deductible contributions from individuals. Traditional IRA rules apply, meaning distributions prior to age 59.5 may be subject to a 10% penalty unless an exception applies (like specified education expenses or qualified medical expenses).

For American children born between January 1, 2025, and December 31, 2028, there is a pilot program where the U.S. Treasury will add a one-time Trump Account seed contribution of $1,000. This is tantamount to free money for eligible children and even if families choose to forgo additional Trump Account contributions, there is no reason to pass on the seed contribution if it is available.

The process of opening a Trump Account involves filing an election with the IRS using Form 4547. Currently, Form 4547 can be filed online at trumpaccounts.gov to open an account and elect to receive the pilot program contribution for eligible children. Trump Accounts are scheduled to open on July 5, 2026.

Are Trump Accounts the best option for grandparents seeking to give grandchildren a leg up?

The answer really depends on your individual goals. For many Grandparents, education funding is the number one objective, and 529 plans are still a superior tool for that purpose. 529 plans can receive larger contributions and permit tax-free growth on investments if distributions are used for qualified education expenses. With a Trump Account, investment growth will be subject to income tax when withdrawn (regardless of the use) and annual contributions are limited to $5,000 per child.

Trump Accounts should also be compared with a UTMA custodial brokerage account for a child. UTMA accounts do not provide tax deferral; however, they are far more flexible and can benefit from capital gains tax rates. With Trump Accounts, earnings are tax deferred until distributions are taken, but those distributions will be taxed at typically higher ordinary income tax rates. There is also an additional 10% penalty for Trump Account distributions taken prior to age 59.5 unless an exception applies.

Perhaps the greatest utility for Trump Accounts is establishing a retirement fund for children that can compound, tax-deferred, over many decades, with the option to convert those funds to a Roth IRA after reaching age 18 if desired. The primary question grandparents should ask is how they intend gifted funds to be used. The answer will usually illuminate what type of investment vehicle is the best fit.

A QLAC is a type of deferred income annuity. In exchange for the purchase price (premium), a deferred income annuity provides a lifetime stream of income starting in a future year. This is distinguished from an immediate annuity where the lifetime income stream begins within twelve months of purchase. The QLAC purchaser can choose to delay the income stream until as late as age 85.

What makes a QLAC unique is the fact that the value of the QLAC is disregarded in calculating annual RMDs. When the QLAC owner reaches the predetermined income date, up to age 85, the annual payments will become part of the RMD. However, until the annuity income begins (which can be well after the typical RMD starting age of 73), funds placed in a QLAC are ignored in calculating RMDs. The benefit of this strategy is tax deferral and a reliable source of income once payments commence.

Retirement account owners are subject to a lifetime (inflation adjusted) limit for purchasing QLACs, and in 2026 that limit is $210,000. Additionally, if an annuitant were to die before reaching the income start date specified in their QLAC, it is possible their heirs would receive nothing. It is important to understand the available options when purchasing any type of annuity, especially regarding survivor benefits and return of premium options in the event of a premature death.

It's important to note that a successful QLAC will only defer, not eliminate, some RMDs and the associated income taxes. When the QLAC annuity payments commence (as late as age 85), RMDs will be higher due to the additional income stream. Consultation with a qualified tax advisor is recommended.