Open Enrollment 2027: Don’t Just Renew, Review

October 11, 2026 — Sam H. Fawaz

Open enrollment can feel like another task on a busy calendar. But your choices can affect what you spend on health care, how much you save in taxes, and how well your family is protected financially.

Your employer’s open enrollment season lets you select benefits for the upcoming plan year. It often takes place in the fall. Outside this window, you may be limited in changing certain elections unless you experience a qualifying life event, such as marriage, the birth of a child, or the loss of other coverage.

Before renewing last year’s selections, consider what has changed. Your health, family, finances, or employer’s offerings may make different benefits a better fit for 2027.

Pick a health plan that works for you

Look beyond monthly premiums. A lower-premium plan may have a higher deductible, more cost-sharing, or a more restrictive provider network. Higher premiums may be worth it if the benefits better match your expected care.

HMO, POS, EPO, and PPO generally describe provider-network and access rules. A high-deductible health plan, or HDHP, describes a plan design that may also use one of these network arrangements.

Understand networks and referral rules

  • Health maintenance organization (HMO). Coverage generally is limited to network providers, except for emergency care. Many HMOs require a primary care physician to coordinate care and provide specialist referrals.
  • Point of service (POS) plan. Out-of-network care generally is available at a higher cost. These plans usually require a primary care physician and specialist referrals.
  • Exclusive provider organization (EPO). Coverage is generally limited to network providers, except for emergency care. Specialist referrals often are not required.
  • Preferred provider organization (PPO). You can generally see specialists without referrals and receive covered out-of-network care, but you usually pay less within the network.

Confirm each plan’s requirements and actual costs rather than assuming one type is always less expensive.

Understand deductibles and preventive care

A deductible is the amount you pay for certain covered services before the plan begins sharing those costs. Some benefits may be covered beforehand.

Many plans cover eligible preventive services at no cost when you use network providers. However, not every service provided during a preventive visit necessarily qualifies for no-cost coverage.

Consider a high-deductible health plan (HDHP)

HDHPs often offer lower premiums in exchange for higher upfront costs. For 2027, the minimum deductible for an HSA-qualified HDHP is $1,750 for self-only coverage and $3,500 for family coverage. Actual deductibles may be higher.

Certain preventive services may be covered in full before the deductible. Using network providers generally lets you benefit from negotiated rates even before you meet it.

Compare total health plan costs

Estimate each plan’s annual cost by adding premiums to expected care expenses, including deductible payments, copays, and coinsurance. Avoid counting the same expense twice.

Use last year’s care as a starting point, then adjust for anticipated procedures, prescriptions, or family changes. Your employer may offer a comparison calculator.

Also consider the in-network out-of-pocket maximum, which limits your annual cost sharing for covered in-network services. Premiums, noncovered services, and most out-of-network expenses do not count toward it.

If both spouses have workplace coverage, compare enrolling together in one employer plan versus maintaining separate plans. Watch for spousal surcharges and compare the cost of covering children under each plan.

Before enrolling, confirm that your preferred providers are in-network and understand how your prescriptions are covered.

Make the most of a health savings account

If you choose a health savings account (HSA) qualified plan, consider how an HSA could fit your budget. A high deductible alone does not necessarily make a plan HSA-qualified.

To contribute, you generally must have qualifying coverage, no disqualifying additional health coverage, and no Medicare enrollment. You also cannot be eligible to be claimed as someone else’s tax dependent.

For 2027, contribution limits are $4,500 for self-only coverage and $9,000 for family coverage, including employer contributions. Eligible spouses generally share the family contribution limit. Eligible individuals age 55 or older can contribute another $1,000. Each qualifying spouse must make their catch-up contribution to their own HSA. Limits may be reduced for partial-year eligibility.

Contributions through a qualifying employer payroll arrangement generally avoid federal income and payroll taxes. Direct contributions generally provide a federal income tax deduction, but not payroll-tax savings. State income tax treatment may differ.

Withdrawals, including investment earnings, are federally tax- and penalty-free when used for qualified medical expenses. Unspent balances remain yours indefinitely, including after a job change or retirement, and can fund qualified expenses even when you are no longer eligible to contribute.

Expenses generally must be incurred after the HSA was established and cannot be reimbursed elsewhere or claimed as an itemized medical deduction. Keep records to support tax-free withdrawals.

If your finances allow, contributing while eligible and paying current medical bills from other funds can leave more money invested for potential tax-free growth. Consider your cash needs and investment risk before using this strategy.

Save on taxes with a flexible spending account

An employer-sponsored flexible spending account, or FSA, lets you set aside money for eligible expenses. Contributions generally avoid federal income, Social Security, and Medicare taxes, and often state and local income taxes. Your savings depend on your tax rates and eligibility.

Health FSAs

For plan years beginning in 2026, the federal limit on employee pretax contributions is $3,400. Employers may set lower limits. Check enrollment materials for the applicable 2027 amount.

Funds can pay qualified medical, dental, and vision expenses not reimbursed by insurance.

General-purpose health FSA coverage generally prevents HSA contributions while that coverage is in effect. This can include a spouse’s FSA that can reimburse your expenses, even if you never use it.

An HSA-compatible limited-purpose FSA (typically for dental and vision expenses) or a qualifying post-deductible FSA may allow contributions to both accounts. A dependent-care FSA does not affect HSA eligibility.

Dependent-care FSAs

Dependent-care FSAs are not just for child care. They may also cover eligible care for a spouse, parent, grandparent, or other qualifying adult who is incapable of self-care and lives with you for more than half the year. Dependency and work-related care requirements also apply.

You may set aside up to $7,500 annually, or $3,750 if married filing separately, subject to your employer’s plan limit. For married couples filing jointly, the $7,500 limit generally covers combined dependent-care benefits, including employer contributions.

Your tax-free amount may be lower based on your earned income and your spouse’s. Care generally must enable you and your spouse to work or look for work, with special rules for a spouse who is a full-time student or incapable of self-care.

Eligible care can include:

  • Care for qualifying children under age 13, or a qualifying spouse or dependent who is incapable of self-care.
  • Day care, preschool, before- and after-school care, and day camp.

For qualifying adults receiving care outside your home, the person generally must also regularly spend at least eight hours a day in your home.

Overnight camp and kindergarten tuition do not qualify. Expenses paid with tax-free benefits cannot also support a child and dependent care tax credit.

Understand spending deadlines

FSAs generally follow a use-it-or-lose-it rule. A health FSA may offer a carryover of up to $680 for plan years beginning in 2026 or a grace period of up to 2½ months, but not both.

Dependent-care FSAs do not qualify for that carryover provision, although they may still offer a grace period.

Check deadlines for receiving eligible care and submitting claims. Extra time to submit claims does not necessarily extend the time to incur expenses.

Review dental and vision coverage

Next, consider benefits that help manage other expenses.

For dental coverage, compare premiums, deductibles, networks, and your share of preventive services, fillings, and major procedures. The annual benefit maximum limits what the insurer pays, unlike a medical out-of-pocket maximum, which limits your cost sharing for covered in-network services. Check waiting periods, too.

For vision coverage, review exam benefits, eyewear allowances, copays, and how often benefits apply. Compare premiums and expected expenses with what you would otherwise pay.

Revisit your life insurance needs

Consider what your survivors would need for debts, education expenses, and replacing your income. Review workplace coverage alongside individual policies to identify gaps.

Confirm what happens if you change jobs or retire. You may be able to continue or convert coverage, subject to requirements and deadlines.

Review primary and contingent beneficiaries after family changes.

Employer-provided group-term life insurance above $50,000 can create taxable income based on the IRS-calculated cost of excess coverage, not the full death benefit.

Protect your income with disability insurance

Disability insurance can replace part of your income if a covered illness or injury prevents you from working.

Compare the income percentage replaced, maximum monthly benefit, waiting period, and benefit duration. Also understand the definition of disability and any exclusions or limitations.

Benefits generally are taxable when premiums were employer-paid or paid with pretax dollars. Benefits attributable to premiums you paid with after-tax dollars generally are federally tax-free.

Consider whether the amount you would actually receive, together with emergency savings, could support your household during an extended absence.

Explore your other benefits

Some employers offer student-loan assistance through qualifying educational-assistance programs. For 2026, the tax-free limit is $5,250 per employee for combined eligible educational assistance, including qualifying student-loan payments. It is not a separate loan-repayment allowance. Inflation indexing begins in 2027, so confirm the applicable amount.

Other offerings may include long-term care insurance, pet insurance, financial counseling, fitness discounts, and wellness incentives. Compare voluntary insurance with outside alternatives and look for useful programs you may have overlooked.

Make your choices count

Your benefits are part of your financial plan, not just annual enrollment forms. Before the deadline, ask: What has changed? What will each option cost? Where do you need additional protection?

Thoughtful answers can help you choose benefits that support everyday needs and longer-term goals.

Please reach out if you would like help evaluating how your choices fit into your broader financial plan.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss retirement, college, tax, or other financial planning matters, please contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first and has no products to sell. If you are not a client, an initial consultation is complimentary, with no pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Ghost Tapping: What Consumers Need to Know About Tap-to-Pay Scams

October 4, 2026 — Sam H. Fawaz

As more people use tap-to-pay technology for everyday purchases, scammers have found a new way to exploit that technology in the form of ghost tapping. While ghost tapping sounds like something out of a scary movie, it is a scam with very real consequences.

Tap-to-pay technology is designed to make payments quick and convenient. Whether you use a contactless bank or credit card or a smartphone wallet, the systems rely on near-field communication, or NFC, to send payment information when placed near a card reader. It is typically a faster, more secure way to pay, protected by layers of encryption.

Unfortunately, criminals are always looking for new ways to take advantage of consumers and have begun to use contactless payment technology to steal money and personal data.

In a ghost tapping scam, fraudsters use hidden card payment readers, fake terminals, or compromised devices to trigger an unauthorized contactless transaction. In some cases, they may try to get close enough to a person’s wallet, pocket, or handbag to read a contactless card (did someone really accidentally bump into you?).

In others, they use social engineering to trick someone into tapping their phone or card against a fake or altered payment terminal (remember those fake gas station pump credit card scanners?) Some scams may also involve loading stolen card details onto a fraudster’s digital wallet and then using them to make contactless purchases.

It is important to keep the risk in perspective. Modern contactless cards and digital wallets include multiple security protections, and a successful unauthorized “drive-by” charge from someone passing nearby may be harder than it sounds.

In many situations, the greater risk is social engineering. A scammer may pose as a vendor, charity worker, parking attendant, or fundraiser and pressure a consumer to tap a card or phone without clearly displaying the merchant name, purchase amount, or any added tip.

Consumers should treat an unexplained request to tap the same way they would treat an unfamiliar link or an unexpected request for account information: pause, verify, and walk away if something does not seem right.

The Michigan Department of the Attorney General advises consumers to read the payment screen before tapping and verify the merchant name, total charge, and any tip amount. Consumers should not allow themselves to be rushed into a transaction and should stop if the information on the terminal does not match what they expected. The Attorney General also cautions consumers to resist pressure to act immediately, particularly when a stranger creates urgency or asks for financial information.

Several warning signs suggest a tap-to-pay transaction may not be legitimate. Be especially cautious when a seller or individual:

  • Pressures you to pay immediately or discourages you from reviewing the screen.
  • Refuses to provide a receipt or cannot clearly explain the charge.
  • Uses a device that appears damaged, altered, unbranded, flimsy, or disconnected from a normal point-of-sale setup.
  • Asks you to tap more than once because the first transaction supposedly “did not go through.”
  • Displays a transaction total, merchant name, or tip prompt that differs from what you expected.
  • Approaches people in crowded locations and claims to collect donations, sell tickets, or accept payments without a clearly identifiable business or organization.

While the idea of someone stealing your money with a quick tap sounds frightening, most major banks and card providers have security systems that monitor unusual account activity, and many contactless transactions have value limits.

In addition, mobile wallets typically require facial recognition or a passcode before approving a payment. Still, there are steps consumers can take to help reduce the risk of falling victim to a ghost tapping scam:

  • Keep your cards and phone secure, especially in crowded places, such as airports, shopping centers, and public transportation.
  • Be cautious if someone carrying a device gets unusually close to you for no obvious reason.
  • Before tapping, confirm the merchant name, exact dollar amount, and tip amount shown on the payment terminal. If the information is incomplete or doesn’t match the transaction, don’t tap.
  • Do not let a stranger handle your unlocked phone or guide you through a payment screen. A legitimate merchant should allow you to control your own device and review the transaction before authorizing it.
  • Check whether your bank offers card controls in its online app, and use contactless features only when necessary.
  • Set up real-time transaction alerts for card purchases, including small-dollar transactions. Fraudsters may use small unauthorized charges to test whether a card is active before attempting larger transactions.
  • Use a strong phone passcode and biometric security, such as facial recognition or fingerprint authentication, for mobile-wallet apps.
  • Check your account regularly for fraudulent activity and set up fraud alerts with your bank or credit card provider so you are notified of any suspicious card activity.
  • Consider using a wallet with RFID-blocking technology. While it may add an extra layer of protection, it should not replace more important safeguards such as reviewing transactions, enabling alerts, and protecting your cards and phone.
  • Keep receipts and, when practical, take a screenshot of unexpected payment prompts or merchant information. This information may be useful if you need to dispute a charge.

If you are targeted by a ghost tapping scam, contact your bank or credit card provider immediately and ask them to freeze or cancel your card. You should also update any passwords that are linked to your banking and digital-wallet accounts.

Speed matters if you believe an unauthorized transaction has occurred. Dispute the charge through the card issuer’s official mobile app, website, or the telephone number printed on the back of the card. Don’t rely on a phone number, text link, QR code, or email supplied by an unfamiliar person. Review recent activity on all cards and digital wallets, since criminals may test more than one payment method.

Also remove the affected card from any digital wallet until the issuer provides guidance. Review your financial accounts for unfamiliar devices, new contact information, or changes to account settings. If you believe your identity or account credentials were compromised, change passwords promptly and use unique, strong passwords for financial accounts.

Michigan Attorney General Dana Nessel advises scam victims to report fraudulent charges to their bank, credit card company, or payment app immediately, notify local law enforcement when appropriate, and consider filing a report with the Federal Trade Commission. Michigan consumers may also submit a consumer complaint to the Attorney General’s Consumer Protection Team. Other states have similar consumer protection teams.

As Halloween approaches, the only ghost tapping you should encounter is the kind that comes with a haunted house, a dark hallway, and a good scare, not an unexpected charge on your account. Before you tap, take a moment to verify the details and keep a close eye on your accounts, so scammers don’t turn a little convenience into a costly trick.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Source: Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.

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IRS Announces Rare Mid-Year Standard Mileage Rate Increase

September 13, 2026 — Sam H. Fawaz

In an unusual mid-year action, the Internal Revenue Service has announced an increase in the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, and moving expense purposes for the second half of 2026. This change was announced in Internal Revenue Bulletin 2026-29. The mid-year change was attributed to recent increases in fuel prices. The standard mileage rate for computing the deductible costs of operating an automobile for charitable purposes is set by statute and remains unchanged.

What are the new rates?

For July 1, 2026, to December 31, 2026, the standard mileage rates are as follows:

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  • Business use of auto: 76 cents per mile (up from 72.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used for business purposes. If you are an employee, your employer may reimburse you for your business travel expenses using the standard mileage rate. However, if you are an employee and your employer does not reimburse you for your business travel expenses, you are generally not able to deduct your unreimbursed travel expenses.
  • Medical use of auto: 23.5 cents per mile (up from 20.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used to obtain medical care (or for other deductible medical reasons) if you itemize deductions on your federal income tax return. You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount of your adjusted gross income.
  • Moving expense: 23.5 cents per mile (up from 20.5 cents for January 1, 2026, to June 30, 2026), may be deducted if an auto is used by a member of the Armed Forces on active duty to move, pursuant to a military order, to a permanent change of station (unless such expenses are reimbursed). An employee or new appointee of the intelligence community may also deduct moving-related costs if the move relates to a change in assignment requiring relocation. The moving-expense deduction is not currently available to other taxpayers.
  • Charitable use of auto: 14 cents per mile (the same as for January 1, 2026, to June 30, 2026), may be deducted if an auto is used to provide services to a charitable organization if you itemize deductions on your income tax return. Your charitable deduction may be limited to certain percentages of your adjusted gross income, depending on the type of charity, and subject to a 0.5% floor.

How rare is a mid-year adjustment?

Typically, the IRS issues new optional standard mileage rates during the last few months of the year, with the new rates effective January 1 of the following year. Occasionally, however, the IRS announces mid-year changes. This year’s increase will be the fifth mid-year increase in 20 years.

Prior years with mid-year adjustments include 2005, 2008, 2011, and 2022. As with this year’s increase, these prior mid-year standard mileage rate announcements were largely tied to fuel costs.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

Source: Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.

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SpaceX, Anthropic, and the Danger of IPO Euphoria

June 15, 2026 — Sam H. Fawaz

The SpaceX (symbol: SPCX) initial public offering (IPO) arrived on Friday with historic scale and an equally historic level of enthusiasm. Within hours of listing, the company approached a $2 trillion valuation, placing it among the world’s largest companies almost instantly.

The stock was priced at $135 and closed its first day of trading near $161, a respectable one-day gain of over 19%. By most measures, the launch was a success.

There’s no question that SpaceX is a remarkable business. The combination of Starlink’s recurring revenue, reusable rocket technology, and its expanding ambitions in artificial intelligence and orbital infrastructure makes it one of the most ambitious enterprises ever brought to public markets.

But investors need to separate two things that often get conflated during moments like this: a great company and a great investment at today’s price.

At over 100x sales, the current valuation embeds not just success, but near-perfection.

What You’re Really BuyingForm S-1 is the basic SEC “go public” document that a company must file before an IPO, laying out its business, finances, risks, and how it plans to use the money raised so investors can decide whether to buy the stock.

A closer look at the SpaceX Form S-1 tells a nuanced story. SpaceX today is effectively three businesses layered together:

  • A strong core: Starlink, generating high-margin, recurring revenue
  • A proven enabler: reusable rockets lowering the cost of space access
  • A set of long-dated bets: Artificial Intelligence, orbital data centers, and space commercialization

A reasonable sum-of-the-parts framework might justify a valuation closer to $1–$1.1 trillion, even after applying a generous premium for Elon Musk’s track record. The gap between that and the IPO valuation represents something very important: a priced-in call option on the future of space itself.

Roughly 30–40% of the valuation is tied not to current earnings power, but to outcomes that may take a decade or longer to materialize, if they materialize at all.

That is not speculation in a negative sense, but it is speculation nonetheless.

The IPO Reality: Liquidity Event First

Only about 4% of shares were floated (offered) in the IPO. The rest remain with insiders, employees, and early investors, many of whom are sitting on enormous gains.

This matters.

The IPO is not primarily about funding rockets. It is, in large part, a liquidity event that allows early stakeholders to sell into peak demand. Public investors are stepping in at a point where much of the value creation has already occurred in private markets.

History shows this is rarely where the best risk/reward entry point exists.

Mega-IPOs and Market History

The pattern is consistent:

  • The largest, most anticipated IPOs tend to debut at elevated valuations
  • Early trading is driven by constrained supply and heavy demand
  • Over time, as stock lock-ups expire and supply increases, prices often normalize

Recent IPO examples reinforce this:

  • Rivian: down ~80% from early highs
  • Coupang: down more than 50%
  • Lineage Logistics: Down about 50% within two years
  • Several recent large IPOs are still below listing prices

Even the “winners” like Airbnb and Snowflake have delivered flat-to-negative returns for investors who bought on day one.

In fact, the majority of recent mega-IPOs have traded below their initial listing price within a year.

Even successful long-term companies often struggle after going public. Tesla, for example, went essentially nowhere for years after its IPO before eventually delivering outsized returns. Facebook also traded below its offering price for an extended period before recovering.

This does not mean SpaceX will fail. It means that the entry price matters.

The key takeaway: timing and valuation matter just as much as the quality of the business.

The Supply-Demand Illusion

Early trading in IPOs can be misleading.

With such a small percentage of shares available, supply is artificially constrained. At the same time, demand is amplified by media coverage, retail enthusiasm, and, in some cases, forced buying from index funds. Underwriters have a vested interest in a successful IPO, so they’ll support the stock price by buying shares for the first few days after the IPO.

This imbalance can push prices higher in the short term, but it is not sustainable. As lock-up periods expire and more shares become available, supply increases significantly, often putting downward pressure on prices.

Tesla, SpaceX, and the Merger Question

One of the most discussed topics right now is a potential merger between Tesla and SpaceX.

Based on the Form S-1, there is no indication that such discussions have occurred at the board level. From a legal and disclosure standpoint, that strongly suggests any transaction, if it were ever considered, is likely years away, not imminent.

That said, the relationship between the companies is real and growing:

  • Tesla supplied over $500 million in energy infrastructure to SpaceX’s AI operations
  • Joint initiatives include chip development and AI-driven systems
  • Tesla has already taken a stake in SpaceX

These are meaningful commercial ties, but they do not equate to a pending merger. For now, think strategic partnership, not consolidation.

Index Inclusion: A Hidden Driver

Another overlooked dynamic is how quickly SpaceX could be added to major indexes.

Nasdaq’s new “fast entry” rules could force inclusion into the Nasdaq-100 within weeks, potentially driving billions in passive buying. At the same time, S&P maintains stricter profitability and seasoning requirements, which could delay inclusion there.

This creates a new dynamic:

  • Short-term demand driven by index flows
  • Long-term uncertainty around sustained institutional ownership

It also raises a broader issue: index rules themselves are evolving in response to companies like SpaceX, Anthropic, and OpenAI.

Despite its size, SpaceX is not immediately eligible for inclusion in the S&P 500 index due to profitability and trading history requirements. While some indexes may add it quickly, others will not. That distinction matters, as index inclusion can drive substantial institutional demand.

Investors should not assume automatic or immediate support from passive investment flows.

Sector Classification Matters More Than You Think

The S&P 500 is divided into eleven sectors, each with different “weights” in the index. Where SpaceX ultimately lands, Communication Services, Industrials, or even a revised sector structure, will influence how capital flows into the stock.

  • The Communication Services sector is the most likely home, driven by Starlink
  • The Industrials sector reflects legacy aerospace perception
  • The Technology sector is possible, but would further concentrate an already dominant sector

This is not just academic. Sector placement affects ETF and mutual fund flows, institutional allocations, and ultimately valuation support.

A Broader Message for Upcoming IPOs (Including Anthropic and Open AI)

What we are seeing with SpaceX is not an isolated event. It is part of a broader trend:

  • Larger companies are staying private longer
  • Public investors are gaining access later in the lifecycle
  • Valuations reflecting peak optimism at the point of entry

We are seeing similar enthusiasm building around other potential IPOs, including companies like Anthropic and OpenAI. Anthropic, OpenAI, and other AI-driven IPOs are likely to follow a pattern similar to SpaceX’s.

This is a recurring cycle in the markets. Investors become eager to “get in early” on transformative companies, fearing they may miss the next Amazon or Google. But by the time a company reaches the public markets today, much of the explosive growth has already occurred in private hands.

The public market often receives a more mature company, at a valuation that already reflects high expectations.

The risk is not that these companies are poor businesses. The risk is overpaying at the moment of maximum narrative strength.

A More Disciplined Approach

None of this suggests avoiding these companies altogether. SpaceX may very well be a dominant force for decades. The same could be true for leading AI firms.

However, discipline is critical:

  • Avoid chasing first or second day excitement
  • Let valuations normalize over time
  • Watch how the stock behaves after lock-up periods lapse
  • Focus on risk-adjusted entry points rather than headlines

There is often a far greater opportunity after the initial hype fades and price discovery becomes more grounded.

Final Thought: Patience Over Participation

The most important question is not whether SpaceX succeeds. It very well may.

The question is whether buying into the initial excitement offers a favorable risk/reward tradeoff.

History suggests that it rarely does.

There will likely be a time when SpaceX, or companies like Anthropic, offer compelling entry points. Those opportunities tend to emerge after the hype fades, after supply increases, and after valuations are tested by reality.

Until then, discipline matters more than enthusiasm.

Although the fear of missing out is a powerful motivator, there is another saying in the investing and trading business:

It’s better to be out of a stock and wishing you were in, than being in a stock wishing you were out.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets-May 31, 2026

May 31, 2026 — Sam H. Fawaz

It’s the end of May, and stock markets continue to demonstrate remarkable strength. The S&P 500 and Nasdaq indexes both reached record highs on the last trading day of the month (Friday), capping off a powerful May in which major indices gained between 2.5% and 11%. Notably, only Bitcoin and gold declined during the month, and year-to-date, Bitcoin remains the only major asset class down double digits, while bonds are modestly negative.

Since the March 30 intraday low, the S&P 500 index has rallied approximately 20%, marking the strongest nine-week winning streak on record. While last week’s gains were relatively modest, they were sufficient to extend this historic run.

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A Rare and Powerful Rally

This type of sustained advance is uncommon. Since 1950, there have only been 10 similar streaks, and just two in this century. Historically, these periods are often followed by short-term consolidation (sideways movement), typically driven more by marking time and sector rotation than by sharp price declines.

More importantly, forward returns following these streaks, over periods ranging from one month to one year, have generally been positive. These types of environments have not typically marked major market tops or the beginning of bear (downtrending) markets.

That said, it is reasonable to expect a near-term pause, pullback, or correction. After such an extended run, some degree of consolidation would be healthy. This should not be confused with an imminent bear market; longer-term conditions still support higher equity prices, and I expect the indexes will be higher by year’s end.

Liquidity, Artificial Intelligence, and Expanding Opportunity

Several structural forces continue to underpin the market:

  • Artificial intelligence remains a dominant investment theme, driving capital spending, earnings growth, and investor enthusiasm.
  • A wave of high-profile IPOs, including SpaceX and Anthropic, has the potential to attract new capital to public markets.
  • Corporate earnings have broadly exceeded expectations, reinforcing confidence in equity valuations.

At the same time, speculative behavior has re-emerged. Recent trading activity suggests increased risk-taking, with rapid money rotations between stocks and heightened momentum-driven flows. This reflects abundant liquidity but also introduces fragility if sentiment shifts.

The Macroeconomic Backdrop: Mixed Signals

While markets are strong, economic data presents a more nuanced picture:

  • New home sales declined 6.2% month-over-month, with inventory rising to a 9.4-month supply, well above the 4–6-month range considered balanced. Affordability remains a key constraint.
  • Consumer confidence edged lower, with households increasingly reducing discretionary spending and delaying large purchases.
  • Inflation, as measured by the PCE Index (Personal Consumption Expenditures), is re-accelerating. Headline PCE rose to 3.8% year-over-year, while core PCE (which measures the prices U.S. consumers pay for goods and services excluding food and energy) increased to 3.3%, both well above the Federal Reserve’s 2% target.

Consumer sentiment just hit an all-time low of 44.8 in May, with current conditions and future expectations both collapsing to record pessimism.

This is the first time since 1953 that all three (overall, current, and future) sentiment measures have simultaneously set new lows, making today’s mood historically bad. Consumers feel worse about both their present situation and their outlook than at any point in roughly 75 years of data. They’re especially worried about long-run inflation, the rising cost of living, and deteriorating personal finances. If these attitudes lead households to cut back on spending, it could weigh meaningfully on the U.S. economy and, eventually, on stock prices.

These divergences highlight an important principle: the economy and the stock market often move on different timelines. While portions of the economy, particularly lower- and middle-income consumers, are under pressure, corporate earnings and investment, especially in artificial intelligence, remain robust.

The Federal Reserve: No Immediate Safety Net

Markets have, at times, relied on the assumption of a “Federal Reserve Put”, the idea that policymakers will step in to support asset prices during periods of weakness. That assumption is less reliable today.

With inflation still elevated and the labor market relatively stable, the Federal Reserve has limited flexibility to cut rates aggressively. Any expectation of rapid easing may be premature. As a result, markets could be vulnerable to disappointment if policy remains tighter for longer. A small rate hike in the next 12 months would not be surprising if inflation remains sticky.

The new Federal Reserve Chairman, Kevin Warsh, has his work cut out for him.

Oil, Geopolitics, and Expectations

Recent declines in oil prices have supported stocks by easing inflation concerns and lowering yields. Much of this optimism is tied to expectations of a potential U.S.–Iran agreement and increased global energy supplies.

However, markets may have already priced in much of this positive outcome. If oil prices stabilize or decline less than expected, or if geopolitical developments take longer to materialize, equities could face a “sell-the-news” reaction.

The Week Ahead: A Critical Test

The coming week is dense with catalysts and could set the tone for the market’s next phase.

1. May 2026 Monthly Jobs Report (Friday June 5)

Economists expect approximately 90,000 new jobs, with an unemployment rate near 4.3%. Markets are looking for a “Goldilocks” outcome-a strong enough to confirm economic stability, but not so strong that it reignites inflation concerns or pushes interest rates higher.

2. AI Conferences and Commentary

Events such as Computex Taipei, Microsoft Build, and the Snowflake Summit will keep AI at the forefront. Investors will be watching for signs that demand is broadening beyond semiconductors into software, infrastructure, and enterprise applications.

3. Federal Reserve Signals

Federal Reserve speakers and the Beige Book will provide insight into inflation, labor markets, and regional economic conditions. Any shift toward a more hawkish tone could challenge current market optimism.

4. Key Earnings Reports

Companies reporting earnings this week include Broadcom, CrowdStrike, Hewlett Packard Enterprises, Medtronic, Palo Alto Networks, and several major retailers (see below). These results will help determine whether earnings strength is broad-based or still concentrated in a narrow group of leaders.

5. Consumer Health Indicators

Retail earnings and updates, including from Dollar General, Ollie’s, Signet Jewelers, Victoria’s Secret, Macy’s, Ulta Beauty, Five Below, and Lululemon, will offer a clearer picture of consumer behavior. Spending remains intact but increasingly selective.

What Matters Most Now

The market remains in a bullish uptrend, supported by earnings growth, AI-driven investment, and resilient economic activity. However, conditions are becoming more balanced:

  • Valuations are higher.
  • Expectations are elevated.
  • Positioning is more crowded, particularly in technology and AI-related names.

For the rally to continue, incoming data must validate current optimism. That means stable employment, contained interest rates, and continued strength in earnings and AI demand.

Bottom Line

The primary question is no longer whether the market is strong—it clearly is. The more important question is whether it can sustain that strength amid a heavy calendar of economic data, policy signals, and corporate results.

If markets continue to absorb news constructively, maintain leadership, and attract buyers on pullbacks, the path higher remains intact. However, if positive developments trigger selling, or if interest rates rise, it would signal a transition from momentum-driven gains to a period of consolidation.

Investors should be prepared for near-term volatility while recognizing that the broader trend remains quite constructive.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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What’s Going on in the Markets May 17, 2026

May 31, 2026 — Sam H. Fawaz

Editor’s Note: This is a reposting of a video that mysteriously disappeared from May 17 2026.

What’s really driving this stock market surge, and can it keep going? View my short video here.

In this week’s update, I break down the powerful rally we’ve seen since the March 30th lows, with the S&P 500 up 18% and the NASDAQ soaring 28% in just a month and a half. Earnings have been nothing short of impressive, with nearly 90% of companies reporting strong results. But there’s a twist: inflation is starting to creep back up, and that could change the Fed’s next move on interest rates.

I’ll walk you through what this combination of strong earnings and rising inflation means for your portfolio, why I expect some short-term “backing and filling” after this parabolic run, and why I still believe 2026 is shaping up to deliver solid double-digit stock market returns. 

If you want a clear, no-nonsense view of where the market stands right now and where it may be headed next, you’ll find this video worth your time.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Scam Alert: Don’t Answer the Call or Text

April 12, 2026 — Sam H. Fawaz

Fraudsters are texting fake “Apple Pay fraud alerts” to trick people into authorizing their own transfers—making it almost impossible to recover any lost money.

Forbes reported that Apple is warning iPhone users about a surge in scam calls and texts that impersonate Apple, Apple Support, or Apple Pay security. These messages often claim there’s suspicious activity on your account, a blocked Apple Pay transaction, or a problem that needs “urgent” attention, and then push you to click a link or call a phone number where scammers try to steal passwords, verification codes, or financial details.

Apple’s guidance is simple: if you receive an unexpected call or message claiming to be from Apple, do not answer, do not call back any number in the message, and do not click links or share any codes or passwords. Instead, hang up and contact Apple only through official channels you find yourself (the built‑in Support app, apple.com, or the phone number on Apple’s website), and forward suspicious messages to reportphishing@apple.com.

To reduce the incidence of fake messages reaching your eyes, on your iPhone (sorry, Android users, I’m no help here, but I imagine they’re targeting Google Pay users as well):

1) Go to Settings → Apps → Messages → Unknown Senders and turn on “Screen Unknown Senders”.

2) Enable Filter Spam: Under Text Message Filter, choose Text Message Filter or another spam filtering service you might already subscribe to.

3) Never click suspicious links, even if they look like Apple or your bank/brokerage firm.

4) Keep your iPhone operating system (iOS) up to date to ensure you have the latest security updates: Settings → General → Software Update and turn on Automatic Updates if they’re not already on.

Source: Apple Warns All iPhone Users—Do Not Answer These Calls And Texts-Forbes Article

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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No Paper, Only Plastic or Digital: Welcome to Tax Filing Season 2026

February 28, 2026 — Sam H. Fawaz

I can’t believe it’s here again—the hustle and bustle of the 2025 tax filing season.

Didn’t we just finish filing 2024 returns and 2025 tax planning?

What’s new

The One Big Beautiful Bill Act, signed into law in July 2025, made several changes taxpayers may want to be aware of when preparing their returns, including these:

· New deductions for tip income and overtime pay are available: up to $25,000 for qualified tips and up to $12,500 ($25,000 if married filing jointly) for overtime, both with income limits.

· A new $6,000 senior deduction is available for taxpayers 65 and older ($12,000 if both taxpayers are 65 and older and married filing jointly), with income limits.

· The Child Tax Credit has been increased to $2,200 per qualifying child.

· The State and Local Tax deduction cap increased to $40,000 for most filers, though this benefit begins to phase out for individuals with a modified adjusted gross income (MAGI) over $500,000.

· New deduction for interest on loans for qualifying new vehicles with final assembly in the U.S., for purchases made in 2025–2028.

· Starting in 2026, a new above‑the‑line charitable deduction up to $2,000 for cash gifts to qualifying charities, available even if you don’t itemize, subject to income limits.

Tips to make filing easier

To speed a potential tax refund and help with tax filing, the IRS suggests the following:

· Make sure you have received Form W-2 and other earnings information, such as Forms 1099, from employers and payers before heading to your favorite tax preparer or starting self-preparation.

The dates for furnishing such information to recipients vary by form, but they are generally not required before February 1, 2026. You may need to allow additional time for mail delivery.

Some brokerage 1099s may not be available until sometime in March, and Schedule K-1s for partnership, S corporation, and trust beneficiaries may be furnished close to or after the deadline (which may require an extension to file).

· Go to irs.gov to find Form 1040 or Form 1040-SR (available for seniors born before January 2, 1960), and their instructions.

· File electronically and use direct deposit or direct debit.

· Request an extension of time to file rather than rush through preparation. An extension of time to file does not extend the time to pay, so you must estimate your liability and send it in with your extension.

· Consider whether the cost of professional tax preparation, in light of many new and confusing tax provisions, is in your best interest. Professional tax preparation is recommended for anything but the simplest returns and often pays for itself in mistakes avoided, time, and tax savings, and frustration.

· Check irs.gov for the latest tax information.

Key filing dates

Here are several important dates to keep in mind:

· January 9. IRS Free File opened. IRS Free File Guided Tax Software, available only at irs.gov/freefile, allows participating software companies to accept completed 2025 tax returns from any taxpayer or family with an adjusted gross income (AGI) of $89,000 or less and electronically file the returns with the IRS.

On January 26, Free File Fillable Forms became available to taxpayers with an AGI above $89,000 to fill out and e-file themselves at no cost.

· January 26. The IRS began accepting and processing individual tax returns.

· April 15. The deadline to file 2025 federal income tax returns (or request an extension) arrives for most taxpayers. If you’re required to make quarterly estimated income tax payments, your 1st quarter 2026 estimated payment is also due (some state tax payment due dates vary slightly from federal due dates).

· June 15 and September 15. These are the due dates for the 2nd- and 3rd-quarter 2026 federal estimated income tax payments. These payments are due even if your 2025 tax return is on extension and has not yet been filed.

· October 15. This is the federal filing deadline for those who requested an extension on their 2025 tax returns.

January 15, 2027. This is the due date for the 4th quarter 2026 federal estimated income tax payment.

Tax refunds

The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. The IRS expects to issue most tax refunds within 21 days of receiving a tax return. That’s true only if:

(1) the return is filed electronically,
(2) the tax refund is delivered via direct deposit and,
(3) there are no issues with the tax return.

To minimize processing delays, the IRS encourages people to avoid paper tax returns whenever possible.

Paper Tax Refund Checks Being Phased Out by the IRS

As part of a broader U.S. Department of the Treasury initiative to transition to fully electronic federal payments, the IRS is phasing out paper tax refund checks for individual taxpayers beginning with the 2026 federal tax filing season and is also reducing reliance on paper checks paid to the IRS in favor of electronic payment options.

Why is the IRS making this change?

The move towards electronic payments is designed to protect taxpayers from the possibility of a paper refund check being lost, stolen, altered, delayed, or returned to the IRS as undeliverable. Electronic refunds (and payments) are also more cost-efficient and faster than non-electronic payments, which can take six weeks or longer to process.

What does this mean for taxpayers?

No changes are being made to the process of filing a tax return. Taxpayers should continue to file their tax returns as they normally would, using one of the existing filing options. However, the shift in refund delivery will be towards electronic payment methods. As a result, taxpayers should have all of their banking information (e.g., account and routing numbers) readily available when filing their returns.

While most tax refunds will be delivered by direct deposit or other secure electronic methods, alternative options, such as prepaid debit cards or digital wallets, will still be available for taxpayers without a bank account.

So plastic? Yes. Paper? No.

What if I owe the IRS money?

The IRS has stated that taxpayers should continue to use existing payment options until further notice, but is strongly encouraging individuals and businesses to use electronic payment options, since they are easier, faster, and more secure. Further IRS guidance is expected soon.

The IRS offers the following electronic payment options:

  • IRS Direct Pay, which lets you pay the IRS directly from your bank account without fees
  • Electronic Federal Tax Payment System (EFTPS), a free system offered by the U.S. Department of the Treasury to pay your federal taxes (only if you’re already enrolled; new enrollments were suspended as of October 17, 2025)
  • IRS2Go, an IRS mobile app that allows you to make secure mobile payments using Direct Pay or card-based options
  • Debit card, credit card, or digital wallet payments made through IRS‑approved third‑party processors (convenience fees may apply)

For more information on the IRS transition towards electronic payments, visit modernizing payments.

After all that, the bottom line is simple: in a world where the IRS is going plastic, Congress is handing out “One Big Beautiful” goodies, and paper checks are going the way of carbon paper, the smartest move you can make this filing season is to stay organized, think electronic, and, when in doubt, let a tax pro lose sleep so you don’t have to.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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Mandatory Roth Catch-Up Contributions Begin in 2026

January 31, 2026 — Sam H. Fawaz

For nearly a quarter century, employers have offered their retirement savings plan participants age 50 and older a valuable opportunity: the chance to make additional catch-up contributions to their plans.¹

Thanks to the SECURE 2.0 Act passed in 2022, that opportunity became even more valuable: Employers may now allow plan participants aged 60 to 63 to contribute more than their other catch-up-eligible peers through “super catch-ups.”

In 2025, the standard plan contribution limit was $23,500. Participants ages 50 to 59 and 64 and older in 2025 can contribute an additional $7,500, while those ages 60 to 63 can contribute an additional $11,250.

However, SECURE 2.0 also included a provision requiring catch-up contributions to be made on a Roth basis for certain high-earning employees. In September 2025, the IRS issued final regulations on these mandatory Roth catch-ups, which will take effect this year.

The Big Picture

In most work-based savings plans, employees can make catch-up contributions and contribute on both a pre-tax and a Roth after-tax basis.² While pre-tax contributions reduce the proportion of a participant’s paycheck that is subject to current income taxes, Roth contributions allow participants to potentially build a tax-free nest egg for the future. Withdrawals from Roth accounts made after the account owner reaches age 59½ are tax-free, provided the account has been held for at least five years; other exceptions apply.

Pre-tax contributions can be especially appealing to high earners, who may contribute as much as possible (up to plan limits) to maximize the opportunity to reduce current taxable income.

However, pre-tax contributions also reduce federal tax revenue. That may be why legislators included a provision in SECURE 2.0 requiring catch-up contributions for those earning more than $145,000 to be made on a Roth (post-tax), rather than a pre-tax basis. Initially slated to take effect in 2024, that provision was delayed until 2026 to allow the IRS to finalize rules and employers to modify their systems and plan documentation accordingly.³

The Details

In September 2025, the IRS issued final regulations stating that the new requirements generally apply to contributions in taxable years beginning after December 31, 2026. The IRS further stated, “The final regulations also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions.”⁴ Many industry observers interpret this language to mean that employers will be expected to begin implementing the new provisions in 2026.⁵ ⁷

To determine whether an employee exceeds the $145,000 threshold, employers will use Federal Insurance Contributions Act (FICA) wages listed in box 3 of the employee’s W-2 form from the previous year. In other words, to comply in 2026, employers will use 2025 W-2 forms. The rule does not apply to those who do not have prior-year W-2 wages, such as the self-employed.⁶ ⁸

The new rule applies to standard and super catch-ups in 401(k), 403(b), and 457(b) plans; however, the new Roth mandate does not apply to SIMPLE plans or the special catch-up contributions permitted in 403(b) and 457(b) plans. Plans that do not offer Roth contributions must either add a Roth feature or disallow high earners from making catch-up contributions.⁷ ⁹ ¹¹

Tax and Retirement-Savings Impacts

High earners who may be subject to the new rule might want to review their tax-planning and retirement-savings strategies soon. Although Roth contributions can provide substantial tax benefits in the future, eliminating the pre-tax catch-up contribution could have a surprising impact on income tax planning during the 2026 tax-filing season.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

1) CNBC, January 4, 2017
2) PLANADVISER, October 1, 2025
3) IRS Notice 2023-62
4) IRS, September 15, 2025
5) Society for Human Resource Management, accessed October 2, 2025
6, 8) Plan Sponsor Council of America, September 30, 2025
7, 9, 10) Slott Report, September 22, 2025
11) ADP SPARK blog, accessed October 2, 2025

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New Year, New Account: How the 2026 Kids’ IRA Could Jump‑Start Your Child’s Retirement Savings

December 31, 2025 — Sam H. Fawaz

Beginning in 2026, a new type of tax-advantaged account for children, informally called “Trump accounts”, will become available. These are a special version of traditional IRAs designed to give kids an early head start on long-term retirement investing, with seed money from the federal government and, in some cases, additional funding from private donors.

Important: Rules are new and still evolving. Final forms, portals, and implementation details may change before these accounts launch. This overview is for general information only and is not personal tax or investment advice.

What is a Trump Account?

  • A Trump account is essentially a traditional IRA for a child under age 18 who has a Social Security number.
  • The accounts were created under the federal “One Big Beautiful Bill” and will take effect for tax years beginning in 2026.
  • Although they follow many of the same tax rules as traditional IRAs, there are essential differences in who can contribute, how the accounts are funded, and how distributions work.

Who is Eligible and How Do You Opt In?

  • Each eligible child must be opted in by a parent or guardian; accounts are not automatically created.
  • The U.S. Treasury will set up the basic account framework for each eligible child, but parents must actively open/activate the account.
  • To opt in, parents will either:
    • File new Form 4547, or
    • Enroll through a federal online portal once it is available.
  • As of now, only a draft Form 4547 has been released, and the online portal is not expected to be available until mid‑2026.

Government and Private “Seed” Contributions

Trump accounts are unusual because they can receive funding from multiple sources, including the federal government and specific qualifying organizations.

$1,000 federal contribution:

  • The federal government will contribute $1,000 to each Trump account opened for children born after 2024 and before 2029.
  • Parents must opt in (via Form 4547 or the portal) to receive this contribution.
  • Additional $250 for lower‑income ZIP codes:
    • Michael and Susan Dell have pledged $6.25 billion to fund additional contributions for 25 million children ages 0-10 who live in ZIP codes with a median income below $150,000.
    • Eligible children in those areas will receive an additional $250 in their Trump accounts.
  • These government and qualifying organizational contributions:
    • Are not taxable to the child.
    • Don’t create a cost basis in the account (they are treated more like pre‑tax contributions inside a traditional IRA for tax purposes).

How Much Can Be Contributed Each Year?

In addition to the federal and qualifying “general” contributions, families and employers can add their own money:

  • Up to $5,000 per year can be contributed to a child’s Trump account until the child turns 18.
    • This annual limit applies to all contributions combined (parents, relatives, employers, etc.).
    • The $5,000 limit will be indexed for inflation each year after 2027.
  • Of that $5,000 annual limit, up to $2,500 may be contributed tax‑free by an employer of either the parent or the child (if the child has a job).
  • Contributions can be made by:
    • Parents or guardians.
    • Grandparents or other relatives.
    • Other individuals who wish to help fund the account.
  • Key tax point:
    • No one gets an income tax deduction for contributing to a Trump account.
    • Qualified general contributions by governments or 501(c)(3)s, employer contributions, and the federal $1,000 contribution do not create a cost basis in the account.
  • Timing restriction: Contributions cannot begin before July 4, 2026.

Investment Rules and Distribution Basics

These accounts are intended to be long‑term, stock‑based retirement-savings vehicles for children.

Investment options (before age 18)

  • Until the child turns 18, Trump account funds may be invested only in:
    • Certain stock mutual funds, or
    • Exchange‑traded funds (ETFs) that track an index of primarily U.S. companies (for example, an S&P 500 index fund).
  • The goal is to keep investment choices simple, diversified, and aligned with long‑term growth.

Withdrawals and taxes

  • Before age 18:
    • Distributions are generally not allowed while the beneficiary is under 18, with limited exceptions to be clarified in regulations.
  • Starting at age 18:
    • Once the beneficiary reaches 18, distributions are taxed similarly to a traditional IRA:
      • Withdrawals that represent cost basis (after‑tax contributions) are generally not taxable.
      • Withdrawals of earnings (growth, income, and pre‑tax contributions) are taxable as ordinary income in the year withdrawn.
    • Before age 59½, taxable portions of distributions may also be subject to a 10% early distribution penalty, unless an exception applies (e.g., certain education expenses, first‑time home purchase, or other qualifying events under IRA rules).

Rollovers

  • A Trump account may be rolled over, in or after the year the beneficiary turns 18, to:
    • A traditional IRA for the same beneficiary, or
    • Certain other qualifying retirement accounts (subject to future guidance).
  • This allows the account to transition into the standard retirement system once the child is an adult.

Planning Considerations for Families

For many families, especially those who do not currently max out other tax‑advantaged plans, Trump accounts may offer:

  • A federally funded start for a child’s retirement savings.
  • A structured way for parents, grandparents, and employers to add to long‑term savings.
  • Investment in low‑cost, diversified stock index funds with decades to grow.

At the same time, because:

  • Contributions are not deductible,
  • Investment choices are restricted before age 18, and
  • Rules around basis, taxation, and penalties mirror traditional IRA rules,

it will be essential to coordinate any Trump account funding with your broader retirement and education planning, as well as with Roth IRAs, 529 plans, and regular taxable accounts.

Kids’ IRA or UTMA/UGMA Account?

Some leading financial planners have noted that Trump accounts may not always be the best way to save for children.

One key critique is that while these accounts offer tax deferral, they do not provide tax‑free growth as a Roth IRA does. Instead, contributions are after‑tax, and much of the growth is eventually taxed as ordinary income when withdrawn in adulthood, similar to a non‑deductible traditional IRA.

By contrast, a simple taxable custodial account (UGMA/UTMA) can often take advantage of the kiddie tax and favorable long‑term capital gains rates, allowing families to realize gains periodically at low or even 0% tax rates and to step up basis over time. This can leave the child with more after‑tax wealth than a Trump account, even if the account values look similar on paper.​

Advisors also note that flexibility favors traditional custodial accounts.

UGMA/UTMA assets can be used for a wide range of goals once the child reaches majority: education, starting a business, a first home, or other needs, without early‑withdrawal penalties.

Trump accounts, on the other hand, are subject to retirement‑style rules: access is constrained, withdrawals before age 59½ can trigger penalties, and distributions are generally taxed as ordinary income.

Taken together, the ordinary‑income taxation, lack of a true tax‑free “Roth‑like” benefit, and tighter withdrawal rules are why some experts still prefer straightforward taxable custodial accounts as the primary savings vehicle for many families, using Trump accounts (if at all) as a supplemental tool rather than the core strategy.​

Get in touch with us if you’d like help evaluating whether a Trump account makes sense for your family and how it fits with your existing financial planning. The next step is to review your situation and your current saving priorities.

Sam H. Fawaz CFP®, CPA, PFS is the President of YDream Financial Services, Inc., a fee-only investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other retirement, college, tax, or financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fiduciary financial planning firm that always puts your interests first, with no products to sell. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We begin with a thorough assessment of your unique personal situation. There is no rush and no cookie-cutter approach. Each client’s financial plan and investment objectives are unique.

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