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Trump Accounts for Kids: How Do They Stack Up?

Trump Accounts are investment vehicles for kids (plus they offer free cash if you qualify), but other options might offer better long-term benefits.

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In President Donald Trump's "One Big Beautiful Bill Act", the federal government introduced a new way to save for children’s futures: the Trump Account.

This investment account gives parents a way to save and invest for their children, and kids who meet certain requirements may qualify for seed money up to $1,000.

But a Trump Account may not be a superior replacement for existing investment tools just yet.

What is a Trump Account?

A Trump Account is an investment account designed to give children a head start financially. Money contributed to these accounts gets invested in the stock market.

The Trump Accounts Contribution Pilot Program starts eligible kids off with a one-time $1,000 credit. The money comes from the Department of the Treasury.

In addition, various philanthropists have pledged money to support Trump Accounts. Dell Technologies founder Michael Dell and his wife, Susan Dell, for instance, recently pledged to deposit $250 into 25 million Trump Accounts, totaling $6.25 billion. Their deposits will target children 10 and under who don’t qualify for the $1,000 Treasury seed money, and who live in areas with a median household income below $150,000.

Several employers have also reported that they will match some contributions for employees.

Who qualifies?

To be eligible to have a Trump account, a child must:

Be under 18 and not turning 18 in the calendar year in which the account is opened. 

Have a Social Security Number.

To be eligible for the $1,000 credit under the pilot program, a child must:

Be born between Jan. 1, 2025, and Dec. 31, 2028.

Be a U.S. citizen.

Have a Social Security number.

How do Trump Accounts work?

Getting started

Starting this year, parents can use IRS Form 4547 to create an account for an eligible child. Or starting in summer 2026, they will be able to create an account on TrumpAccounts.gov.

How do contributions and withdrawals work?

Contributions made before the calendar year in which the beneficiary turns 18 are limited to $5,000 per year. Employers can contribute up to $2,500 per year to accounts, which won’t count as income for the parents or children — but does count against the annual account limit.

Trump Account withdrawals aren’t allowed before the first day of the calendar year the child turns 18.

Contributions made in the year the child turns 18 or after generally follow traditional IRA rules. The IRA contribution limit in 2026 is $7,500 for those under age 50. The money invested grows tax-deferred, and withdrawals are taxed as ordinary income. (After-tax contributions can be withdrawn tax-free, so keep good records.)

There’s a 10% penalty for withdrawing money from an IRA before age 59 ½, unless there’s a qualifying exception, such as homebuying or paying for higher education expenses.

What about taxes?

Contributions made to Trump Accounts before the child’s 18th birth year must be made with after-tax dollars, which means no tax deduction for parents or employers, said Jacob Martin, a certified financial planner in Columbus, Ohio, in an email interview.

Contributions made during the 18th birth year and after could be deductible.

How do they compare with existing investment vehicles?

Trump Accounts have perks, but there are other long-term investment and college savings strategies that bring more to the table, financial experts say.

Trump Accounts resemble traditional IRAs, except contributions made before the beneficiary’s 18th birth year aren’t deductible and have a lower annual cap. Unlike an IRA, there’s no earned income requirement to start.

Brokerage accounts, including UTMA & UGMA custodial accounts, don’t have contribution or withdrawal limits.

A 529 plan offers more flexibility than a Trump Account when it comes to who can open an account and use the money. For example, account holders can change beneficiaries, or roll funds from one family member’s plan to another.

While the exact amount varies by state, contribution limits for 529 education savings plans are high. Contributions grow tax-free, and withdrawals are tax-free when made for qualifying expenses. Some states offer residents tax deductions for contributing. You can also roll over unused money, up to a certain amount, into a Roth IRA.

Is a Trump Account worth it?

If your child can get the $1,000 credit, consider it, Robert Persichitte, a CFP in Arvada, Colorado, said in an email interview.

“If it's free money, great. Take what you can get,” he said.

A Trump Account gives children the ability to start investing early with a little seed money. It could help establish a fund your kid could put toward buying a home or starting a business someday.

But for most taxpayers, Roth IRAs and 529 accounts are likely the better options because they offer much better tax savings, Persichitte said.

Other investment accounts, including IRAs, 529s and other custodial accounts, also allow higher contribution limits, which could help you save a larger amount over the long term.

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