The One Big Beautiful Bill Act created something significant: a tax-advantaged investment account specifically designed to give every American child a head start on building wealth.
If you have children or grandchildren, you need to understand Trump Accounts before they launch this summer. Here’s what you need to know, and why I think they’re a smart move for families who can take full advantage of them.
What Exactly Are Trump Accounts?
Think of Trump Accounts as a hybrid between a traditional IRA and a 529 plan, but specifically designed for minors.
Starting July 5, 2026, parents and legal guardians can open these custodial-style traditional IRAs for any child under 18 with a Social Security number. The account remains in the child’s name but under your control until they turn 18. Here’s what makes them unique:
The Government Kicks In $1,000: Children born between January 1, 2025, and December 31, 2028, automatically receive a $1,000 seed contribution from the U.S. Treasury. That’s free money that starts compounding immediately.
You Can Add Up to $5,000 Annually: Unlike traditional IRAs, your child doesn’t need earned income for contributions. You can contribute up to $5,000 per year (adjusted annually for inflation) until the year they turn 18.
Tax-Deferred Growth: The account grows tax-deferred, meaning no taxes on gains until withdrawal. When your child reaches 18, the account converts to a traditional IRA, and standard IRA rules apply.
Restricted Until Age 18: Funds generally can’t be withdrawn before age 18, which removes temptation and ensures the money actually compounds over time.
The Power of Time: Why They’re Smart
The math is compelling, especially for families who can maximize contributions.
Consider this scenario: If you contribute the full $5,000 annually at the start of the year (adjusted for inflation at 2.3%) for 18 years, and the account earns a 6% annual return, your child could have approximately $193,000 by age 18.
That breaks down to roughly $110,000 in after-tax contributions and $83,000 in investment gains, all growing tax-deferred.
Even with just the $1,000 government seed contribution and no additional deposits, that account could grow to nearly $5,800 by age 18, and over $18,000 by age 28 if left untouched.
We’ve spent years helping clients understand the power of compound growth. Trump Accounts apply that same principle to children, giving them 18+ years of tax-deferred growth before they even enter the workforce.
Who Benefits Most?
Trump Accounts offer value across income levels, but they’re particularly advantageous for high-income families who:
Can Afford to Maximize Contributions: Contributing the full $5,000 annually for 18 years requires disciplined cash flow—something that’s easier when you have significant discretionary income.
Need Estate Planning Tools: Contributions to Trump Accounts can help transfer wealth from your taxable estate. That roughly $110,000 in contributions over 18 years moves out of your estate while still benefiting your child.
Already Max Out Other Accounts: If you’re already maxing out 529 plans, IRAs, and other tax-advantaged vehicles, Trump Accounts give you another bucket for tax-efficient savings.
Value Financial Literacy: These accounts create tangible teaching moments. Watching an account grow from $1,000 to potentially six figures teaches children about investing in a way no classroom lecture ever could.
How Trump Accounts Compare to Other Savings Vehicles
Trump Accounts don’t replace 529 plans or custodial Roth IRAs—they complement them.
vs. 529 Plans: 529 plans offer tax-free withdrawals for qualified education expenses and often provide state tax deductions. Trump Accounts offer more flexibility (they’re not limited to education), but withdrawals are taxable. Many families will use both.
vs. Custodial Roth IRAs: Roth IRAs for kids require earned income. Trump Accounts don’t, making them accessible even for young children with no job. Plus, contribution limits are separate—having both doesn’t affect the other.
vs. UGMA/UTMA Accounts: These custodial accounts offer investment flexibility but lack the tax advantages and withdrawal restrictions that help Trump Accounts actually reach age 18 intact.
The key insight: Trump Accounts create an “and” opportunity, not an “or” decision. They’re designed to stack with your existing savings strategy.
The Strategic Question at Age 18
Here’s where professional guidance becomes crucial: What happens when your child turns 18? They’ll face a significant financial decision with long-term consequences:
Option 1: Convert to Traditional IRA and Keep Growing: The account rolls into a traditional IRA and continues compounding tax-deferred, potentially reaching over $500,000 by age 35 with no additional contributions.
Option 2: Withdraw for Education, Home Purchase, or Other Goals: Withdrawals are taxed as ordinary income at your child’s tax rate—likely very low if they’re a college student with limited income.
Option 3: Convert to Roth IRA: This could be the smartest move. At age 18, most kids have little to no taxable income. Converting a Trump Account to a Roth IRA at a low tax rate locks in decades of completely tax-free growth.
But, without proper guidance, kids cash out accounts for cars or short-term wants. The difference between cashing out at 18 versus converting to a Roth and letting it grow until retirement could be hundreds of thousands of dollars.
What You Need to Do Now
Trump Accounts officially launch July 5, 2026, but planning should start now.
If you have children born in 2025-2028: You’re automatically eligible for the $1,000 seed contribution. Watch for IRS Form 4547 or the online portal at trumpaccounts.gov to open your account.
If you have older children: Any U.S. citizen under age 18 is eligible to open a Trump Account (they just won’t receive the $1,000 government contribution). Consider whether the tax-deferred growth justifies contributions for your older children.
If you’re expecting: Plan to open the account as soon as your child receives their Social Security number to maximize the compounding timeline.
For everyone: Start modeling scenarios. How much can you realistically contribute annually? How does this fit with 529 plans and other savings? What’s your strategy at age 18?
The KFA Approach: Integrated Planning Across All Your Accounts
Trump Accounts are just one piece of a comprehensive wealth strategy.
At KFA Private Wealth Group, we help high-income families coordinate all their tax-advantaged vehicles—from RSU strategies and Mega Backdoor Roths to 529 plans, donor-advised funds, and now Trump Accounts.
Because we combine both CPA expertise and financial planning under one roof, we can:
- Model the potential tax implications of maximum Trump Account contributions alongside your other savings
- Coordinate contribution timing to optimize cash flow across multiple accounts
- Develop a clear strategy for your child’s age-18 decision (Roth conversion vs. withdrawal vs. continued IRA growth)
- Integrate Trump Accounts into your broader estate and gift tax planning
The families who benefit most from Trump Accounts aren’t just those who can contribute the maximum—they’re the families who integrate them strategically into a coordinated financial plan.
Final Thoughts: Don’t Overcomplicate This
Trump Accounts represent something rare: a chance to reset the starting line for your children.
For families with the means to maximize contributions, the math is straightforward and compelling. For everyone else, even modest contributions create valuable teaching moments about investing, patience, and long-term thinking.
Have questions about Trump Accounts and how they fit into your wealth plan?
Schedule a consultation to discuss your specific situation. We’ll help you determine whether maximizing Trump Account contributions makes sense alongside your other financial goals, and create a coordinated strategy across all your tax-advantaged accounts.
The opinions expressed herein are those of KFA Private Wealth Group and are subject to change without notice. KFA reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. The information provided is for educational and informational purposes only and should not be considered investment advice or an offer to sell any product. Past performance is no guarantee of future results. This contains forecasts, estimates, beliefs and/or similar information (“forward looking information”). Forward looking information is subject to inherent uncertainties and qualifications and is based on numerous assumptions, in each case whether or not identified herein. It is provided for informational purposes only and should not be considered a recommendation to buy or sell securities or a guarantee of future results. KFA is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about KFA, including our investment strategies, fees and objectives can be found in our ADV Part 2, which is available upon request.
