If you’re saving for your child’s future, you’ve likely heard about Trump Accounts – a new federal investment tool designed to give kids a financial head start. Created under the One Big Beautiful Bill Act and signed into law in July 2025, these accounts come with a unique perk: a $1,000 government deposit for eligible newborns.5
But do they belong in your family’s financial plan?
What’s a Trump Account?
Think of it as a tax-deferred IRA for kids,2 but with a few twists:
- Eligibility: Children born between January 1, 2025, and December 31, 2028, automatically get the $1,000 seed deposit.5
- Contributions: After that, parents, grandparents, or even employers can contribute up to $5,000 per year ($2,500 from employers doesn’t count as taxable income).4
- Investments: Funds grow tax-deferred in low-cost U.S. equity index funds.4
- Access: Locked until the child turns 18, then it converts to a traditional IRA for qualified uses like education or a first home.6
How It Fits Into Your Plan
Trump Accounts aren’t meant to replace 529s, Roth IRAs, or custodial accounts – they’re an addition. Here’s how they compare:
- Vs. 529: Less flexible for education but broader in use.1
- Vs. Custodial Roth IRA: No earned income requirement, so even newborns qualify.3
- Vs. UTMA/UGMA: Better tax treatment for long-term growth but stricter access rules.3
Should You Open One?
It depends on your goals:
- Take the $1,000 seed deposit if your child qualifies.
- Add to existing savings if you’re already maxing out other accounts.
- Skip it if you need flexibility for shorter-term expenses.
Bottom Line: Trump Accounts are a new tool – but they work best as part of a bigger strategy. If you have questions, please let us know – we’d welcome a conversation.
Sources
1Bankrate. (2025). How the $1,000 Trump accounts for American babies compare to 529s and custodial Roth IRAs. https://www.bankrate.com/retirement/how-the-1000-trump-accounts-for-american-babies-compare-to-529s-and-custodial-roth-iras
2Federal Register. (2026, March 9). Trump Accounts: Proposed rule by the Internal Revenue Service. U.S. Department of the Treasury. https://www.federalregister.gov/documents/2026/03/09/2026-04533/trump-accounts
3Fidelity. (2026). Trump accounts vs. 529s, UTMA/UGMAs, and Roth IRAs: Which to pick to save for kids. https://www.fidelity.com/learning-center/personal-finance/trump-accounts-vs-529-utma-ugma-roth-IRA
4Grant Thornton. (2025, December 9). IRS issues initial guidance on Trump accounts. https://www.grantthornton.com/insights/newsletters/tax/2025/hot-topics/dec-09/irs-issues-initial-guidance-on-trump-accounts
5Internal Revenue Service. (2025, December 2). Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations (IR-2025-117). https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
6Schwab. (2026, March 6). The ins and outs of the new Trump kids’ accounts. Charles Schwab. https://www.schwab.com/learn/story/ins-and-outs-new-trump-kids-accounts