Trump Accounts for Older Kids: A Potential Planning Strategy

Trump Accounts were created under the One Big Beautiful Bill Act as a new way to save for children. Much of the discussion has focused on how these accounts compare with other savings options. However, Trump Accounts may offer an additional planning oppor­tunity for some families, including those with older children.

What Are Trump Accounts?

For a good primer on the basics, I’d encourage you to review my colleague Michael Lenick’s article about Trump Accounts (What is the new Trump Account I keep hearing about?).

For eligible U.S. cititzen children born between January 1, 2025 and December 31, 2028, a Trump Account may qualify for a one-time federal contri­bution. Parents, guardians, or other autho­rized individuals must make the required election for the child to receive the contribution.

Older children who are not eligible for the federal contri­bution may still be able to benefit from a Trump Account. One possible use is to begin setting aside money for their long-term retirement needs.

During the account’s growth period, contri­bu­tions made by individuals generally are not deductible. Total contri­bu­tions are subject to an annual combined limit, which is $5,000 for 2026. Unlike contri­bu­tions to a tradi­tional or Roth IRA, contri­bu­tions to a Trump Account during this period generally do not require the child to have earned income.

Once the child reaches age 18 and the Trump Account growth period ends, the account generally becomes subject to the rules that apply to tradi­tional IRAs. Depending on the child’s circum­stances and the rules in effect at that time, the child may be able to consider converting some or all of the account to a Roth IRA.

A Roth conversion may result in taxable income. The taxable amount will depend on several factors, including the account’s tax basis, investment earnings, applicable tax rules, and the child’s individual tax situation at the time of conversion.

How This Strategy Might Work

Consider a hypothetical example involving a 10-year-old. A parent contributes $5,000 annually through age 17, for total contri­bu­tions of $40,000.

If the account earns a hypothetical annual return of 8%, it could be worth approx­i­mately $53,183 when the child turns 18. That amount would consist of approx­i­mately $40,000 in contri­bu­tions and $13,183 in investment growth.

At that point, it should be evaluated whether a Roth conversion is appro­priate. The conversion’s tax conse­quences would depend on the child’s complete tax situation, including the treatment of the contri­bu­tions, any other IRA assets, and the tax laws then in effect.

Techni­cally, children are allowed to contribute to Roth IRAs before they’re 18, but they generally must have suffi­cient earned income to support the contri­bution. A Trump Account may therefore provide another way for families to begin saving for a child who does not yet have earned income.

Hypothetical Growth

This example is hypothetical and provided for illus­trative purposes only. It assumes annual contri­bu­tions of $5,000 and a constant annual return of 8%. It does not reflect actual investment results, market fluctu­a­tions, fees, taxes, or changes in contri­bution limits.

Could a Trump Account Be Appropriate for Your Family?

Before contributing to a Trump Account, parents should consider how the account fits with their broader financial prior­ities. These may include funding their own retirement, building emergency savings, paying for education, and addressing other family goals.

A Trump Account may be worth consid­ering for families who are finan­cially prepared to set aside money for a child’s long-term future. However, the most appro­priate savings strategy will depend on the family’s circum­stances, objec­tives, time horizon, and tax situation.

If you’re thinking about opening a Trump Account, we can help guide you on making the best choice for your individual situation.