Last week, I got a call from my Air Force buddy, Adam, whose father wants to start contributing to his grandkids' future using the Trump Accounts that go live on July 4. He wanted to learn more about these accounts before proceeding.
Ironically, I had just finished signing up my four-year-old son, Teddy, for a Trump Account. Great minds think a like!
What Are Trump Accounts?
Trump Accounts are tax-deferred investment accounts designed for children under 18. Starting July 4, 2026, families can open these accounts for any child with a valid Social Security number. Additionally, children born between January 1, 2025, and December 31, 2028, receive a one-time $1,000 contribution from the U.S. Treasury, invested immediately in a low-cost U.S. stock index fund.
Making this even better, Michael and Susan Dell pledged $6.25 billion to provide $250 deposits for children age 10 and under who were born before the Treasury's funding cutoff date. The Dell contribution specifically targets children living in ZIP codes with median household incomes of $150,000 or less, expanding access to millions of kids who would not otherwise receive the federal $1,000 seed money. For my zip code, 77905, Teddy is eligible for the $250 deposit. Thank you Michael and Susan Dell!
Family, friends, and employers can contribute up to $5,000 per year to each Trump Account. The account grows tax-deferred until the child turns 18, when it converts to a traditional IRA. Withdrawals are taxed as ordinary income, and early withdrawals before age 59½ trigger the 10% penalty.v
The Alternatives
A 529 plan is designed specifically for education expenses. Contributions are after- tax, but qualified withdrawals for tuition, and room and board are tax-free. The account owner retains control and can change beneficiaries. Non-qualified withdrawals trigger income tax plus a 10% penalty on earnings. However, unused 529 balances can now be rolled over into a Roth IRA for the beneficiary. This is subject to annual contribution limits and a 15-year account age requirement, providing an additional exit strategy if the child doesn't use all the education funds.
A UTMA account offers complete investment flexibility and no contribution limits. The first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child's rate, and anything beyond is taxed at the parents' rate. UTMA assets count against financial aid and full control transfers to the child at age of majority (21).
A custodial IRA requires the child to have earned income. A custodial Roth IRA offers the best longterm tax benefits, contributions are after- tax, but qualified withdrawals in retirement are tax-free. The earned income requirement disqualifies most young children.
What I Told My Buddy His father's decision depends on the grandkids' ages, whether they have earned income, and what flexibility the family values most.
If the grandkids are young with no earned income, Trump Accounts are an excellent starting point. The $1,000 government seed, plus the potential $250 Dell contribution, plus up to $5,000 annually from Grandpa creates a meaningful head start. If the family expects college attendance, layering in a 529 plan alongside a Trump Account diversifies both tax treatment and purpose.
If the grandkids are older and working part-time, a custodial Roth IRA may deliver better long-term tax benefits. Contributions can be withdrawn penalty-free at any time, and earnings grow tax-free if withdrawn after age 59½.
If Grandpa wants maximum control and the ability to redirect funds later, a 529 plan in his name offers that flexibility. If he wants simplicity and believes in long-term stock market growth with tax deferral, Trump Accounts are hard to beat for young children.
The Real Conversation At the end of the day, I reminded Adam that the best gift his father can give is not just money, but the lesson that wealth is built through patience, discipline, and ownership. Whether through Trump Accounts, 529 plans, custodial IRAs, or some combination, the act of investing early compounds far beyond dollars.
The opportunity to participate in the American economy, to own productive businesses, and to benefit from decades of growth is a privilege. Trump Accounts make that opportunity more accessible than ever before, especially for families who might not otherwise open investment accounts for their children.
Starting July 4, 2026, millions of American families will have a new tool to build generational wealth. The question is not whether one account type is perfect. The question is whether we choose to participate at all.
Joe Olive, CFP, MPS, is a 10-year Air Force veteran who works as a CERTIFIED FINANCIAL PLANNER with Sather Financial Group, a fee-only strategic planning and investment management firm. He holds a master's degree from Columbia University.
