More than 6.5 million children have been registered for a Trump Account, even as advisers continue to debate whether they’re really a top savings vehicle for kids.
Registration for the tax-deferred investment accounts began this year for children under age 18 with a Social Security number. Individuals, companies, state and local governments, and qualified charities can contribute annually up to a combined $5,000 to a Trump Account, but $1,000 of Treasury seed money is only available to U.S. children born between 2025 and 2028. About 1.4 million children registered were eligible to receive $1,000, according to a U.S. Treasury spokesperson.
Trump Accounts will invest in low-cost index funds. No withdrawals are allowed until the year the child turns 18, when the account will be treated like a traditional IRA with basically the same rules.
Most advisers tell their clients to sign their babies up for a Trump Account to get the free $1,000, but beyond that, reviews are mixed. Some tout the ability to convert a Trump Account into a Roth IRA at 18 to allow tax-deferred growth to become tax-free for life. Others say that may be attractive, but it depends on what the plans are for the money and how much faith you have that tax laws never change.
“The Roth conversion is taxable, but the tax-free growth over many decades is appealing,” said Richard Pon, a certified public accountant in San Francisco. But “it really depends on what the money will be used for and when and how confident you are that the Roth law will still be around.”
How Can Trump Accounts Become Tax-Free?
Normally, people must earn income to open a Roth account. Even youth Roth IRAs can only accept income children have earned doing work like babysitting, mowing lawns, or delivering newspapers.
However, the Trump Account “creates a legal pathway into a Roth IRA that does not rely on earned income contributions,” said Mat Sorensen, founder and CEO of Directed IRA & Directed Trust Company.
The loophole is that the year the child turns 18 and the Trump Account converts into a traditional IRA, it becomes eligible for a Roth conversion. That transition also opens up investment choices beyond only the low-cost index funds that Trump Accounts allow.
“And, if we’re strategic about how we convert the traditional IRA (formerly a Trump Account) when the child reaches age 18, there will be no tax on the Roth conversion,” Sorensen said.
Paying zero tax on the Roth conversion assumes the 18-year-old has little to no income, putting them in the zero federal tax bracket. As long as “the taxable portion of the Roth conversion is under the standard deduction ($16,100 in 2026), they will pay no tax on the amounts converted,” Sorensen said.
However, even if the young adult has little taxable income, converting the account to a Roth IRA could generate a modest tax bill while locking in decades of tax-free growth, according to Luke Delorme, director of financial planning at Tableaux Wealth.
Should Trump Accounts Be a Top Savings Plan?
Despite the potential benefits, some advisers say there may be better options depending on what you want to use the money for.
If the money is intended to pay for college, “a parent is better off with a 529 plan as that is nontaxable when withdrawn,” Pon said. Some leftover 529 money can also be rolled into a Roth IRA later for tax-free growth, and parents may also receive an upfront state tax deduction for contributions.
At 18 or older, a child who has earned income can simply open a Roth account directly rather than going through a taxable Roth conversion.
Finally, the Trump Account conversion “assumes that at age 18, Roth conversions are still allowed,” Pon said. “Laws change over time, so who knows what will happen. For example, when Social Security was first introduced, it was nontaxable. Then, in the 1970s, it became partially taxable.”
Delorme said that for families with children born between 2025 and 2028, electing the $1,000 pilot contribution appears straightforward. “But ultimately, the relevant question is not whether Trump Accounts are inherently good or bad but how they fit within a broader savings strategy.”
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