Saving for Your Child (and Adding Trump Accounts to the Mix)

UPDATED July 22, 2026. 

When families tell us they're "saving for the kids," they usually mean one (or more) of these three life goals:

• Education (college, trade school, grad school)
• Young-adult launch support (first apartment, car, emergency fund, wedding, first home down payment help, business seed capital, bridge-years support)
• A retirement head start (because time is the biggest advantage your child will ever have)

Our approach is simple: name the goal first, then choose the account that gives you the most tax-advantaged growth while still matching how (and when) you'll use the money.

July 2026 Update: Since this article was originally published, Trump Accounts became operational on July 4, 2026. Parents, guardians, grandparents, and certain family members can now establish accounts through the IRS election process. Eligible children born between January 1, 2025 and December 31, 2028 may receive a $1,000 federal seed contribution. Children under age 18 with a valid Social Security number can generally have an account even if they do not qualify for the federal contribution.

If you've been hearing about a Trump Account for kids, here's how we're thinking about where it can fit. Trump Accounts are no longer a theoretical planning tool. They are now operational and available nationwide. For families with eligible children, establishing an account may be worth considering, particularly when a child qualifies for the federal seed contribution — though whether it makes sense depends on each family's individual tax situation, financial goals, and existing savings plan (see Risks and Limitations below). Once the account exists, families can decide later whether additional annual contributions make sense within their broader financial plan. But in most plans, they're an addition, not a replacement for the basics.

Risks and Limitations of Trump Accounts

Before opening a Trump Account, families should be aware of the following material limitations:

• Ordinary income tax on distributions: Unlike a Roth IRA, where qualified distributions are tax-free, earnings withdrawn from a Trump Account are generally taxed to the account holder as ordinary income. Only contributed basis (after-tax dollars) may be withdrawn tax-free.
• Loss of parental control at age 18: The account becomes the child's sole property at adulthood. Parents have no control over how the funds are used after that point.
• Financial aid treatment unresolved: As of this writing, the Department of Education has not issued guidance on how Trump Accounts will be treated under FAFSA or the Student Aid Index. Families who expect to apply for financial aid should monitor this area before making substantial contributions.
• Contribution window closes at age 17: Contributions to a Trump Account are not permitted after the child's growth period ends. There are no catch-up contribution provisions.
• Annual contribution limits apply and are subject to change by regulation.
  
  

  Whether a Trump Account is appropriate for your family depends on your specific circumstances. Please consult with a Sachetta adviser before opening an account or making contributions.

Goal #1: Saving for College or Education

Key message: The funds in a Trump Account are available at age 18, so they can line up with college timing—but if college funding is the goal, a 529 plan growing tax-free is still the primary vehicle.

A Trump Account for kids is designed more like an IRA than an education savings account, and it grows differently than a 529. That matters if your main intention is to turn savings into "tuition dollars."

How do Trump Accounts get factored into financial aid (FAFSA / Student Aid Index)?

This part is still developing. Trump Accounts are new, and we haven't seen the Department of Education explicitly spell out "Trump Accounts" by name in FAFSA instructions yet. For now, we treat this as a planning watch item, not something to build an entire strategy around.

The treatment of Trump Accounts within future financial aid formulas remains an area to monitor. We continue to view FAFSA treatment as a secondary planning consideration. The primary reason to open the account is the opportunity for long-term tax-deferred growth (note: distributions of earnings are generally taxed as ordinary income upon withdrawal — see Risks and Limitations above) and, where applicable, receipt of the federal seed contribution.

Planning takeaway:  Even if college is the primary objective and a 529 remains your foundational education savings vehicle, opening an eligible child's Trump Account may be worth discussing with your adviser — particularly if the child qualifies for the federal seed contribution. Opening a Trump Account does not require you to choose between it and a 529; the two can be used together. Whether this makes sense for your family depends on your individual circumstances, including your tax situation and financial goals.

Goal #2: Helping with Young-Adult "Launch" Goals

Many parents hope to provide their children with launch support for a first apartment, a car, a wedding, an emergency fund, a first home down payment, business seed capital, or "bridge years" support during transitions.

In practice, many families may decide to open the Trump Account regardless of whether launch support is the primary objective. The account provides another pool of assets that can potentially grow for years before adulthood while preserving flexibility for future planning decisions.

Key message: A Trump Account for kids can be a viable option for this goal, but we often prefer keeping launch money in the parents' names so you can decide (control) what goals to fund, and in what dollar amounts. There is also lower financial aid impact in the parents' names than in kid's names.

When is a Trump Account the right choice for "launch" goals?

Choose a Trump Account for kids for launch goals if you want the money to be your child's at adulthood and you're comfortable with the lack of control that comes with that.

When your adult child takes money out of their Trump Account, the taxable portion is generally taxed to your child as ordinary income, while any tracked basis comes out tax-free. 

Importantly, income tax treatment is generally the same regardless of what the money is used for — and unlike a Roth IRA, there is no provision for tax-free qualified distributions of earnings.

Goal #3: Giving Your Child a Retirement Head Start

Key message: Retirement is a genuinely interesting goal for a Trump Account for kids because it can let you start earlier than a custodial Roth IRA typically allows.

A custodial Roth IRA is an amazing tool, but it has one big gate: your child needs earned income. Trump Accounts may allow you to seed investing before those working years begin. 

Keep in mind, however, that Roth IRA qualified distributions of earnings are tax-free, while Trump Account earnings distributions are generally taxed as ordinary income — a material difference to factor into long-term retirement planning.

We consider this path when you're already doing what you want to do with a 529 for education, you're not shortchanging your own retirement or other priorities, and you still have extra dollars you want to invest for your child's long-term future. The case becomes even more compelling when a child qualifies for the government's $1,000 starting contribution. A decade or more of compounding on money the family did not have to contribute can produce meaningful long-term value.

A Quick Case Study: Kylie and the Power of Starting Early

Let's make the "time value of money" real.

Kylie is 4 years old. Her parents contribute $5,000 per year to a Trump Account beginning when the accounts are available. They make 14 contributions (from age 4 through age 17). After that, the account can't receive additional contributions because the growth period ends.

The following figures are hypothetical illustrations only. They assume a 6% fixed annual return, which is not guaranteed and may not reflect actual investment results. Actual returns will vary based on market conditions, investment selection, fees, and other factors. This illustration does not represent the results of any actual client account. Past or projected performance is not indicative of future results.

• Hypothetically, by the time Kylie turns 18, the account could be around $105,000 (based on the assumptions above)
• Hypothetically, if she left it invested and never added another dollar, it could grow to roughly $1.6 million by age 65 (based on the same assumptions; this figure also does not account for income taxes due on earnings distributions at withdrawal)

This is the part we want families to hear with confidence: the advantage isn't complexity; it's time. Starting earlier than a Roth IRA typically allows can give your child decades of compounding, they can't "catch up" to later.

What Should Parents Do Now?

If your child is eligible for a Trump Account, opening one may be worth considering — though the right decision depends on your family's individual circumstances, including your tax situation, financial goals, and existing savings plan. If you'd like to evaluate whether this makes sense for you, we're happy to walk through it together.

• Children under age 18 with a valid Social Security number may generally have an account.
• Children born between January 1, 2025 and December 31, 2028 may qualify for the federal $1,000 seed contribution.
• Opening the account does not obligate you to make ongoing annual contributions.
• Waiting provides little planning advantage, while opening the account allows investment growth to begin sooner.

From a practical planning perspective, the decision to open the account is usually easier than deciding how much additional money, if any, to contribute in future years.

Closing Thought

If you've ever felt like you're supposed to save for education, launch support, and retirement all at the same time, you're not alone. The good news is that you do not have to choose only one strategy.

For many eligible families — particularly those whose children qualify for the federal seed contribution — opening a Trump Account may be one step worth taking, depending on individual circumstances. Be sure to review the Risks and Limitations above and speak with an adviser before acting.

 From there, the real planning question becomes how Trump Accounts, 529 plans, retirement savings, and other family goals work together in a coordinated plan.

If you'd like, we can help you decide what goal matters most in your family, map out what you're already doing well, and then figure out whether adding a Trump Account for kids improves the plan or just adds complexity.

CMS publish date could not be updated due to a HubSpot technical limitation, and that the article reflects the approved revised text as of July 29, 2026.  

About the Author

Stephen Ahern, CPA/PFS, CFP®, AEP®, MST, is President of Sachetta. He holds a Master’s Degree in Taxation from Bentley University and for over thirty-five years, has provided individual financial, investment, estate, and tax planning, as well as small business consulting, to a diverse base of clients. His clients have included key top-level executives, high-net-worth individuals, business owners, venture capitalists, and entrepreneurs. As an established personal financial planner, Stephen has delivered numerous presentations on financial, investment, retirement, and tax planning to corporations and professional groups. He has also written articles on investments, education, and estate planning. Before joining Sachetta, he co-founded and served as President of Wealth Management Advisors, LLC.