On July 4, 2026, the long-anticipated “Trump Accounts,” created under the One Big Beautiful Bill Act, officially went live. Many households are asking the same question: should we open one of these for our children or grandchildren? The idea of starting early on retirement savings has real appeal, giving an asset six decades to compound before it’s ever touched. But before funding a new account, it’s worth understanding how these accounts work, how they’re taxed, and how they compare to the tools families already have access to.
A Trump Account is built on a traditional IRA structure but designed specifically for minor children from birth until age 18. Families can contribute up to $5,000 of cash per year per beneficiary, and an employer can add up to $2,500 toward that total, for a total contribution of $5,000 per year per child. Individual contributions go in after-tax, while employer, government, and qualifying charitable contributions* go in pre-tax. Growth is tax-deferred, and once the child reaches 59½, withdrawals are taxed on a pro-rata basis: part return of after-tax contributions, part ordinary income.
One welcome clarification arrived just before launch. The IRS issued a revenue procedure confirming that individual contributions qualify for the annual gift tax exclusion, currently $19,000, removing uncertainty that had lingered since the accounts were first proposed.
There’s also a modest incentive worth capturing. Children born between 2025 and 2028 are eligible for a $1,000 government pilot contribution that doesn’t count against the annual limit. This isn’t automatic, though. The parent claiming the child as a dependent must actively file IRS Form 4547 or register at trumpaccounts.gov.
The more important question for most families isn’t whether a Trump Account is good, but whether it’s better than what they’re already using.
Against 529 plans, the Trump Account doesn’t come close for education funding. A 529 grows tax-deferred and comes out completely tax-free for qualified education expenses, with up to $35,000 eligible for lifetime rollover into a Roth IRA. Rolling a Trump Account into a Roth, by comparison, triggers ordinary income tax on the pre-tax portion. This could still work well in a low-income year, such as before the child starts full-time work, when the conversion tax hit is minimized, and the funds then grow tax-free under Roth rules. Overfunded 529s also offer a useful secondary benefit: unused funds can be redirected to grandchildren once a child no longer needs them.
Against UTMA and UGMA custodial accounts, the comparison is more interesting than it first appears. Kiddie tax rules let a child’s first $1,350 of unearned income go untaxed each year, with the next $1,350 taxed at the child’s typically favorable capital gains rate. Beyond that, gains are taxed at the parents’ rate. Families who harvest this annually can build a meaningfully stepped-up cost basis by the time a child turns 18. A Trump Account, by contrast, defers growth into decades of eventual ordinary income tax, up to 37 percent, rather than the more favorable capital gains rate of up to 23.8 percent.
Against a parent-owned brokerage account, control is the deciding factor. Money in a Trump Account or UTMA becomes the child’s outright at 18 or the state’s age of majority. A parent-owned account stays under the family’s control indefinitely, can be accessed at any time without penalty, and doesn’t count as a gift, preserving the annual exclusion for other planning. The tradeoff is giving up tax deferral; dividends and gains are taxed annually at the parent’s rate. For some affluent households, that annual tax cost is a reasonable price for liquidity and control, especially given the step-up in basis available at death.
Our view: yes, open a Trump Account, but with a clear limit in mind. If a child was born between 2025 and 2028, claiming the $1,000 government contribution is close to free money. Beyond that, we’d urge caution before committing significant family capital to the $5,000 annual maximum. Seventeen years of contributions can build a large, rigid, pre-tax bucket that eventually creates real tax friction, required distributions, and early withdrawal restrictions. For most wealth transfer goals, 529 plans, custodial accounts using gains harvesting, or parent-owned brokerage accounts remain the more flexible foundation, with the Trump Account playing a supporting role. Please reach out to your Wealth Manager with questions.
*Charitable and government contributions to Trump Accounts must benefit an entire “qualified class” of children, such as all kids in a given state or income bracket, rather than a named individual, which means a household can’t direct a DAF grant into a specific child’s account the way the Dells funded $250 deposits for 25 million qualifying children nationwide.
Weekly Commentary
How Do “Trump Accounts” Stack Up Against Other Child Savings Vehicles?
Mallon FitzPatrick
On July 4, 2026, the long-anticipated “Trump Accounts,” created under the One Big Beautiful Bill Act, officially went live. Many households are asking the same question: should we open one of these for our children or grandchildren? The idea of starting early on retirement savings has real appeal, giving an asset six decades to compound before it’s ever touched. But before funding a new account, it’s worth understanding how these accounts work, how they’re taxed, and how they compare to the tools families already have access to.
A Trump Account is built on a traditional IRA structure but designed specifically for minor children from birth until age 18. Families can contribute up to $5,000 of cash per year per beneficiary, and an employer can add up to $2,500 toward that total, for a total contribution of $5,000 per year per child. Individual contributions go in after-tax, while employer, government, and qualifying charitable contributions* go in pre-tax. Growth is tax-deferred, and once the child reaches 59½, withdrawals are taxed on a pro-rata basis: part return of after-tax contributions, part ordinary income.
One welcome clarification arrived just before launch. The IRS issued a revenue procedure confirming that individual contributions qualify for the annual gift tax exclusion, currently $19,000, removing uncertainty that had lingered since the accounts were first proposed.
There’s also a modest incentive worth capturing. Children born between 2025 and 2028 are eligible for a $1,000 government pilot contribution that doesn’t count against the annual limit. This isn’t automatic, though. The parent claiming the child as a dependent must actively file IRS Form 4547 or register at trumpaccounts.gov.
The more important question for most families isn’t whether a Trump Account is good, but whether it’s better than what they’re already using.
Against 529 plans, the Trump Account doesn’t come close for education funding. A 529 grows tax-deferred and comes out completely tax-free for qualified education expenses, with up to $35,000 eligible for lifetime rollover into a Roth IRA. Rolling a Trump Account into a Roth, by comparison, triggers ordinary income tax on the pre-tax portion. This could still work well in a low-income year, such as before the child starts full-time work, when the conversion tax hit is minimized, and the funds then grow tax-free under Roth rules. Overfunded 529s also offer a useful secondary benefit: unused funds can be redirected to grandchildren once a child no longer needs them.
Against UTMA and UGMA custodial accounts, the comparison is more interesting than it first appears. Kiddie tax rules let a child’s first $1,350 of unearned income go untaxed each year, with the next $1,350 taxed at the child’s typically favorable capital gains rate. Beyond that, gains are taxed at the parents’ rate. Families who harvest this annually can build a meaningfully stepped-up cost basis by the time a child turns 18. A Trump Account, by contrast, defers growth into decades of eventual ordinary income tax, up to 37 percent, rather than the more favorable capital gains rate of up to 23.8 percent.
Against a parent-owned brokerage account, control is the deciding factor. Money in a Trump Account or UTMA becomes the child’s outright at 18 or the state’s age of majority. A parent-owned account stays under the family’s control indefinitely, can be accessed at any time without penalty, and doesn’t count as a gift, preserving the annual exclusion for other planning. The tradeoff is giving up tax deferral; dividends and gains are taxed annually at the parent’s rate. For some affluent households, that annual tax cost is a reasonable price for liquidity and control, especially given the step-up in basis available at death.
Our view: yes, open a Trump Account, but with a clear limit in mind. If a child was born between 2025 and 2028, claiming the $1,000 government contribution is close to free money. Beyond that, we’d urge caution before committing significant family capital to the $5,000 annual maximum. Seventeen years of contributions can build a large, rigid, pre-tax bucket that eventually creates real tax friction, required distributions, and early withdrawal restrictions. For most wealth transfer goals, 529 plans, custodial accounts using gains harvesting, or parent-owned brokerage accounts remain the more flexible foundation, with the Trump Account playing a supporting role. Please reach out to your Wealth Manager with questions.
*Charitable and government contributions to Trump Accounts must benefit an entire “qualified class” of children, such as all kids in a given state or income bracket, rather than a named individual, which means a household can’t direct a DAF grant into a specific child’s account the way the Dells funded $250 deposits for 25 million qualifying children nationwide.
Disclosure and Source
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2026 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere. A3572
Talk To Us