02/18/2026
Pros and Cons of the Trump Account, IMO
Pros: $1,000 of free money from the government (if you have a baby in 2025 through 2028). Your employer can contribute to the account. It grows tax free. If you have a child of any age, you can enroll them. (this is good because for all other tax qualified accounts like 401K’s, Roth IRA’s and traditional IRA’s, the child has to have earned income or be over 21). Contributions are allowed up to $5,000 a year. Low threshold to begin the account.
Cons: We don't know what the fees will look like inside that account. It seems the government picks the custodian of the accounts. Contributions are NOT tax deductible. After 18 years of age, the account turns into a Traditional IRA. So, if they want to pay for school, they would get an exception to the 10% early withdrawal penalty but still have to pay regular income tax on the growth of the funds. This could be managed with a tax plan but it could be very confusing. I can see those contributions ending up getting taxed again because the record keeping could get lost with rollovers or institutional buyouts. This would be great... for the government.
Overall, I think the plan would be a home-run if the account turned into a Roth IRA at 18 years old. But this plan? Well, you might as well open a custodial brokerage account and buy stocks to hold. Capital gains are less than regular income tax. You can gift up to $38,000 per couple to each kid ( a much higher contribution limit). There is 0% Tax Rate on taxable income up to $49,450 for a single person in 2026. So, if this had been in place for the last 18 years, our kid could cash out and pay ZERO in taxes with a buy and hold strategy. Or possibly end up paying $5,540 in taxes with a Trump Account.
So. What do you think?
