Key Takeaways
- Trump Accounts are essentially free money from the government for newborns: Babies born between 2025 and 2028 will get $1,000 automatically deposited into their account.
- But these accounts aren’t just for newborns. Families can contribute up to $5,000 annually for kids up to age 18.
- Though the rules aren’t settled yet, it’s possible that Trump Account balances will be convertible to Roth IRAs at age 18, which could result in tax-free savings for the child for life.
How Trump Accounts Work
The Trump Accounts created under the One Big Beautiful Bill Act (OBBBA) are government-funded investment accounts designed to help children build wealth from birth. Babies born between Jan. 1, 2025, and Dec. 31, 2028, will automatically receive a one-time $1,000 deposit from the government.
For parents of children born in that window, opening a Trump Account is a no-brainer. The government provides the seed money, the government sets up the account, and the funds can compound over decades into a modest nest egg—all at no cost to the family.
But Trump Accounts aren’t just for newborns. Families with children up to age 18 can open one and contribute up to $5,000 per year. That’s where the potential hidden twist comes in: it appears likely that all contributions made before age 18—and their growth—may later qualify for a Roth IRA conversion, creating a powerful opportunity no matter the initial age of the Trump Account owner.
Why It Matters for You
Trump Accounts could become far more than a modest savings tool. If IRS rules confirm a Roth IRA conversion path at age 18, they may offer kids tax-free savings power that’s unmatched by other accounts.
The Roth IRA Twist Flying Under the Radar
The OBBBA specifies that once a child turns 18, contributions made to a Trump Account before that year—along with any earnings—will fall under the rules of a traditional IRA. Retirement analyst Ian Berger notes that this wording “suggests that Trump Account funds can be converted to a Roth IRA starting in the age-18 year,” calling it “a great opportunity” because it could allow for decades of tax-free growth.
While traditional IRAs are funded with pretax dollars, meaning you owe taxes when you withdraw the money later, Roth IRAs flip the formula. Contributions go in after-tax, but withdrawals are tax-free. That distinction is critical for young adults because converting while they’re young means they may be able to avoid a tax bill on those savings forever.
To convert a traditional IRA to a Roth IRA, the account holder must pay taxes on the funds that are in the account, and these taxes are based on their tax bracket.
Why the 0% Tax Bracket Is a Sweet Spot
Many 18-year-olds’ annual earnings fall below the income threshold for paying federal taxes. In 2025, for instance, any single filer earning less than $11,925 would be in the 0% tax bracket.
At that 0% level, a Roth IRA conversion becomes a golden opportunity: the money is effectively tax-free when it goes in (to the converted Roth account) and tax-free when it comes out, so long as any earned income plus the converted funds are less than $11,925 (for 2025).
That’s because any funds you convert are considered as income. So each year, to take advantage of the 0% tax bracket, you’d convert the maximum amount possible, that is, the 0% income threshold set by the IRS (the equivalent of 2025’s $11,925 adjusted for inflation each year) minus any earned income.
If Trump Account balances do in fact convert to traditional IRAs at age 18, account holders could wait and do a Roth conversion at any point in their lives. But the optimal time to convert is when their tax bracket is zero, making the conversion costless.
Roth IRAs Aren’t Just for Retirement
Your child doesn’t necessarily need to wait until retirement age to use money in a Roth. Contributions (though not earnings) can be withdrawn anytime. And in certain cases—such as paying for college expenses or buying a first home—the IRS allows early access to the earnings as well, without penalty.
A Unique Advantage: Contributions Without Earned Income
Normally, kids can only open a Roth IRA if they have a job and report earned income. That leaves many young people out, since casual work like babysitting or dog-walking often doesn’t qualify. Trump Accounts bypass that barrier by allowing up to $5,000 in annual contributions regardless of earned income, with up to half of that potentially coming from a parent’s employer if the benefit is offered.
Over time, what once looked like a second-tier account for kids could become one of the most powerful wealth-building tools for young adults.
What We Don’t Know Yet—and Why IRS Guidance Will Be Critical
Despite the promising language in the OBBBA, many details remain unsettled. The IRS has not yet confirmed whether Trump Accounts will be treated exactly like traditional IRAs or whether unique rules will apply.
Rob Williams, managing director and head of wealth management research at Charles Schwab, told Investopedia that “there’ll be a lot of interpretation from the IRS, and also companies that offer the accounts.” He emphasized that the program was designed for newborns, and the details of how conversions could work after age 18 still need to be clarified.
Until that guidance is issued, families should view Trump Accounts as a potential—but not guaranteed—gateway to Roth IRA savings. If conversions are ultimately allowed, these accounts could offer an unprecedented chance for kids and young people without job earnings to build long-term, tax-free savings.