I Thought Trump Accounts Were Useless for Older Kids—But Maybe They’re a Goldmine

Why Trump Accounts Are a Slam Dunk for Babies

The “Trump Accounts” created under the One Big, Beautiful Bill Act (OBBBA) are government-funded investment accounts meant 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 U.S. Treasury.

For anyone with a child born in that window, a Trump Account is a no-brainer. The seed money is free, the Treasury will set up the account even if you don’t, and there’s no reason to leave $1,000 on the table.

Yes, the investment choices may be limited and the tax treatment may not be as favorable as other savings options. But those drawbacks are secondary to the guaranteed $1,000, which can compound over time into a modest nest egg—all at no cost to your family.

That’s straightforward for babies. But for kids like mine, who don’t qualify for the seed money, Trump Accounts have seemed like a weak choice.

For Older Kids, a Hidden Loophole Could Turn Trump Accounts from Useless to Brilliant

For children born outside the seed-money years, I initially saw Trump Accounts as inferior to other savings tools. A 529 plan offers better tax breaks for college, a Roth IRA is far superior once a child has earned paycheck income, and custodial brokerage accounts provide more flexibility and often better tax treatment.

But as more details have emerged, I’ve realized there may be an unexpected advantage for kids like mine. The key is that language in the law suggests that Trump Accounts will convert into Traditional IRAs when the child turns 18.

If that’s true—and if the IRS’s normal IRA rules apply—then the balance could be converted into a Roth IRA. In practice, that would mean any contributions made to my daughter’s Trump Account before she turns 18—along with any growth during that time—could be shifted into a Roth. Parents or the child can put in up to $5,000 per year (with a parent’s employer able to contribute up to $2,500 of that limit, if offered), even if the child has no earned income.

Why is that powerful? Normally, Roth IRAs require you to pay taxes upfront, but the payoff is tax-free withdrawals in retirement. For kids in the 0% tax bracket, though, there’s no tax on the way in or on the way out.

Granted, kids can already open a Roth if they earn a paycheck—my daughter in college has had one since her first summer job in high school. But my younger daughter, with only cash babysitting and dog-walking earnings, doesn’t qualify. A Trump Account would bypass that barrier, allowing contributions up to $5,000 per year.

If those contributions can later be flipped into a Roth, the money would essentially go in tax-free, grow tax-free, and come out tax-free. Over 40 years, that could make what once looked like a subpar account for kids into one of the best wealth-building tools for young adults.

What We Don’t Know Yet—and Why IRS Guidance Will Be Critical

So far, only limited official information has been provided about how the Trump Accounts will actually work. The language of the OBBBA spells out some details but leaves many others open to IRS guidance. That means we’ll need to wait for the IRS to clarify whether Trump Accounts will truly become traditional IRAs, with the option to convert to a Roth, or if they’ll be IRA-like accounts with their own rules.

As the parent of a teen who may be able to benefit from contributions in the next few years—contributions that could turn into a sizable tax-free nest egg decades from now—I’ll be watching closely for the IRS’ verdict. If you have kids born before 2025, you may want to pay attention, too.