INSIGHTS
Saving for a Child’s Future Starts Earlier Than Ever: Trump Accounts vs. Other Options
by Larson Gross
ARTICLE | June 01, 2026
Families today have more options than ever when it comes to saving for a child’s future. Alongside traditional tools like 529 plans and custodial accounts, proposed “Trump Accounts” are creating new conversations around long-term, tax-advantaged savings for children.
For parents and grandparents, the key question is not which account is ‘best,’ but rather understanding what each option is designed to accomplish and how those tools fit into your family’s broader financial goals.
As my wife and I prepare to welcome our first child in July, this topic has become deeply personal for us. Like many growing families, we are thinking carefully about how to create financial flexibility and long-term opportunity for our child from day one.
The good news: thoughtful planning does not require complexity. Starting early, understanding your options, and building a strategy around your goals can make a meaningful difference over time.
Understanding the Different Savings Options
No single savings vehicle solves every goal. Each option comes with unique tax treatment, flexibility, and planning considerations.
Here is a practical overview of the most common strategies families are evaluating.
529 Plans
529 plans remain one of the most effective education-focused savings tools available.
Key Benefits
- Tax-deferred investment growth
- Tax-free withdrawals for qualified education expenses
- High contribution limits
- Potential state tax deductions in some states
Considerations
- Funds are generally intended for education expenses
- Non-qualified withdrawals may trigger taxes and penalties
For families whose primary goal is college funding, 529 plans continue to provide strong advantages.
Custodial Accounts (UGMA/UTMA)
Custodial accounts allow parents or grandparents to save and invest on behalf of a child without restrictions tied specifically to education.
Key Benefits
- Greater flexibility in how funds are used
- Broad investment options
- Can support future goals beyond college
Considerations
- Assets legally become the child’s at adulthood
- Investment income may create tax implications
- Can impact future financial aid eligibility
- Tax considerations including potentially added compliance around kiddie tax provisions
These accounts often appeal to families who want flexibility for future opportunities, whether that includes education, business ownership, housing, or other life goals.
Roth IRA Strategies for Children
If a child has earned income, Roth IRAs can become an extremely powerful long-term planning tool.
Key Benefits
- Tax-free growth potential
- Early contributions benefit significantly from compounding
- Contributions can often be withdrawn tax-free
Considerations
- Requires earned income
- Annual contribution limits apply
Many financial professionals view early Roth IRA contributions as one of the most effective long-term wealth-building strategies available.
Trump Accounts
Proposed Trump Accounts are expected to function similarly to custodial retirement-style accounts for children.
Under current proposals:
- Eligible children born during specific years may receive an initial government-funded contribution
- Families could contribute additional annual amounts
- Investments would grow tax-deferred
- Withdrawals would generally occur later in adulthood
The proposal has gained attention because it encourages long-term investing from birth, reinforcing the value of compounding over time.
However, families should carefully evaluate how these accounts compare with existing options based on their own financial priorities and tax situation.
The Most Important Step Is Clarifying the Goal
One of the biggest mistakes families make is selecting an account before identifying the purpose behind the savings.
Different goals often require different strategies.In many cases, the most effective solution is not choosing one account over another. It is coordinating multiple tools together thoughtfully.
For example:
Goal |
Common Strategy |
Education funding |
529 Plan |
Flexible future support |
Custodial Account |
Long-term retirement wealth |
Roth IRA & Trump Accounts |
What Parents and Grandparents Should Consider
When evaluating child savings strategies, there are several important planning questions to discuss with your advisor:
- Flexibility vs. Tax Advantages
Accounts with the strongest tax benefits often come with tighter usage restrictions. Families should weigh how important flexibility may be over time.
- Investment Time Horizon
A child born today may not use these funds for 18 to 30 years. That long timeline creates meaningful opportunities for compounded growth.
- Family Contribution Planning
Many grandparents want to contribute financially in tax-efficient ways. Coordinating gifting strategies across generations can help maximize impact.
- Changing Future Goals
Not every child will follow the same path. A strategy that accommodates changing educational, career, or personal goals may offer greater long-term value.
Final Thoughts
Like many soon-to-be parents, my wife and I are balancing excitement with responsibility. And while there is no perfect roadmap, one thing has become very clear to us:
Starting early matters.
Not because every answer needs to be figured out immediately, but because intentional planning creates options later. That is ultimately what most parents want for their children: opportunity, flexibility, and stability.
The growing conversation around Trump Accounts reflects a larger trend in financial planning: families are becoming more proactive about creating long-term financial foundations for children earlier than ever before.
Whether that involves a 529 plan, custodial account, Roth IRA strategy, or a combination of approaches, the most important step is understanding how each tool aligns with your family’s goals.
Financial planning for children is not about finding a perfect product.
It is about building a thoughtful strategy that evolves alongside your family over time.
Let's Talk!
Call us at (360) 734-4280 or fill out the form below and we'll contact you to discuss your specific situation.
Chad VanDyken CPA, CFP®
Partner, Larson Gross Advisors
After graduating from University of Hawaii at Manoa in 2015 with bachelor degrees in both Accounting and Finance, Chad returned to his hometown of Lynden and joined the Larson Gross team. Today, Chad is a Partner at Larson Gross and has earned his CPA and CFP® (Certified Financial Planner™) designations.
Chad loves helping individuals and family group clients navigate through their financial plan by specializing in income and estate tax. For Chad, it is such a privilege to help advise our clients in such a personal and intimidating part of their life. He also serves as treasurer of the Northwest Washington Estate Planning Council.