Turn a childs trump account into tax-free retirement savings

How to use it

1. 1

   Open a child's account

   Eligible children born between 2025 and 2028 may qualify for a $1,000 federal contribution. Families can also make additional contributions within the applicable limits. Start at TrumpAccounts.gov.

2. 2

   Invest early and let it grow

   Choose a qualifying, low-cost U.S. stock index fund and leave the money invested. The goal is to give the investments as much time as possible to compound.

3. 3

   Consider Roth conversions at age 18

   Once the child reaches adulthood, evaluate converting some of the account into a Roth IRA. Traditional IRA withdrawals are generally taxable, while qualified Roth IRA withdrawals can be tax-free. Converting means paying tax now on the taxable portion in exchange for potential tax-free growth later. Young adults with little income may be able to convert money at relatively low tax rates.

4. 4

   Spread conversions across low-income years

   Rather than converting everything at once, calculate how much to convert each year. College years or the start of a career may offer opportunities to pay less tax. Check the beneficiary's income, deductions, state taxes, and whether special rules such as the kiddie tax apply.

5. 5

   Help cover the tax bill

   Parents or grandparents can consider helping the beneficiary pay the conversion tax. A family funding arrangement could reimburse a set percentage of the taxable amount, provided the arrangement is properly documented. For example, a family might budget 24% of the taxable conversion amount toward reimbursement. That is a family policy, not a guaranteed tax rate or assurance that it will cover the actual tax owed.

Official tax rules & sources

• Trump Accounts
• IRS Form 8606

Applies to