If your kid turned or will turn 17 this year (2026), then please consider fully funding their Trump account before the year ends.
Next year, when they turn 18, the account will be automatically converted to a traditional IRA. The second part of my recommendation, then, if it’s appropriate for you, is to convert the traditional IRA to a Roth IRA.
(Henceforth we’ll call these accounts 530A accounts. That is the new section in the tax code that created them, even though, yes, the code actually names them “Trump accounts.” I hope this naming convention allows us to evaluate the accounts on their actual merits, not on their political affiliation.)
What is a 530A Account?
A 530A account is a retirement account for your child.
530A accounts were introduced in the One Big Beautiful Bill Act, passed in 2025. We were able to start opening them earlier this year. 530A accounts are, obviously, a very recent change to the tax code and the financial industry is still actively figuring out how to most effectively use these accounts. In writing this blog post, it struck me that there are still a bunch of details about how these accounts work that are either very recently coming out from the federal government or we only have our best guesses about.
In part because of those gray areas, and in part because there are already many other long-established, good ways to give money to your children, I’m still “meh” on Trump accounts in general. In this post, however, I want to get into this one corner case—if your child is 17 years old in 2026—where I think funding your kid’s Trump account is likely to be a good idea.
Please note: Section 530A accounts are so new that we haven’t been able to observe their full lifecycle in action. We know what we expect to happen next year, when some children turn 18, but it has literally never happened before, so it’s all “wing and a prayer.” (Especially with this administration, amirite?)
How Does a 530A Account Work?
I don’t want to belabor the many details of 530A accounts. You can read about many more details in this blog post.
I think these are the most relevant bits:
All children currently 17 years old and younger already have an account.
The Trump administration has automatically opened a 530A account for all eligible children. In order to use your child’s account, however, you have to “claim” it.
Some of those children will get free contributions.
Very young children and children who live in certain zip codes will receive free money from the federal government or certain philanthropic sources. You can find out if your child got any free money by claiming their account.
You can contribute up to $5000 per year to your kid’s account.
You can do this through the year the child turns 17 (not in the year the child turns 18). You get no tax deduction for your contribution.
Which means that if your kid turns 17 in 2026, this is the only year in which you can contribute to their 530A account.
Contributions are automatically invested in a low-cost S&P 500 fund.
Much to my surprise and delight, given my expectations of this administration, there is a single investment option in these accounts: a low-cost S&P 500 fund. When money is contributed to the account, it is automatically invested in this fund.
There is one (so far) exception to this investment lineup (and who’s to know at this early stage how big an exception it will end up being): philanthropic entities (not you, the parent) can donate individual stocks into these accounts. Additionally, that individual stock must be held for five years in the 530A account before being sold.
Considering the long timeframe of this investment money (your child is 17 and the money is intended for their retirement, decades in the future), an S&P 500 fund (more or less the 500 biggest companies in the US) is a very reasonable choice. Also, go ‘Murica!
When your child turns 18, the account is automatically converted to a traditional IRA.
Starting January 1 of the year your child turns 18 (so, January 1, 2027, for those kids who are 17 this year), the 530A account will be “frozen” until their 18th birthday. During the frozen period, it will continue to be invested and will grow/shrink according to the S&P fund it’s invested in, but you can’t do anything with the account.
On your kid’s 18th birthday, the 530A account will be converted automatically into a traditional IRA. At that point, your child can access it and have full legal control over it, just as with any other traditional IRA. It will have shed its 530A-ness.
Why Am I Talking about Age 17 Specifically?
2026 is the first year when 530A accounts are available. Because contributions can be made only up through the year that children turn 17,
this creates a one-time opportunity for children who turn 17 in 2026.
This narrows the scope of the decision to something that is a lot more manageable.
Instead of asking yourself “Should I put money in my kid’s 530A account? This year? How about next year? How about the next 15 years?” you can ask yourself the smaller question: “Should I put $5k into my kid’s 530A account, just this one time?”
The answer is Yes for me, and many of my colleagues with similarly aged kids have come to the same conclusion.
It’s Less Straightforward for Younger Kids
I’m less settled about what I’m going to do for my younger daughter, who turned 13 this year. First, there’s the fairness issue (I am able to put only $5000 into her older sister’s account, but I am eligible to put $5000 in the younger kid’s account…in each of four years).
Then there’s also the tax issue. If I fund it $5000/year for four years. That $20,000 of contributions could, over five years, create a lot of growth, all which would be taxed when converted to Roth or otherwise taken out of the account.
I’m going to continue thinking about how makes sense for my younger kid. I’ve got a few years to see how this all plays out.
A 530A Account Can Be Better than a Custodial Roth IRA for a 17 Year Old
I’ve been helping my 17 year old contribute to a custodial Roth IRA for the last few years with her earned income. This is also intended to help her save for retirement. The idea is two-fold:
- Teach my kid to consistently save for retirement with a portion of her income.
- Get the money into a forever-more-tax-free account. Because of the kiddie tax rules, it costs her $0 taxes now to save to a Roth IRA. The money inside a Roth account can then grow tax-free for literal decades, and she can withdraw it tax-free in her retirement.
The one big limitation of her Roth IRA, however, is that the contributions are limited to how much she earns (which is not much). The 530A account contribution is not so limited; we can contribute $5000 regardless of how much she earns.
Now, remember, I’m talking solely about the idea of funding this in the year your kid turns 17, which limits the amount of growth that would occur in the 530A account between the $5000 contribution and the ultimate conversion to a Roth IRA. Converting growth could cost some meaningful taxes, which complicates the analysis.
Also, this is not to say that your kid can’t do both. They can fund their Roth IRA according to their earned income (maybe even with some help from you), and you can fund their 530A account with your own money.
How To Actually Do This
Here’s how I expect this process to unfold.
No 530A accounts have been converted to IRAs yet. That’ll happen for the first time, in reality, on January 1, 2027. So, in my timeline below, that step and every step thereafter are theoretical as of now!
#1 Well before December 31, you “claim” your child’s existing 530A account.
This account should already exist, thanks to the Trump administration’s decision to automatically open accounts for all eligible children. You can claim it on trumpaccount.com (one of the official sites…notice that it is “account” not “accountS”) or via the app, which you can download from the other official site, trumpaccounts.gov (notice that it is “accountS” not “account”).
I say “well before” just because you want to give yourself some time to make your way through the bureaucracy. Maybe it happens lickety split. Maybe you encounter some hassle. You have to have you kid’s social security number and birth certificate for this process.
Good estate planning hygiene: After you have claimed the 530A account, be sure to set a trusted contact and beneficiary on it.
#2 Before December 31, you contribute $5000 to the account.
This money will be automatically invested in the S&P 500 fund.
#3 When Your Child Turns 18, Help them convert the traditional IRA to a Roth IRA ASAP.
On January 1, 2027, this account will be frozen. Then, on your child’s 18th birthday (or shortly thereafter, it appears), the 530A account will be converted automatically to a traditional IRA.
The 530A accounts are managed through The Bank of New York Mellon (BNY) as the federal financial agent and Robinhood as the brokerage and trustee. It appears the newly formed traditional IRA will live initially at Robinhood, too, though no conversions have happened yet, so I’m not sure and my search results aren’t reassuringly clear, and the implementation details are still changing on a pretty frequent basis.
As soon as possible after your child turns 18, help them gain access to their new traditional IRA and convert it to a Roth IRA. (Here are instructions for doing the conversion, from Robinhood’s website.)
This conversion to Roth is the key point of this whole process.
After the conversion to Roth, your child will now have roughly $5000 in a Roth IRA, which can grow tax free for literal decades, until they withdraw it in retirement. (Though Roth accounts have some complicated withdrawal rules, we generally like to think about not taking money out of retirement accounts until at least age 59 ½, after which age penalties disappear.)
This conversion should have a very low, and probably $0, tax impact. Why will it have such little tax impact?
Because your balance is probably still kinda close to that $5000 contribution, of course depending on how the S&P 500 has performed since your contribution.
Let’s say the account has grown to $5500 since your contribution. You now have a “basis” of $5000 and $500 of growth. When it’s converted from traditional IRA to Roth, that $5000 has already been taxed and so isn’t taxed again. It is only that $500 that will be taxed, and at the kiddie tax rates, which could very well result in a $0 tax bill.
If you work with a CPA or, hell, know how to do some good tax projections yourself, I recommend discussing this Roth conversion with them, so you know what kind of tax bill you (or your child) is signing up for.
Good estate planning hygiene: Be sure to set a beneficiary on this IRA.
Consider moving the IRA to another custodian.
If I’m right that the traditional IRA is opened at Robinhood, it should be able to continue living at Robinhood. I, however, don’t want my children (however “17-going-on-40” they might be) anywhere near Robinhood. That business model is based on gamifying investments and incentivizing as much trading and gambling and speculation as possible. How horrible for our long-term investing results.
I plan to move my child’s IRA out of Robinhood ASAP (probably after converting to Roth) and to another, more staid custodian, like Fidelity or Charles Schwab.
This is a Low Stakes Way to “Give with a Warm Hand”
The traditional inheritance happens when parents die. This is often when the children are already 50 or 60 years old and their financial situation is already “set.” We financial planners like to talk about how much nicer it’d be to give money to your kids during a time in their lives when it could make a really big difference to their quality of life, and when you’re alive to see that difference! We call this “giving with a warm hand, not a cold one.”
I think of this 530A account contribution as a small form of giving with a warm hand. If you give your kid $5000 of retirement savings when they’re 17, that could turn into a tax-free $225,000 four decades later (assuming a perhaps generous 10% annual rate of return). That’s $225,000 that they don’t have to save for retirement and could use for other things in their life.
Don’t forget, there are many other well-established ways you can use to give money to your child “with a warm hand”:
- put money in their 529 college savings account
- pay for their college out of cash flow
- fund a UTMA for them
- keep money in your own brokerage account to give to them when they’re in their 20s, 30s, or 40s
- etc.
Here’s a great (nerdy) article that breaks down giving money to kids based on the goal you’re trying to support. (Look for the section “The Best Accounts For Each Type Of Giving.”) The idea is that, depending on whether you’re trying to pay for their college or help them with their first home down payment or help take pressure off their need to save for retirement or or or, you should likely choose a different kind of account or different tactic.
Even If You Don’t Fund It, You Should Still Claim It
Remember when I explained that the Trump administration automatically opened accounts for all eligible children? That means that your 17 year old (and your 5 year old and your 10 year old) has a 530A account whether they like it or not. And it’ll be converted to a Traditional IRA whether they like it or not.
My understanding of best security/data protection processes is that you should claim the account, even with a $0 balance, just so no one else can.
It’s also possible your children will receive government or philanthropic contributions, and you definitely want to get access to those.
Other Considerations
As with all moves you make with your money, especially when you’re saving/giving/spending money on your kid’s behalf, be sure to talk with them about what you’re doing and why!
You should think about the kind of person your kid is. If they, when they turn 18, suddenly get an account with $5000 in it, do you think they’ll take all the money out for an impromptu trip to Vegas? Or will they leave it in there and treat it prudently? If it’s the latter, great, fund the 530A account. If it’s the former, maybe keep “their” money in your investment accounts and parcel it out to them when they’re older and more prudent.
You should do this only if you have $5000 “extra.” Don’t sacrifice your own retirement or other important goals to fund the Trump account.
While you can always fund a 530A account and not convert it to Roth, I don’t think that’s a good idea. You will lose some excellent low-/zero-tax opportunities when your kid is young. Also, your kid will likely end up paying taxes again on your $5000 contribution when they take the money out. In order to avoid doing that, they’ll have to keep records of the $5000 contribution…possibly for 40 years! Not even I am that good/well-organized/type A.
I keep stumbling across gray areas and uncertainties about 530A accounts. They’re so new that their full lifecycle hasn’t had a chance to unfold. I’d really like to see some children move through the whole process before I recommend putting much more than a single year’s contribution in it. Maybe if your kid is 16, I’d be okay with contributing for two years. But much more than that and I feel uncomfortable.
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