Best Investing Accounts for Kids (New Trump Accounts?) - Money Guy Show Recap

Podcast: Money Guy Show

Published: 2026-03-11

Duration: 1 hr 4 min

Summary

In this episode, the hosts break down the best investment accounts for kids, focusing on new Trump accounts, 529s, custodial accounts, and Roth IRAs. They emphasize the importance of starting early and leveraging the benefits of compound interest to secure a child's financial future.

What Happened

The episode kicks off with a discussion on the fundamentals of building wealth, particularly highlighting the significance of time in a child's financial journey. The hosts point out that children, unlike adults, have the advantage of time, which can be a game changer when it comes to investing. They introduce the concept of compound interest, referred to as the 'eighth wonder of the world' by Benjamin Franklin, and how it can dramatically enhance wealth over time.

Next, the hosts dive into a detailed comparison of four investment vehicles for children: 529 plans, UGMA/UTMA accounts, custodial Roth IRAs, and the newly introduced Trump accounts. They explain the eligibility criteria for opening these accounts, emphasizing that Trump accounts can be established after birth and may include a government-sponsored $1,000 seed fund for children born in 2025 or 2026. Each account type is dissected to shed light on their respective benefits, limitations, and contribution rules, giving parents a clearer understanding of where to start saving for their kids.

The discussion also touches on ownership of these accounts and the timing of when children gain access to the funds. The hosts clarify that Trump accounts are child-owned and accessible at age 18, whereas 529 plans remain under parental control until funds are distributed for educational purposes. This distinction is crucial for parents to consider as they think about their child's readiness to handle finances. Through this episode, the hosts aim to equip parents with the knowledge to make informed decisions for their children’s financial futures.

Key Insights

Key Questions Answered

What are the benefits of Trump accounts for kids?

Trump accounts can be opened after a child’s birth and are designed to encourage saving from an early age. A significant advantage is the $1,000 seed fund offered by the government for children born in 2025 or 2026, which acts as free money to kickstart their savings. This initiative is a compelling reason why many parents are inquiring about these accounts.

How do 529 plans compare to custodial accounts?

529 plans are specifically tailored for educational expenses and are owned by the parents, meaning they control the funds until the child is ready to use them for college. In contrast, custodial accounts are irrevocable gifts to the child, and once they reach the age of majority, they have full control over the funds. This distinction is crucial for parents to consider when planning for their child's financial future.

What are the contribution limits for custodial accounts?

Custodial accounts, which include UGMA and UTMA, do not have specific contribution limits, allowing parents to deposit as much as they wish for their child's benefit. However, once these accounts generate a certain amount of income, different tax rules apply, which can affect the overall savings strategy.

What is the maximum contribution for custodial Roth IRAs?

For custodial Roth IRAs, contributions are limited to the lesser of the child's earned income or the annual Roth limit, which is set at $7,500 for 2026. This means if a child earns $3,000, they can only contribute that amount to their Roth IRA, making it essential for parents to keep track of their child's earnings.

At what age do children gain access to their Trump accounts?

Trump accounts are structured to be child-owned, meaning the child has access to the funds at the age of 18. This raises considerations for parents regarding their child's readiness to handle such financial responsibility as they transition into adulthood.