A Free $1,000 Head Start for Your Child's Retirement

A new type of investment account for kids launches on July 4, 2026. It's officially called a "530A account," but you'll hear it referred to as a Trump Account. You can think of it simply as a starter retirement account for any child age 0 through 18, and it comes with a nice incentive built in.

How It Works

From birth through age 17 ("the growth period"): money can be contributed to the account, but nothing can be withdrawn, and investment choices are somewhat limited. The child is the "beneficiary."

From age 18 on: the account behaves much like a 401(k) or Traditional IRA. The now-adult child becomes the "owner," can begin taking withdrawals (taxed as ordinary income, with a 10% penalty before age 59½, similar to other retirement accounts), and can convert the account to a Roth IRA. We typically recommend that conversion happen between ages 18 and 21, before the child has significant income of their own.

Ways Money Can Go Into the Account

Before the child turns 18, contributions can come from several sources: family and friends can contribute up to $5,000 per year (not tax-deductible, due by December 31 each year); many employers can contribute up to $2,500 per year on behalf of an employee's child, tax-free; and charitable or government programs can add more on top, with no annual cap. As one example, the Dell Foundation plans to contribute $250 for each child age 10 or under living in a lower-income ZIP code. And of course, there's the one-time $1,000 federal deposit for children born 2025 through 2028.

How to Open One

Opening an account is straightforward:

1. Have the child's Social Security number on hand.
2. The account must be opened by an authorized adult, in this order of priority: guardian, parent, adult sibling, or grandparent. The child must be 17 or younger when the account is opened.
3. All new accounts open initially with BNY/Robinhood (they can be rolled over to another institution later). Accounts go live after July 4, 2026.
4. Apply using Form 4547, or online at the link below.

Our Recommendation

For children born 2025 through 2028, opening an account is close to a no-brainer. The free $1,000 alone justifies the effort. For older children, it's a more personal decision. If your family is still working on your own retirement, an emergency fund, or college savings, we'd prioritize those first.

If you do decide to open one, here's how to get the most from it:

• •Capture every dollar of free money available: the $1,000 federal deposit if your child qualifies, any charitable contributions like the Dell Foundation's, and any employer match your workplace offers.
• •Contribute annually if your budget allows, treating it as an ongoing gift to your child.
• •Consider this especially if you've already covered college and other goals and want a tax-advantaged way to pass wealth to the next generation.
• •Once your child turns 18, we'll help you evaluate converting the account to a Roth IRA.

One important note: these are not college savings accounts. As you'll see below, the withdrawal rules make them a poor fit for short-term goals. They're built to jump-start a retirement account, not to pay for tuition.

Why This Is Worth Five Minutes of Your Time

Set the name aside and focus on the math. A dollar invested at age 5 has 60 or more years to grow before retirement. Compounding works like a snowball rolling downhill: each year's gains generate their own gains the next year, and no one has more time on their side than a child.

There's a bonus lesson here too. Kids who grow up watching an account compound learn something most adults don't figure out until their 30s or 40s: you can trade time for money in a job, or you can own pieces of great businesses and let your money work while you sleep. This account gives them a front-row seat to that lesson, years early.

If you have questions or want to discuss how these may fit your situation specifically, reach out and we can schedule a call to discuss these accounts further.