Turn a Trump Account Into a Tax-Free Nest Egg

Here's a tax-advantaged strategy using a child's Trump retirement account that you may want to discuss with your tax and financial professionals.

The Concept

Your contributions to the child's account aren't tax-deductible. However, the amounts contributed—by you or others— grow tax-deferred, offering a substantial investment advantage that supports your family's long-term goals. Maximize your contributions each year within the allowed limits, which are $5,000 for 2026 and 2027.

While the child owns the account, you manage it until they turn 18. After that, contributions and earnings made before age 18 are treated as traditional IRA contributions, subject to a 10% early withdrawal penalty, though these balances can also be rolled over into a Roth IRA.

The Twist

The twist is a series of well-planned Roth conversions. For many young adults, age 18 is an especially good time to begin, since converting amounts that—combined with earnings—stay within the 0% tax bracket means no federal income tax is owed. Similar partial conversions can continue taxfree through the college years. After that, the child can convert the remaining balance and pay tax in that year, or continue partial rollovers until the full balance is converted, potentially paying less tax overall.

Benefits

Converting during early, low-income years secures decades of tax-free growth—a lasting tax advantage. Roth contributions, including those from a Trump account established in your child's early years, may be withdrawn tax- and penalty-free before retirement, and your child can later use them to buy a home or start a business.