A new way to give your grandchildren a head start
How the new Trump accounts work, and the free $1,000 for kids born 2025 through 2028
A client called me recently about her grandson.
He’s graduating college, headed to medical school, and she’d love to help — probably by gifting him some appreciated stock.
My clients are wonderful people and family is important to each of them.
But it got me thinking about my clients’ younger grandchildren — the ones still in car seats.
Because there’s a brand-new option that could do something for them her grandson is already too old to enjoy.
Here’s the truth about helping the youngsters in your life: with a small child, time matters even more than money.
Money is only the seed.
Time is the ingredient compounding can’t work without. And a newborn has more of it than anyone else.
Starting July 4, 2026, there’s a new account built almost perfectly for that idea.
They’re called “Trump accounts.” Here’s the official website.
Yes, that’s the official name, and I’m using it the way the IRS does.
Let me explain what they are, and then give you an honest look at whether one makes sense for the children, grandchildren, nieces, or nephews in your life.
What they are
A new kind of long-term savings account for children.
Think of it as a retirement account that starts in childhood.
The money is invested in a low-cost index fund that tracks the U.S. stock market, and it grows without being taxed along the way.
The part that’s basically free money
If a child is born between 2025 and 2028, is a U.S. citizen, and has a Social Security number, the government will deposit $1,000 to get the account started. No contribution required from you.
Those deposits begin July 4, 2026. Someone just has to open the account first.
If you have a grandchild (or child or anyone else) who qualifies, that $1,000 is the closest thing to found money you’ll see this year.
Who can have one, and who can add to it
Any U.S. citizen child with a Social Security number who hasn’t turned 18 can have a Trump account, not just babies. Only children born 2025–2028 get the free $1,000, but any eligible child can receive contributions.
And here’s the part that matters for you: family can chip in.
Up to $5,000 a year, from parents, grandparents, anyone.
So this can absolutely be a vehicle for the kind of help you might want to give.
How the taxes work
You contribute with after-tax dollars. This means no income tax deduction.
The money grows tax-deferred year to year.
The child can’t touch it until 18. At 18, it becomes a regular Traditional IRA.
When money comes out later, any growth (and that $1,000 seed) is taxed as ordinary income, like a retirement account. The dollars you personally put in come back out tax-free.
One important caveat: these rules are brand-new and still being finalized, so some details may shift.
Please treat anything specific as “check with your tax advisor,” not gospel.
Now the fun part: what time can do
What if you never add another dollar beyond the free $1,000?
Left alone in the market, at a relatively conservative, hypothetical 6% a year return, here’s roughly what that single $1,000 could become:
About $2,850 by age 18
About $5,700 by age 30
About $13,800 by age 45
About $33,000 by age 60
From one $1,000 deposit that was never touched. Time did all the work.
Now add a modest commitment.
Say you add $2,000 a year, well under the $5,000 limit, until the child turns 18.
At that same hypothetical 6%, about $36,000 of contributions could grow to roughly $65,000 by college age. A real head start on school, a first home, or simply launching into adult life.
Note: 6% is below the broadly diversified stock market’s long-run average, and nothing is guaranteed. Some years will be down. And money decades from now buys far less than it does today.
The lesson here is simple: time, more than the size of the gift, does most of the heavy lifting.
Is it the best place to save for a child?
Not always.
If the goal is education, a 529 plan is likely more tax-efficient: it grows tax-free and comes out tax-free for school.
If the child has earned income from a job, a custodial Roth IRA is often the strongest long-term deal. (A newborn can’t use one, since you need earned income, which is exactly the gap the new Trump account fills.)
A custodial investment account offers the most flexibility, with its own tax quirks.
So my honest take: the free $1,000 is a clear win.
If you have a child or grandchild who qualifies, why not claim it?
Beyond that, whether to keep funding a Trump account or steer those dollars to a 529 or a Roth depends on what you’re trying to accomplish.
If you’d like to explore it
Mention it to your children. For a child or grandchild born 2025–2028, someone needs to open the account to claim the $1,000. You can start the process here.
Mark the date: accounts and contributions begin July 4, 2026.
Get clear on the goal first, whether that’s education, a general head start, or long-term security, because that points to the right account, which may or may not be this one.
Loop in your tax advisor before contributing, since the rules are still settling.
Or bring it to our next conversation, and we’ll see if it fits your family and your own plan.
Most of the women I work with have more than enough for their own lifetimes.
What they want is to do something meaningful for the people coming up behind them.
This is one simple, powerful way to do exactly that.
You can’t give a grandchild more time on this earth.
But you can give their money more time to grow. Started early enough, that may be the most generous gift of all.
If you have a question, just reply — I read every one.
Until next Wednesday,
Russ