The Trump IRA, part of a recent bill, allows contributions of up to $5,000 annually for children under 18, with tax-free growth and penalty-free withdrawals at age 18. The government offers a $1,000 initial contribution for children born between 2025 and 2028. Despite these advantages, financial advisers recommend alternative savings strategies, such as 529 accounts and custodial Roth IRAs. While the Trump IRA provides an entry point for young savers, options like 529s and Roth IRAs may yield greater benefits depending on employment income and tax considerations.
The Trump IRA allows parents and employers to contribute up to $5,000 annually for kids under 18, with tax-free income growth.
For kids born from January 2025 to December 2028, the government will provide $1,000 to initiate savings in the Trump IRA.
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