2026 brings a new way to save for a child's future through the newly created Trump Account. While the account offers some unique benefits, it's important to understand how it compares to other popular options such as 529 plans, custodial Roth IRAs, and UTMA/UGMA accounts.

One big advantage of a Trump Account is the potential to jump-start long-term retirement savings. Eligible children may receive a $1,000 government seed contribution, and family members can contribute up to $5,000 annually. The account grows tax-deferred and can also receive employer and charitable contributions. However, contributions stop when the child turns 18, investment choices are limited to U.S. equity index funds during childhood, and funds generally cannot be accessed until adulthood.
 

For working teenagers, a Custodial Roth IRA remains one of the most powerful savings tools available. Contributions grow tax-free, and decades of compounding can create substantial wealth. The drawback is that contributions require earned income, which limits how much many children can contribute. Additionally, the child gains full control of the account once they reach adulthood.

A 529 Plan continues to be the preferred vehicle for education savings. Earnings grow tax-free and qualified education withdrawals are tax-free. Account owners maintain control and can change beneficiaries if plans change. The downside is that non-qualified withdrawals may trigger taxes and penalties, making it less flexible than some alternatives.

Finally, UTMA/UGMA accounts offer the greatest flexibility. Funds can be used for virtually any purpose once the child reaches the age of majority. However, these accounts do not provide the same tax advantages as retirement or education-focused accounts, and investment income may be subject to the "kiddie tax."
 

The best choice depends on your goals—whether that's funding education, building
retirement savings, or providing flexibility for future opportunities.