If you've been doing your research on building wealth for your kids, you've probably come across both Trump Accounts and custodial Roth IRAs. They're both long-term investment accounts. They both offer tax advantages. And they're genuinely easy to confuse.
Here's how they actually compare.
What Is a Custodial Roth IRA?
A custodial Roth IRA lets you open a Roth IRA in your child's name and manage it as the custodian until they're an adult. The money grows tax-free, and qualified withdrawals in retirement are completely tax-free.
The catch: your child needs earned income to contribute. If your 10-year-old mows lawns, babysits, or has a part-time job, they can contribute up to the amount they earned (capped at the annual IRA contribution limit, currently $7,000). You can also contribute on their behalf, up to that same earned income amount.
No earned income? No Roth IRA contributions.
What Is a Trump Account?
A Trump Account, officially called an Invest America Account, is a new government program created under the One Big Beautiful Bill Act. It's a tax-deferred investment account for any child under 18 with a Social Security Number.
No earned income requirement. Anyone can contribute up to $5,000 per year. And if your child was born between 2025 and 2028, the government kicks in a free $1,000 to start.
At 18, the account converts to a traditional IRA, not a Roth. That's an important distinction.
Tax-Free vs. Tax-Deferred: The Core Difference
This is the biggest mechanical difference between the two.
A Roth IRA grows tax-free. Contributions are after-tax dollars, and qualified withdrawals in retirement are completely tax-free. If your child is in a low tax bracket now (or earns very little), this is a powerful advantage.
A Trump Account grows tax-deferred. You don't pay taxes on growth while the money is in the account, but your child will owe income tax on earnings when they withdraw. Individual contributions (after-tax dollars) come out tax-free. Government and employer contributions, plus their earnings, are taxed on withdrawal.
For most kids, Roth is technically the better tax structure long-term. But Trump Accounts don't require earned income, which makes them accessible to every family right now.
The $1,000 Government Seed
Roth IRAs don't come with government money. Trump Accounts do, for children born 2025 through 2028. That free $1,000, invested in an S&P 500 index fund for 18 years, could be worth significantly more by the time your child turns 18. See the projected growth numbers.
If your child qualifies for the seed, that alone makes the Trump Account worth opening.
Investment Options
A custodial Roth IRA gives you wide flexibility. Depending on the brokerage, your child can invest in individual stocks, ETFs, mutual funds, index funds, and more.
A Trump Account invests exclusively in low-cost S&P 500 or U.S. equity index funds with an expense ratio cap of 0.10%. Less flexibility, but also less risk of someone making a bad pick.
Can You Have Both?
Yes, and for some families this is the ideal setup. Use a Trump Account as the foundation (especially if the $1,000 seed is on the table), and open a custodial Roth IRA once your child starts earning income. The two accounts serve similar long-term goals but from different directions.
How to Open a Trump Account
File IRS Form 4547 with your 2025 tax return by April 15, 2026 to claim the government seed for eligible children. The account opens in July 2026. We've got a full walkthrough in our step-by-step guide to opening a Trump Account.
Not sure if your child qualifies? The Invest America landing page has the full eligibility breakdown.
Take the 30-second quiz to see what your child qualifies for at investamericaquiz.com.
Wondering about something else? We've rounded up every question people are asking about Trump Accounts.
This post is for educational purposes only and is not tax, legal, or investment advice. Grifin is not affiliated with the U.S. government or the Invest America program.
