Trump Accounts vs Roth IRA:
Which One Is Better for Your Kids?

Trump accounts became available for the first time on July 4th, 2026, and the buzz around them has been pretty big. A Treasury Department official was quoted saying everyone should have one. And for parents and business owners trying to do right by their kids financially, that kind of blanket recommendation is hard to ignore.

Butin this episode, William pushes back on it.

Not because Trump accounts are bad. They are not.

But because the idea that any single financial vehicle is right for everyone is almost never true.

What Trump Accounts Actually Are

Trump accounts allow parents to put money into a pre-tax account for children under the age of 18. The government contributes an initial $1,000 to get things started. In certain zip codes and income thresholds, additional contributions are being made on behalf of kids as well.

The power behind them is straightforward. Money invested early and left alone has the potential to grow into a remarkable sum by the time a child reaches retirement age. Albert Einstein famously called compounding interest the eighth wonder of the world, and that principle is exactly what makes these accounts appealing.

How Trump Accounts Work From a Tax Perspective

A Trump account grows pre-tax, meaning contributions go in without being taxed upfront and the money grows tax deferred inside the account. When distributions are eventually taken, they are taxed at whatever the account holder’s ordinary income rate is at that time.

That tax treatment is important to understand before you commit.

You are not eliminating taxes.

You are deferring them.

And depending on where your child’s income lands in retirement, you may end up paying more in taxes on the back end than you would have under a different structure.

Where the Roth IRA Wins

For small business owners specifically, there is an alternative worth thinking about. If you can legitimately employ your child in your business, you can pay them earned income and contribute up to the contribution limit into a Roth IRA on their behalf before they turn 18.

A Roth IRA grows tax deferred and comes out completely tax free under qualifying conditions. That is a meaningful difference from a Trump account, which creates a taxable event upon distribution.

Put those two side by side and the math often favors the Roth.

Not always.

But often enough that the conversation is worth having before you open an account just because a headline told you to.

The Right Answer Depends on Your Situation

William isn’t saying Trump accounts are wrong.

For many families they’re a useful tool, especially when the government contribution makes them immediately appealing and the family doen’t have a business structure that makes a Roth IRA contribution possible before age 18.

But for small business owners who do have that option, taking the time to understand both vehicles, model the tax implications, and make a decision based on your specific situation is far more valuable than following a blanket recommendation from Washington.

Great tool.

Not a must-have for everyone.

Have the conversation before you commit.

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July 4th, 2026. It was 12 days ago. It was the first day that you could open up what has become very popular these days, which is referred to as Trump accounts. And Trump accounts can be great vehicles, right? It allows people to put money into a pre-tax account for young kids under the age of 18. If they’ve been born within a certain timeframe, the government puts in $1,000 as well.

And in certain zip codes with certain income, income thresholds, the Dale family is putting money into these accounts for the benefit of kids, right? We all recognize what Albert Einstein once said, that compounding interest is the eighth wonder of the world. And so, if we can get money into [00:01:00] accounts for these kids at a young age and, and they don’t touch it, then, you know, by the time they get to age 60, 65, 70, whenever it is that they want or need the money, then that, that money can, can be worth a phenomenal sum, right?

Given historical returns, and we don’t know if history in terms of returns would, will generate the same types of returns going forward, right? Past performance is not indicative of future results, as we always have to put on anything that relates to performance. Um, but I saw an article this morning that somebody in the Treasury Department said everybody should have a Trump account.

And I get, I get upset. I don’t get upset, I get frustrated by stuff like that, right? Everybody should have XYZ. And look, again, I think Trump accounts are great vehicles, but I don’t think they are a must-have for everybody. There are certainly reasons to have it. [00:02:00] There are certainly reasons that I can make the case for not to have it.

There are other ways to save for kids. We put money in a Trump account, it grows pre-tax, which means it doesn’t get taxed as it grows, and it creates, upon distribution, it creates taxes at whatever your current tax rate is. Now, you can do Roth conversions, which means you potentially get some of that money out cheaper, and again, that, that might, that might make sense.

But, you know, there are also ways for small business owners to employ their kids and to put money into a Roth IRA and prior to being age 18. And Roth IRAs grow tax-deferred, but then ultimately, upon qualifying conditions, the money comes out tax-free. And if you’ve got a choice for, to hire your 10, 11, 12, 13-year-old kid and [00:03:00] can put $5,000 into an account for them, and only $5,000 into an account for them, then would we rather jam it into a Roth IRA or would we tra- rather jam it into a Trump account?

And I think, you know, if we take a holistic view at it, I think, um, in many instances, again, not in all instances, but in many instances, we’d end up choosing the Roth account. So great vehicles, great tools, not knocking them in any way, shape, or form. However, they are not for everyone. So have conversation, think about it, outline goals, outline strategies, understand why some things work, in some instances better than other things do, but not all the time.

So again, there are very few things in life that everyone should have, and while they are good tools, I’d make the case that a Trump account is very much not something that everyone under the age of 18 [00:04:00] must have

ORIGINAL MEDIA SOURCE(S):

William Bissett: Should Your Kid Have a Trump Account? Here’s the Honest Answer. | Portus Perspectives

Originally Recorded on July 17, 2026

Portus Perspectives: Episode 33

By /Published On: August 19, 2026/