Yahoo Finance explains how Trump Accounts may grow tax-free over time

Trump Accounts are already open and widely enrolled

Yahoo Finance reports that Trump Accounts, a new investing vehicle for American children, have been available since July 4, 2026. The article says the White House stated in October that nearly 70 million children nationwide had a Trump Account because eligible children were enrolled automatically.

The accounts were created under President Donald Trump’s 2025 One Big Beautiful Bill Act, according to the article.

Who can have one and how money can go in

According to Yahoo Finance, parents, guardians and other authorized adults can open a Trump Account for a child under 18 who has a Social Security number. The article says U.S. citizen children born from 2025 through 2028 are also eligible for a one-time $1,000 federal contribution.

The piece says families, guardians and friends can generally add up to $5,000 a year, with that amount indexed for inflation. It also says employers may contribute as much as $2,500 for an employee’s child, and the child can later begin contributing once they are older and have their own income.

Yahoo Finance says the money is invested during childhood mostly in low-cost mutual funds or exchange-traded funds that follow U.S. stock indexes, giving it time to compound over years or even decades. The article also says some individual stocks, including Elon Musk’s SpaceX, may be included in Trump Accounts.

Why the account is not automatically tax-free

The article says some people are not convinced Trump Accounts are the best place for extra money because they are not automatically tax-free in the same way a Roth IRA is. Yahoo Finance reports that family contributions are usually made with after-tax dollars, while investment earnings grow tax-deferred. It adds that government and employer contributions can also be taxable when the money is eventually withdrawn.

The Roth IRA conversion possibility after age 18

Yahoo Finance says IRS guidance makes the Trump Account rules mostly fall away starting Jan. 1 of the year the account holder turns 18. From then on, traditional IRA rules generally apply, and the money can be transferred or rolled into another eligible retirement account.

That opens the possibility of converting the money into a Roth IRA, the article says. Yahoo Finance explains that the IRS allows traditional IRA money to be converted to a Roth IRA through a rollover, a trustee-to-trustee transfer or a transfer inside the same financial institution. Unlike a regular Roth contribution, the article says a conversion does not require earned income and is not limited by the usual Roth income rules.

The piece says that matters because children who do not work generally cannot contribute to an IRA, since they do not have earned income. A Trump Account can therefore create an earlier start, and then part or all of the balance may later be converted.

Taxes, the kiddie tax and the possible payoff

Yahoo Finance says a Roth conversion can still create a tax bill. The taxable portion generally includes amounts that have not already been taxed, such as investment gains and certain government or employer contributions.

The article says the point is not necessarily to convert everything right when the child turns 18. Instead, it suggests the best years may be those when the tax cost is lowest. A teenager or young adult with little taxable income could be in a lower bracket than they may be later, and the article says families could spread conversions across several low-income years rather than taking on one large tax bill.

There is, however, another issue: the kiddie tax. Yahoo Finance says that under current rules, more than $2,700 of unearned income can be taxed at parents’ rates for children under 18, some 18-year-olds and some full-time students under 24. Because taxable retirement-account income can count as unearned income, the article says an aggressive conversion while the kiddie tax still applies could erase much of the benefit.

The article says the potential upside could be large if the strategy works. It gives an example of a family contributing $5,000 a year for 18 years, which totals $90,000 before adding the $1,000 government deposit or any investment gains. Yahoo Finance says The Wall Street Journal modeled a similar approach and found that $90,000 invested during childhood could grow to more than $3 million by age 59½ if the Roth conversion is timed properly.

Once the money is in a Roth IRA, qualified retirement withdrawals can be tax-free, according to the article. Yahoo Finance says the largest advantage may be the long investing runway: a child could get nearly two decades of early compounding, followed by decades more of potentially tax-free growth.

Other money moves the article mentions

After discussing Trump Accounts, Yahoo Finance shifts to other ways readers can put money to work. It says uninvested cash that is being held for emergencies or short-term needs does not have to sit idle, and it points to a Wealthfront Cash Account as one example of a high-yield option. The article says the account has a base APY of 3.55% through program banks, and that referred clients with a new-client boost and direct deposit incentive can earn up to 4.55% APY. Yahoo Finance says that is 10 times the national deposit savings rate, citing the FDIC’s September report.

The article also mentions Acorns, which it describes as an app that invests spare change automatically. Yahoo Finance says users link debit or credit cards, the app rounds purchases to the nearest dollar, and a $3.25 coffee becomes a 75-cent investment. It says the money goes into a diversified portfolio of ETFs that can be adjusted for risk tolerance, including funds such as the Vanguard S&P 500 ETF and custom portfolios focused on sectors like heavy industry, energy, consumer staples and utilities. The article adds that a new user who sets up a $5 recurring deposit can receive a $20 bonus.

Finally, Yahoo Finance says a financial advisor can help people decide where savings and investments should go, including how taxes and Roth conversions may affect a plan. For investors with portfolios of $250,000 or more, the article says these choices can become more complex, and it says a matching service called WiserAdvisor can connect users with up to three vetted advisors. The article notes that WiserAdvisor does not provide advice directly and that results are not guaranteed.