Key Takeaways

• Different savings accounts are designed to accomplish different goals, from education to long-term retirement savings.
• The new Trump Account expands the options available to families but isn’t intended to replace every other savings strategy.
• Choosing an account often begins with understanding when the money may be needed and how much flexibility you want.
• Parents and grandparents may find that different accounts fit different stages of a child’s life.
• Taking time to compare your options today can help ensure your savings strategy reflects your family’s long-term goals.

Saving for a Child or Grandchild: Which Account Fits Your Goals?

The introduction of the new Trump Account has sparked plenty of interest among parents and grandparents.

One of the first questions we’ve been hearing is:

“Is this something we should consider for our child or grandchild?”

It’s a thoughtful question, and one that’s worth slowing down to consider before opening any account.

Families have more ways than ever to save for the next generation. Along with the new Trump Account, many are already familiar with 529 plans, Roth IRAs, and custodial accounts like UTMA and UGMA accounts.

The important thing to understand is that each account was designed with a different goal in mind.

Some focus on education. Others encourage long-term retirement savings. Some offer greater flexibility, while others provide tax advantages in exchange for following specific rules.

Because of that, comparing account features is only part of the decision.

We encourage families to begin somewhere else.

Before asking, “Which account should we open?” it can be helpful to ask:

“What are we hoping this money will accomplish?”

That conversation often makes the next step much clearer.

In this article, we’ll compare four of the most common ways families save for children and grandchildren, explain where each account may fit, and share a few questions worth discussing before making a decision.

Start With the Goal, Not the Account

When a new savings opportunity makes headlines, it’s easy to focus on the account itself.

How much can you contribute? Are there tax advantages? When can the money be used?

Those are all reasonable questions, and we’ll cover many of them throughout this article. Before comparing features, though, it helps to take a step back and think about what you’re actually hoping the money will accomplish.

Imagine walking into a hardware store looking for a tool. Most people wouldn’t ask, “What’s the best tool?” They’d start by describing the project they’re trying to complete. If you’re hanging a picture, you may need a hammer. If you’re tightening a bolt, you’ll probably reach for a wrench. If you’re assembling furniture, a screwdriver may be the better choice.

Savings accounts work much the same way.

A 529 plan was designed to help families save for education. A Roth IRA helps individuals build retirement savings. Custodial accounts provide flexibility for a variety of future needs. The new Trump Account was created to encourage long-term retirement savings for children.

Each account has strengths, and each was built with a different purpose in mind. That’s why, before discussing contribution limits, tax treatment, or withdrawal rules, we encourage families to begin with a different conversation.

What are we hoping this money will accomplish?

The answer to that question often makes the next decision much clearer.

It can also be helpful to talk through a few practical questions as a family:

Will this money likely be used for education, retirement, or something else?

• Will this money likely be used for education, retirement, or something else?
• When do we expect it may be needed?
• How important is flexibility if circumstances change?
• Who do we ultimately want to control the account?
• How does this fit within our broader financial and legacy plans?

Once those goals are clear, comparing the available account options becomes much more meaningful.

Trump Accounts: A New Option for Long-Term Retirement Savings

Trump Accounts became available for contributions beginning July 4, 2026, giving families another way to save for children. Eligible children born between January 1, 2025, and December 31, 2028, may also qualify for a one-time $1,000 federal contribution if they meet the program’s requirements.

Although much of the early attention has focused on the newness of the account, understanding its intended purpose is often the best place to start.

Unlike a 529 plan, which was created to help families save for education expenses, a Trump Account is designed to encourage long-term retirement savings. That distinction shapes many of the account’s rules and helps explain where it may—or may not—fit within a family’s overall savings strategy.

For example, grandparents who want to give a newborn child or grandchild a long runway for retirement savings may find this account worth exploring. On the other hand, families whose primary goal is helping pay for future education expenses may find that a 529 plan is more closely aligned with what they’re trying to accomplish. Like any financial account, there are a few details you’ll want to understand before deciding whether it’s a good fit for your family.

Under current law, contributions may be made beginning July 4, 2026. Funds generally cannot be withdrawn before January 1 of the year the child turns 18, and once the child reaches adulthood, the account transitions to traditional IRA rules. Current law also permits future Roth conversions if applicable IRS requirements are met.

Another detail that has received less attention is who may establish the account. Treasury guidance outlines an order of individuals who may open a Trump Account on behalf of a child. Before moving forward, it’s worth confirming that the appropriate person is opening the account based on the current rules.

For some families, a Trump Account may become an important part of helping the next generation build long-term retirement savings. For others, another type of account may better support their goals.

Understanding the difference is often more valuable than simply opening the newest account available.

Trump Account at a Glance

Primary purpose: Long-term retirement savings for children

May be worth exploring if: Your goal is to give a child or grandchild a long investment horizon before retirement.

Keep in mind: The account follows specific eligibility, contribution, and withdrawal rules, making it different from education-focused savings options.

529 Plans: A Familiar Choice for Education Savings

For many families, a 529 plan remains one of the most effective ways to save for future education expenses.

If your primary goal is helping a child or grandchild pay for college, trade school, or certain other qualified education expenses, a 529 plan is often one of the first accounts worth considering. Contributions grow tax-deferred, and qualified withdrawals are generally tax-free under current federal law.

One reason 529 plans have remained so popular is that they were designed specifically for education. Rather than trying to balance multiple objectives, they focus on helping families prepare for one of life’s largest expenses.

Over the past several years, these plans have also become more flexible. Under current law, certain unused 529 assets may be eligible to roll into a Roth IRA for the beneficiary, subject to IRS requirements and lifetime limits. That change has helped address one of the concerns families have historically raised about saving “too much” for education.

Like every account we’ve discussed, a 529 plan isn’t the right choice simply because of its tax advantages. It tends to work best when education is the primary goal and the family is comfortable following the rules that come with those benefits.

Roth IRAs for Children: An Opportunity That’s Often Overlooked

When people think about saving for children, Roth IRAs aren’t usually the first account that comes to mind. Yet for children with earned income, they can become one of the most powerful long-term planning opportunities available.

Unlike the other accounts discussed here, Roth IRA contributions require earned income. That means this strategy generally isn’t available until a child begins working, whether through a summer job, part-time employment, or another source of qualifying earned income.

Why does that matter?

Because time can be one of the greatest advantages an investor has.

A teenager who begins saving for retirement may have decades for those investments to grow before retirement. Even relatively modest contributions made early in life can benefit from years of compounding.

For parents and grandparents, a Roth IRA can also become a meaningful way to teach financial responsibility. Contributing to an account while a child is young creates opportunities to talk about earning income, saving consistently, and investing for the future.

UTMA and UGMA Accounts: Flexibility for a Variety of Future Needs

Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) accounts take a different approach.

Rather than limiting the account to education or retirement, custodial accounts allow assets to be invested for the benefit of the child while providing greater flexibility in how those funds may eventually be used.

For some families, that flexibility is appealing. The funds may be available for a variety of future needs, depending on the circumstances.

At the same time, it’s important to understand that the assets ultimately become the child’s property once they reach the age of majority under state law. Families who prefer to maintain greater long-term control over how the money is used may want to weigh that consideration alongside the account’s flexibility.

Like the other options discussed in this article, a custodial account isn’t inherently better or worse than a 529 plan, Roth IRA, or Trump Account. It’s simply designed to accomplish something different.

How Different Families May Approach This Decision

Every family has different goals, which means there isn’t one account that’s right for everyone. Here are a few examples of how these conversations might unfold.

A new grandchild has just arrived.

Mike and Susan recently welcomed their first granddaughter. Their daughter and son-in-law have already started thinking about college, but Mike and Susan are interested in giving their granddaughter a financial head start that could benefit her many years from now.

In a situation like this, a Trump Account may be one option worth exploring because of its long-term retirement focus. Depending on the family’s overall goals, they may also decide to contribute to a 529 plan or use more than one savings strategy over time.

Education is the primary priority.

David and Lisa have two young children and know they’ll likely help pay for college one day. Their primary objective is preparing for future education expenses.

For families with that goal, a 529 plan is often one of the first accounts to consider because it was designed specifically with education savings in mind.

A teenager gets a first job.

Emma is 16 and has started working after school. Her parents are helping her learn about budgeting, saving, and investing.

Because she has earned income, a Roth IRA may become an opportunity to begin building retirement savings while teaching lifelong financial habits. Starting early also gives those contributions more time to potentially benefit from long-term growth.

Flexibility matters most.

John and Karen aren’t sure exactly how their grandson may use the money in the future. They’d like the funds available for opportunities that arise, whether that’s education, starting a business, or another important milestone.

For families who place a high value on flexibility, a UTMA or UGMA account may be worth discussing, while also understanding that ownership eventually transfers to the child when they reach the age of majority under state law.

The common thread in each of these examples isn’t the account itself. It’s the family’s goal.

When families begin by talking about what they’re hoping to accomplish, choosing the right account often becomes much clearer.

Common Questions We Hear

Can we have both a Trump Account and a 529 Plan?

Potentially, yes. Because these accounts were designed for different purposes, some families may decide that both fit within their overall planning strategy. For example, one account may be used to help prepare for future education expenses while another focuses on long-term retirement savings. The appropriate approach depends on your family’s goals and should take current contribution limits and eligibility requirements into account.

Can grandparents open a Trump Account?

Possibly, but there are important rules to understand. Current Treasury guidance establishes an order of individuals who may open a Trump Account on behalf of a child. Before opening an account, it’s worth confirming who has the authority to establish it under the current rules.

Is a Trump Account better than a 529 Plan?

Rather than asking which account is better, it may be more helpful to ask which account better supports what you’re hoping to accomplish.

If your primary goal is helping pay for education, a 529 plan may be the more natural fit. If you’re interested in giving a child a long runway for retirement savings, a Trump Account may be worth exploring. In some situations, families may even decide to use both as part of a broader savings strategy.

What happens if my grandchild never goes to college?

That’s one reason it’s helpful to think carefully about your goals before choosing an account. Some savings vehicles are designed specifically for education, while others offer more flexibility or focus on long-term retirement savings. Understanding how you hope the money will eventually be used can help guide the decision.

Can a child have a Roth IRA?

Yes, provided the child has earned income that meets IRS requirements. For teenagers with summer jobs or part-time employment, a Roth IRA can be an effective way to begin building retirement savings while learning lifelong investing habits.

Which account offers the most flexibility?

That depends on how you define flexibility.

Some families value flexibility in how the money may eventually be used. Others place more importance on tax advantages tied to education or retirement. Each account involves trade-offs, which is why it’s helpful to begin with your family’s goals before comparing features.

Do we have to choose just one account?

Not necessarily. Depending on your circumstances, more than one account may play a role in your family’s overall savings strategy. The most appropriate approach depends on your objectives, timeline, and the rules governing each type of account.

Copyright © 2026, Ed Slott and Company, LLC. Reprinted with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

Final Thoughts

Whether you’re a parent welcoming a new baby, a grandparent thinking about the future, or a family helping a teenager begin investing, choosing an account is only one part of the conversation.

The bigger opportunity is being intentional about what you’re hoping those savings will accomplish.

Some families will decide a 529 plan makes the most sense. Others may explore a Trump Account, a Roth IRA, or a custodial account. In many cases, the right answer may involve more than one strategy over time.

What matters most is that the account supports your goals—not the other way around.

If you’re considering opening an account for a child or grandchild and would like to talk through how these options may fit within your broader financial and legacy plans, we’d be happy to have that conversation.

Sources & Additional Resources

The information provided is for educational purposes only and should not be considered individualized tax, legal, or investment advice. Laws, regulations, and IRS guidance may change over time. Always consult qualified professionals regarding your specific circumstances before making financial decisions.

Trump Accounts

• Internal Revenue Service – Trump Accounts Overview
  https://www.irs.gov/trumpaccounts
• Treasury & IRS Guidance on Trump Accounts
  https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
• About IRS Form 4547 – Trump Account Election(s)
  https://www.irs.gov/forms-pubs/about-form-4547
• Ed Slott & Company – Trump Account vs. Roth IRA vs. 529 Plan vs. UTMA/UGMA Comparison Guide529 Plans

529 Plans

• IRS Publication 970 – Tax Benefits for Education
  https://www.irs.gov/publications/p970
• IRS – 529 Plans: Questions and Answers
  https://www.irs.gov/newsroom/529-plans-questions-and-answers

Roth IRAs

• IRS Publication 590-A – Contributions to Individual Retirement Arrangements (IRAs)
  https://www.irs.gov/publications/p590a
• IRS Publication 590-B – Distributions from Individual Retirement Arrangements (IRAs)
  https://www.irs.gov/publications/p590b