Uluru Advisors
Saving for Your Child: Which Account Wins?
Four ways to invest for a child — Trump Account, Roth IRA, 529 Plan, and a UTMA/UGMA. Enter your numbers, pick a goal, and see what your family would actually keep after taxes.
How the Four Accounts Compare
The numbers above are only part of the story — the rules differ too.
| Trump Account | Roth IRA | 529 Plan | UTMA / UGMA | |
|---|---|---|---|---|
| What it's for | A flexible head start; becomes a retirement account at 18 | Retirement | Education | Anything — no restrictions |
| Who can fund it | Family, employers, government | Only if the child has job income | Anyone | Anyone |
| Yearly limit | $5,000 (until 18) | Up to the child's earnings, max $7,500 | Very high | None |
| Free money | $1,000 federal seed for births 2025–2028 | None | None | None |
| Growth taxed? | Tax-deferred | Tax-free | Tax-free | Taxed as it grows (kiddie tax may apply) |
| Tax at withdrawal | Earnings taxed as income; penalty before 59½ unless for school or a first home | Tax-free in retirement | Tax-free for school; taxed + 10% penalty otherwise | Already taxed along the way |
| Who controls it | Child at 18 | Child (custodial until adult) | The adult owner keeps control | Child at the age of majority |
The best answer is usually a mix — and it depends on your full picture. Let's map it to your family.
Book a CallAssumptions behind these numbers
- Each account receives the same yearly contribution from the child's current age through age 18, then grows untouched — apart from each account's own legal caps (the Trump Account's $5,000/yr limit and the Roth's earnings limit, both noted below).
- The Roth IRA gets that same yearly contribution, but never more than the child's earnings or $7,500/yr, and only in years the child is working. Because it can't start until the child has earned income, it funds fewer years than the others.
- Trump Account contributions are after-tax (not deductible); only the growth and the $1,000 seed are taxed at withdrawal. Withdrawals before 59½ for anything other than school or a first home add a 10% penalty.
- The "a home or anything" goal applies the 10% penalty. A genuine first-home purchase can avoid the penalty on up to $10,000, which this simplified comparison doesn't break out separately.
- Tax rates assumed: 22% on ordinary income at withdrawal, 15% on long-term gains, and a 10% early-withdrawal penalty where it applies. A family's actual brackets may be higher or lower.
- UTMA/UGMA: growth is taxed every year under the kiddie-tax rules. For 2026, a child's first $1,350 of yearly investment income is tax-free, the next $1,350 is taxed at the child's rate, and anything above $2,700 is taxed at the parents' rate — assumed here as a $400,000 married-filing-jointly household. This view taxes all yearly growth, so an account held without selling each year would likely keep somewhat more.
- 529 funds used for anything other than qualified education are taxed and penalized, at any age.
Rules reflected as of June 2026. Trump Account rules follow IRS Notice 2025-68 and remain subject to final regulations.
For educational purposes only — not tax, legal, or investment advice. Projections are hypothetical, use simplified assumptions, and don't guarantee future results. Account rules are current as of June 2026 and may change. Talk with your Uluru advisor before making decisions.
Frequently Asked Questions
What is a Trump Account?
A Trump Account is a new tax-advantaged savings account for children created under the One Big Beautiful Bill Act. Contributions are allowed until the child turns 18, capped at $5,000 per year, and the account converts to a retirement-style account at 18. Children born from 2025 through 2028 receive a one-time $1,000 federal seed contribution.
Can a child have a Roth IRA?
Yes — but only if the child has earned income, such as wages from a job. Contributions are limited to the child’s actual earnings for the year, up to the annual IRA limit ($7,500 in this calculator). Many practice owners employ their children legitimately in the practice, which creates earned income that makes Roth contributions possible.
Which account is best for a child’s savings?
It depends on the goal. For education, a 529 plan’s tax-free growth is hard to beat. For retirement, a Roth IRA wins when the child has earned income. For flexibility with no restrictions, a UTMA works but gives up tax advantages. The calculator above shows the after-tax outcome for each goal — and in practice, the best answer for most families is a mix.
What is the kiddie tax?
The kiddie tax applies a parent’s higher tax rate to a child’s investment income above a small annual threshold. It mainly affects UTMA/UGMA accounts, where earnings are taxed as they grow. This calculator assumes a household income typical of practice-owner families, so kiddie tax meaningfully reduces UTMA results.
Why does the Roth IRA result look so much bigger than the others?
Usually because more money is going into it. Roth contributions in this calculator are based on the child’s earned income (up to the limit), which can exceed the “amount added each year” funding the other accounts. Matching the job income to the annual contribution amount produces an apples-to-apples comparison.
When do contributions stop?
The calculator assumes all contributions stop after the child’s 18th year. Balances then grow untouched until the withdrawal age for the selected goal — 18 for education or a home, 60 for retirement.