$90K → $3M Tax-Free? The Truth About ‘Trump Accounts'

Trump accounts for kids are getting attention because of one claim: that $90,000 of contributions can turn into more than $3 million, completely tax free. The claim comes from a Wall Street Journal article, and a few clients have asked me whether they should be doing this for their children. The math does work. What is rarely explained is why it works, where it breaks, and who it makes sense for.

This article covers what Trump accounts are, how the $3 million example comes together, the mistakes I expect people to make, and where these accounts fit in a family's plan.

What are Trump accounts?

As of March 2026, these accounts are not fully rolled out. They are being discussed as part of broader tax and savings legislation, with a plan to go live in the summer of 2026. The general idea looks like this:

• You open an investment account for a child at birth, potentially with initial funding from the government of up to $1,000.
• Parents and grandparents contribute over time, and the money grows tax deferred.
• If structured and executed correctly, the account is eventually converted into a Roth IRA, which means future growth and withdrawals are tax free.

How $90,000 becomes $3 million

In the headline example, parents invest $5,000 per year until the child is 18. That is $90,000 in total, and it turns into roughly $3 million by the time that child retires, tax free.

That result comes from time more than from any particular investment. Someone who has money invested from the year they are born and someone who waits until 30 to start can make similar total contributions and end up with outcomes that are not close.

The example also rests on big assumptions: consistent investing for 18 years, market returns over multiple decades, and no behavioral mistakes along the way.

Why the Roth conversion matters

There is a second layer here: paying taxes now to create tax free assets later. A young child is typically in a very low tax bracket, potentially even 0%. That creates a window where converting assets into a Roth structure can be extremely efficient. You pay a small amount of tax today, and everything from that point forward grows tax free.

If a parent or grandparent covers that tax bill, assets move into a tax free environment for the beneficiary and the parent or grandparent reduces their taxable estate. I cover conversions more broadly in Roth conversions explained.

Trump account mistakes to avoid

A Trump account is not a liquidity tool. It is not a college fund, a first home fund, or money your child will use in their 20s. They may be able to use a very small portion for some of those purposes, but this is a retirement strategy that starts with a newborn. You are locking the money up for decades.

If the strategy involves a Roth conversion, you also need separate liquidity to pay that tax bill, a real cost people tend to underestimate.

The kiddie tax is also worth flagging. This IRS rule taxes a child's unearned income at the parents' rate once it crosses a certain threshold, and it is designed to prevent families from shifting investment income to their kids to use lower tax brackets. Depending on how these accounts are ultimately structured, it is something to plan around. It is not a deal breaker, but it should not be ignored.

What to do before funding a Trump account

Before doing something like this, I would ask three questions:

1. Am I maxing out my own retirement accounts?
2. Do I have sufficient liquidity for all of my financial goals?
3. Do I have a clear plan for education funding, such as a 529?

If those boxes are not checked, this is not your next move. A Trump account is an optimization layer that sits on top of a solid financial foundation.

Who should consider a Trump account

My honest take is that for most people this is interesting but not urgent. If you are already investing consistently, using tax advantaged accounts, and building a long term plan, you are probably capturing most of the benefit already, though it does not hurt to do this.

It gets more compelling for families who are financially secure, have a long time horizon, and want an additional layer of tax efficient wealth transfer. For them it is worth a real conversation.

The larger takeaway is that time and tax strategy create the wealth, and the account is only the vehicle. Every year you delay starting, for yourself or your kids, is a year of compounding you do not get back.

Common questions

Can a Trump account be used for college or a first home?

A child may be able to use a very small portion for those purposes, but this is a retirement strategy and the money is locked up for decades.

How much does the government contribute to a Trump account?

The idea being discussed includes potential initial funding from the government of up to $1,000 when the account is opened for a child at birth.

Should I open a Trump account or a 529 plan?

I would want a clear plan for education funding, such as a 529, in place first. A Trump account is a layer to add on top of that foundation.

VDB Wealth is a registered investment adviser. Information presented is for educational purposes only and is not intended to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

There's a new type of account being talked about right now that claims you can turn $90,000 into over $3 million completely tax free. Sounds insane, right? Well, it's coming from a recent Wall Street Journal article, and I've actually had a few clients reaching out asking if they should be doing this for their kids.

So, here's the thing. The math actually works, but almost nobody's explaining why it works, where it breaks, and who this actually makes sense for. So, in this video, I'm going to walk you through what are these Trump accounts, how do we really get them to 3 million, and the biggest mistake people are about to make if they try this. Because for most people, this is either a smart long term move or a complete distraction.

Let me show you something. Imagine two scenarios. In the first, you start investing for a child the year they're born. In the second, that same person waits until they're 30 to start. Same idea, same type of investing, even similar total contributions, but the outcomes are not even close. That gap, that's not about how much they invested. That's about time. And that's really what this entire conversation is about.

So, let's break down what these Trump accounts are. Right now, this isn't even fully rolled out yet. It's being discussed as a part of a broader tax and savings legislation with the plan to go live in the summer. The general idea looks like this. You open an investment account for a child at birth, potentially with some initial funding from the government up to $1,000. Parents and grandparents contribute over time, and that money grows tax deferred. And then, if structured and executed correctly, the account is eventually converted into a Roth IRA, which means all future growth and withdrawals are completely tax free.

Now, here's the example that's getting all the attention. Parents invest $5,000 per year until the child is 18. That's $90,000 total, and over time that turns into roughly $3 million when that child retires, totally tax free. It's not because of some crazy investment, but it's really because of one thing, time.

But let's be real for a second. This assumes consistent investing for 18 years, market returns over multiple decades, and no behavioral mistakes along the way. And those are some pretty big assumptions. And it's also why the account itself isn't the magic here. The account is really just a vehicle. Time is the engine for these results.

There's also a second layer to this that's actually really powerful. And that's the idea of paying taxes now to create tax free assets later. When a child is young, they're typically in a very low tax bracket, potentially even 0%. And that creates a window where converting assets into a Roth structure can be extremely efficient. You pay a small amount of tax today, and everything from that point forward grows tax free.

If a parent or grandparent covers that tax bill, you're doing a few things at once. You're moving assets into a tax free environment for the beneficiary, and you're reducing your taxable estate. And at the end of the day, you're giving that child a long term financial foundation that most people never get.

Now, I want to talk about where people get this wrong, because this is the part that doesn't make the headlines. This is not a liquidity tool, and I want to be very clear about that. This is not a college fund, a first home fund, or money your kid is using in their 20s. Sure, they may be able to use a very small portion of it for some of those purposes, but this is really a retirement strategy, and you're starting as a newborn. You are locking this money up for decades. And if part of the strategy involves converting to a Roth at the right time, you also need to separate liquidity to pay that tax bill. That's a real cost that people tend to underestimate.

There's also a sequencing issue here. Before you even think about doing something like this, you should ask, am I maxing my own retirement accounts? Do I have sufficient liquidity for all of my financial goals? Do I have a clear plan for education funding like a 529? And if those boxes aren't checked, this is not your next move. This is an optimization layer. It sits on top of a solid financial foundation, but it's not the foundation itself.

One more thing worth flagging here, something called the kiddie tax. This is an IRS rule that taxes a child's unearned income at the parents' rate once it crosses a certain threshold. It's specifically designed to prevent families from shifting investment income to their kids to take advantage of the lower tax brackets. So, depending on how these accounts are ultimately structured, this is something you want to be aware of and plan around. It's not a deal breaker, but definitely not something to ignore.

So, here's my honest take. For most people, this is interesting, but it's not urgent. If you're already doing the right things, investing consistently, using tax advantaged accounts, and building a long term plan, you're probably already capturing most of the benefit, but it doesn't hurt to do this. You don't need a specific account label to build real wealth. Yes, there are certain advantages of these accounts versus 529 plans and custodial accounts, but they both benefit from the same concept.

Where does this get more compelling? It's really for families who already have the foundation in place. If you're financially secure, have a long time horizon, and are looking for an additional layer of tax efficient wealth transfer, then this is worth a real conversation.

But, the real takeaway here isn't about Trump accounts. It's this: The account doesn't create wealth. Time and tax strategy create wealth. Every year you delay starting for yourself or your kids is a year of compounding you don't get back. And structuring taxes over a lifetime, not just in a single year, is how meaningful wealth actually gets built. If you're a parent or planning to be one, this is one of those decisions that looks small now, but it's going to compound massively over time.

If you want more breakdowns like this, clear, no hype, hit subscribe. And if you've been thinking about doing something like this, drop a comment. I'm always curious how people are approaching it. I'll see you in the next video.