Dave Ramsey reveals better alternatives to Trump Accounts for parents to invest in
Trump Accounts may not be the best way to invest in your child's future. Here are the reasons why.
March 10 2026, Published 5:36 a.m. ET
President Donald Trump has touted his economic policies as game-changing measures to revive the economy, but most of them have invited criticism. His One Big Beautiful Bill Act introduced a new tax-advantaged investment plan for kids, the Trump Accounts, which are intended to secure the future for American children. Many parents have been interested in learning about the plan since it promised an initial deposit of $1000 from the Treasury Department. However, finance guru Dave Ramsey doesn't think Trump Accounts are a wise investment.
He believes the restrictions imposed by the plan do not provide flexibility for the investor. Moreover, the plan is not as tax-friendly as most people might expect it to be.
"I think this is a political stunt. It's not that big of a deal. You've got other ways to save. It's not as revolutionary as the original Roth was, it's not as revolutionary as the 529 is," Ramsey said, sharing his thoughts during a call. "It's just spreading around the money to get people's attention to a political office. I personally wouldn't do it," he added.
While the 65-year-old likes some of President Trump's policies, this is clearly not one of them. His company, Ramsey Solutions, recently dived deeper into the pros and cons of investing in a Trump Account in an article, and also suggested healthier alternatives parents can choose to secure funds for their children.
The Ramsey Solutions report concluded, "A Trump Account might be worth opening if your kid is eligible for the initial $1,000 government contribution. But it’s not a game-changer. In fact, you have several more effective ways to invest in your child’s future."
Trump Accounts can be availed by the parents, and the Treasury Department deposits $1000 to the accounts of children born between January 1, 2025, and December 31, 2028. Parents and other family members can invest up to $5000 every year in the account on behalf of their child.
The account holders can assume ownership of the Trump Accounts after turning 18. However, they can only withdraw the money for putting a down payment on a home, starting a business, or paying for college. If Trump Account holders use the money from the account for any unauthorized purchases, they will have to endure a 10% penalty.
All these restrictions make the policy an unwise investment option, according to Dave Ramsey. There are better alternatives available for parents interested in similar policies, which are more flexible and less restrictive. The 529 plans, for example, allow you to grow an investment account for your child's college fees. The money accumulated through these plans is not subject to federal income tax after withdrawal.
Other custodial plans, like Uniform Transfers to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA), provide you the option to invest as much money as you want in your child's account every year. It doesn't have the $5000 yearly barrier of the Trump Accounts. Custodial Roth IRAs are also a great way to give your kid a head start on retirement savings.
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