If you've been doing your research on building wealth for your kids, you've probably come across both Trump Accounts and custodial Roth IRAs. They're both long-term investment accounts. They both offer tax advantages. And they're genuinely easy to confuse.

Here's how they actually compare.

## What Is a Custodial Roth IRA?

A custodial Roth IRA lets you open a Roth IRA in your child's name and manage it as the custodian until they're an adult. The money grows tax-free, and qualified withdrawals in retirement are completely tax-free.

The catch: your child needs **earned income** to contribute. If your 10-year-old mows lawns, babysits, or has a part-time job, they can contribute up to the amount they earned (capped at the annual IRA contribution limit, currently $7,000). You can also contribute on their behalf, up to that same earned income amount.

No earned income? No Roth IRA contributions.

## What Is a Trump Account?

A Trump Account, officially called an Invest America Account, is a new government program created under the [One Big Beautiful Bill Act](https://www.grifin.com/post/trump-childrens-investment-accounts-explained). It's a tax-deferred investment account for any child under 18 with a Social Security Number.

No earned income requirement. Anyone can contribute up to $5,000 per year. And if your child was born between 2025 and 2028, the government kicks in a free $1,000 to start.

At 18, the account converts to a traditional IRA, not a Roth. That's an important distinction.

## Tax-Free vs. Tax-Deferred: The Core Difference

This is the biggest mechanical difference between the two.

A Roth IRA grows tax-free. Contributions are after-tax dollars, and qualified withdrawals in retirement are completely tax-free. If your child is in a low tax bracket now (or earns very little), this is a powerful advantage.

A Trump Account grows tax-deferred. You don't pay taxes on growth while the money is in the account, but your child will owe income tax on earnings when they withdraw. Individual contributions (after-tax dollars) come out tax-free. Government and employer contributions, plus their earnings, are taxed on withdrawal.

For most kids, Roth is technically the better tax structure long-term. But Trump Accounts don't require earned income, which makes them accessible to every family right now.

## The $1,000 Government Seed

Roth IRAs don't come with government money. Trump Accounts do, for children born 2025 through 2028. That free $1,000, invested in an S&P 500 index fund for 18 years, could be worth significantly more by the time your child turns 18. [See the projected growth numbers](https://www.grifin.com/post/trump-children-s-investment-accounts-how-much-your-child-can-receive).

If your child qualifies for the seed, that alone makes the Trump Account worth opening.

## Investment Options

A custodial Roth IRA gives you wide flexibility. Depending on the brokerage, your child can invest in individual stocks, ETFs, mutual funds, index funds, and more.

A Trump Account invests exclusively in low-cost S&P 500 or U.S. equity index funds with an expense ratio cap of 0.10%. Less flexibility, but also less risk of someone making a bad pick.

## Can You Have Both?

Yes, and for some families this is the ideal setup. Use a Trump Account as the foundation (especially if the $1,000 seed is on the table), and open a custodial Roth IRA once your child starts earning income. The two accounts serve similar long-term goals but from different directions.

## How to Open a Trump Account

File [IRS Form 4547](https://www.irs.gov/pub/irs-pdf/f4547.pdf) with your 2025 tax return by April 15, 2026 to claim the government seed for eligible children. The account opens in July 2026. We've got a full walkthrough in our [step-by-step guide to opening a Trump Account](https://www.grifin.com/post/how-to-open-a-trump-account-for-your-child-step-by-step-guide).

Not sure if your child qualifies? The [Invest America landing page](https://www.grifin.com/invest-america) has the full eligibility breakdown.