FAQ
Is the new Invest America / “Trump Account” better than a 529 plan?
Not as a replacement. A 529 is typically the best-fit tool when the job is education funding. The Invest America account can be a separate “adult launch” bucket designed for an asset the child can access at 18. They solve different jobs, and for many families the right move is layering, not swapping.
What is a UTMA account best for?
A UTMA is often used when you want broad flexibility for the child, college, a home down payment, business startup costs, or other needs. The key tradeoff is control: it’s an irrevocable gift and the child takes full control at the age of majority (varies by state). It may also have tax considerations for unearned income.
When does a custodial Roth IRA make sense for a child?
When the child has legitimate earned income (e.g., part-time job, paid work in a family business, certain performance/modeling income). Contributions are limited to the lesser of the annual IRA limit or the child’s earned income. The power is that contributions happen at a very low tax rate and can compound tax-free for decades subject to Roth IRA rules.
What’s the biggest mistake parents make when choosing an account?
Choosing the right account for the wrong goal. Parents hear “new,” “tax-deferred,” or “government seed,” and assume it replaces existing tools. The smarter approach is to identify the job first (education, flexibility, teen earned income, adult launch) and then match the account to that job.
Should high earners use multiple child accounts?
Often, yes, if the goals are different. One account can be hired for education (529), another for flexible gifting (UTMA), a custodial Roth for working teen years, and an Invest America account for an “adult launch” bucket. The key is to keep each bucket’s job clear and intentional.