Suze Orman says Trump Accounts' free $1,000 is worth grabbing — but parent contributions can backfire

Suze Orman says Trump Accounts' free $1,000 is worth grabbing — but parent contributions can backfire

Chris Morris

Sat, August 29, 2026 at 1:00 AM GMT+3 4 min read

Taking the government's offer of a free $1,000 deposit for your child's future is a no-brainer, says personal finance expert Suze Orman. Where you take things from there, though, is a lot less obvious.

Trump Accounts became available last month to anyone under the age of 18 — and if a child was born in 2025 or 2026 (or is born in 2027 or 2028) and is a U.S. citizen, they're eligible for an automated $1,000 deposit into their account, courtesy of the government. Some employers will also make contributions of up to $2,500 per employee to the accounts.

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There's nothing wrong with that, said Orman, who added "You should never turn down free money." But when it comes to parental contributions to those accounts, it's not the right move for some households.

Setting family priorities

It's a natural parental instinct to want to help set your child up for their future. And the law allows up to $5,000 a year to be contributed to a Trump account, including any employer contribution. But the pressure to invest in your child can make you ignore some very real-world issues.

Orman says any parent or grandparent who has credit card, student loan or car payment debt should focus on paying off those bills before they think about putting their money into a Trump Account. Additionally, if your emergency savings fund won't cover at least eight months of expenses, you should be adding to that.

Even if you have a safety net and aren't burdened by debts of your own, your own retirement savings needs to be on track. If not, you should prioritize yourself before investing for your child. While that might seem selfish to some, ultimately, it's a bigger gift to your child.

"You owe your child the security of knowing they will not need to step in and support you 20, 30, 40 years from now," said Orman.

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Alternative investments

While Trump Accounts will supply some free money for newborns, they're available for any children. That doesn't mean they're the right option, though, said Orman.

If you're the parent of a teenager who has a job that earns them a paycheck, for instance, a Roth IRA could be the smarter choice.

Minors who have earned income during the year, whether self-employed or with a formal job, are eligible to open a Roth IRA. The 2026 maximum annual contribution is $7,500, or the total of a child's earned income for the year — whichever is less. The child, however, does not need to be the one who makes the deposit.

The advantage of these accounts is the contributions are made after taxes, so any funds that accumulate are tax free. That means that when your child does retire (or takes any withdrawal after reaching the age of 59.5) they'll not only have a nest egg that has had decades to grow, they won't have to pay a hefty tax bill when they access it.

Fidelity notes that a one-time contribution of just $1,000 to a Roth IRA could grow to more than $12,000 over 50 years. (That's assuming a 5% annual investment return, compounded monthly). That's not the case with a Trump Account.

"Contributions to a Trump Account are made with after-tax money, so they will not be taxed again when withdrawn, but 100% of earnings withdrawn will be taxed as ordinary income," Orman said.

This article originally appeared on Moneywise.com under the title: Suze Orman says Trump Accounts' free $1,000 is worth grabbing — but parent contributions can backfire

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.