At the Trump Account Summit in January, someone made a claim that runs counter to the guidance of many credentialed financial planners.
“What I love about this thing is, it’s better than Social Security. It really is,” Kevin O’Leary, the Shark Tank investor, told the audience, according to NAPA-Net.
Dave Ramsey, the personal finance radio host with more than three decades on air, chose a sharper label for the Trump Account program. “This feels more like a political stunt than a wealth-building breakthrough,” Ramsey said on TikTok, as GOBankingRates reported.
The Treasury’s $1,000 seed deposits begin hitting eligible accounts July 4, with more than six million children already signed up, according to a mid-June Treasury tally reported by CNBC.
Both men agree on one move: they say parents of qualifying newborns should claim the free deposit before doing anything else with these new accounts.
Where the two commentators split is on whether the accounts warrant ongoing contributions or just the initial government deposit.
O’Leary’s Social Security comparison oversells a custodial IRA for children
O’Leary argued that Trump Accounts function like a streamlined version of Social Security, stripped of bureaucratic overhead and invested directly in the stock market.
But that comparison breaks down, because the two programs solve fundamentally different problems, and neither one substitutes for the other in a household’s financial plan.
Social Security is a guaranteed benefit program funded by payroll taxes, designed to replace a portion of retirement income and backed by the federal government, Social Security stated.
Tommy Lucas, a certified financial planner at Moisand Fitzgerald Tamayo in Orlando, Florida, told CNBC that Trump Accounts function as tax-deferred traditional IRAs for minors, with taxes owed at withdrawal rather than avoided entirely.
These accounts are effectively traditional IRA accounts for minors. With a traditional IRA, taxes are deferred, not forever tax-free. The child will recognize taxable income at some point in the future when they take a withdrawal from the account.
Trump Accounts, established under Section 530A of the Internal Revenue Code, are tax-advantaged investment accounts for children that were created through the One Big Beautiful Bill Act.
Contributions go into low-cost index funds tracking broad U.S. equity markets, with annual fees capped at 0.1%, the Congressional Research Service reported.
Amounts generally cannot be withdrawn from Trump Accounts before January 1 of the year the child turns 18. After that point, the account is generally treated as a traditional IRA and subject to the same rules, IRS Notice 2025-68 confirmed.
Ramsey’s criticism has merit, but his own team says claim the deposit.
Ramsey told a caller on The Ramsey Show that he considered the accounts a vehicle for political attention rather than genuine wealth building, Inc. reported.
He flagged three concerns: Funds are locked until age 18, investment choices are restricted to government-approved index funds, and withdrawals face ordinary income taxation.
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His editorial team at Ramsey Solutions, however, adopted a more measured position, advising families to open the account and claim the $1,000 without hesitation.
For savings beyond that initial deposit, Ramsey Solutions recommended 529 plans, Coverdell ESAs, UTMA or UGMA custodial accounts, and custodial Roth IRAs, arguing that these vehicles deliver stronger tax treatment, greater flexibility, or both.
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Trump Account tax treatment ranks behind most savings alternatives.
The tax structure is the detail both celebrity commentators glossed over, and it changes the calculation for families considering regular contributions beyond the free seed amount.
Personal contributions from parents and relatives use after-tax dollars, so the original deposit amount is not taxed again upon withdrawal, the Congressional Research Service reported.
The $1,000 government seed, all employer contributions, and every dollar of investment earnings are taxed as ordinary income at withdrawal, however, the CRS report confirmed.
That ordinary-income treatment can produce a higher tax bill than a standard brokerage account, where long-term gains qualify for the lower capital gains rate.
Adam Michel, director of tax policy studies at the Cato Institute, called Trump Accounts the least tax-advantaged savings vehicle available to American families.
What the $1,000 seed deposit can realistically grow to over time
TrumpAccounts.gov, the Treasury program’s official site, projects that a $1,000 seed with no additional contributions could reach roughly $243,000 by age 55, based on the S&P 500’s historical average annual return above 10%, CNBC reported .
Morningstar’s market simulations produced an average annual return of 6.3% over the next decade, significantly below the administration’s assumptions, CNBC reported.
At a more conservative 7% annual return, the $1,000 seed alone would grow to approximately $3,570 over 18 years, the Associated Press calculated.
“Investors should understand that projections like these reflect best-case outcomes, not expectations,” certified financial planner Cathy Curtis of Curtis Financial Planning told CNBC.
Building a seven-figure balance by the late 20s would require years of maxed-out contributions and strong, uninterrupted returns, CFP Douglas Boneparth of Bone Fide Wealth told CNBC.
Where Trump Accounts fit alongside 529s and Roth IRAs
The ideal combination of accounts depends on a household’s income, state tax rules, and each child’s expected path toward education or employment.
The 529 plans remain a common option for education costs because they offer tax-free qualified withdrawals under IRS rules and, in many states, a state income tax deduction on contributions.
Roth IRAs, custodial accounts, and emergency savings are likely to be commonly used before families increase contributions to Trump Accounts.
Jeffrey Levine, chief planning officer at Focus Partners Wealth, urged families not to base their entire savings strategy around the Trump Account, CNBC reported.
Related: Kevin O’Leary issues sobering 401(k) reminder to workers