What happens to a Trump Account when my child turns 18?

The money is locked until the year your child turns 18: withdrawals can start on January 1 of that year, and at 18 the account becomes your child's. From then on it follows rules much like a traditional IRA. It is a common myth that withdrawals become tax-free at 18: in one survey, 30% of parents believed it.

How withdrawals are taxed

Money family members put in comes back tax-free. Growth, employer contributions and the $1,000 are taxed as your child's income. Each withdrawal is split in proportion: with $4,000 of family money in a $40,000 account, 10% of every withdrawal is tax-free and 90% is taxable.

Before age 59½, a 10% penalty applies to the taxable part unless an exception covers it. Qualified uses include education and buying a first home.

Can it stay invested?

Yes. Your child can leave it invested, take money out, or roll it into an IRA.

The control question

At 18 the account belongs to your child, not to you. That is a key difference from a 529, where the parent stays the owner and decides how the money is used.