Dave Ramsey is not a fan of Trump Accounts.
On a recent episode of “The Ramsey Show,” the personal finance expert told a caller he wouldn’t recommend opening one. “I would not be doing any of this,” he said in a video clip of the exchange posted to Instagram.
“I’m a fan of some of the things the President is doing. I’m not a fan of some of the things the President is doing, and I think this is a political stunt,” he continued. “You’ve got other ways to save.”
While Trump Accounts won’t officially launch until July 4, 2026, there’s been a lot of conversation surrounding them following President Donald Trump’s State of the Union address on Feb. 24.
During his speech, the president called out the accounts, describing them as “tax-free investment accounts for every American child,” according to a transcript provided by the Associated Press.
He went on to claim that with “modest” contributions, these investment accounts could reach upwards of $100,000 by the time a child turns 18 — a claim that’s certainly appealing to parents looking to ensure their children’s financial futures.
What is a Trump Account?
First introduced by the One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, Trump Accounts are long-term savings accounts designed for children.
As a part of President Donald Trump’s pro-family policy, eligible accounts will receive a one-time contribution of $1,000 from the federal government. No additional contributions are required, but custodians can deposit up to $5,000 annually until the child turns 18, the Trump Accounts website says.
The intent of the accounts is to “provide for stronger and more financially secure futures, and harness the strength of the United States economy to lift up the next generation,” according to Ways and Means Committee Chairman Jason Smith.
However, critics like Ramsey point out that the accounts have some major downsides.
Related: Wall Street quietly rolls out new ‘Trump accounts’
In a post on Ramsey Solutions, the personal finance expert points out that the accounts lack flexibility, limit your investment options, and are placed under some pretty tight restrictions. Additionally, money held in Trump Accounts is taxed as ordinary income when it is eventually withdrawn.
Perhaps most significantly, Trump Account funds can only be used for certain, government-approved, qualified expenses, like education, down payment on a home, or business-related start-up costs. If account holders intend to use their Trump Account money for other reasons, they’ll get hit with a 10% withdrawal fee, Ramsey said.
What Trump Account alternatives does Dave Ramsey suggest?
Instead of investing in a Trump Account, Dave Ramsey offered several alternatives for parents looking to invest for their children.
529 Plans and Coverdell Education Savings Accounts (ESA)
- If helping your child pay for higher education is top of mind, Ramsey suggests opening a 529 Plan or an ESA.
- Both 529 Plans and ESAs are tax-advantaged investment accounts designed with the specific intention of paying for qualified education expenses.
- Both plans offer tax-free withdrawals when used for education-related expenses.
Source: Ramsey Solutions
Uniform Transfers to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) Accounts
- If helping your child with large expenses is your primary goal, Ramsey suggests UTMA or UGMA accounts.
- While both accounts are taxable, they have no annual contribution limits, meaning custodians can grow these at a faster rate.
- These accounts also offer more investment flexibility, including investing in mutual funds.
Source: Ramsey Solutions
Custodial Roth IRAs
- If preparing your child for retirement is your main focus, Ramsey suggests a custodial Roth IRA.
- In retirement, taxes are not taken on money withdrawn from custodial Roth IRAs.
- It is important to note that you cannot open a custodial Roth IRA until your child is earning an income, and contributions can’t outpace that annual income.
Source: Ramsey Solutions
The Bottom Line
While Dave Ramsey doesn’t consider opening a Trump Account a financial misstep — especially if your child qualifies for the $1,000 federal contribution — there are better ways to prepare for their future.
“[Trump Accounts] are just spreading around the money to give attention to a political office,” Ramsey concluded. “I personally wouldn’t do it.”
Related: Dave Ramsey has surprisingly critical words for finance ‘stunt’
