Parents and Kids Build Wealth in Parallel

Most parents plan to leave their wealth to their kids after they die.

What if you could help your kids build wealth alongside you instead?

That's what makes the new 530A accounts ("Trump Accounts") so interesting.

This can be less of a savings account and more of an estate planning strategy.

Here's the idea:

Instead of waiting 40 years to transfer wealth, you can contribute up to $5,000 per year of after-tax money into your child's account starting at birth.

The money compounds tax-deferred until age 18.

Then the real strategy begins.

At age 18, the account converts into a traditional IRA.

During your child's lowest-income years—typically college or early adulthood—you can gradually convert it to a Roth IRA.

Because the original contributions were already taxed, only the investment gains are taxable upon conversion.

And if you keep the annual conversions below the standard deduction (currently $16,100), it's possible to convert the account while paying little to no federal income tax.

The playbook looks like this:

• Open the account. Any U.S. child under 18 with a Social Security number qualifies. Children born between 2025 and 2028 also receive a $1,000 government contribution.
• Contribute up to $5,000 per year of after-tax money.
• Let it grow tax-deferred until age 18.
• Convert it to a Roth IRA during your child's lowest tax bracket years.
• Then do the hardest thing in investing: nothing.

The math is pretty wild, even using a conservative 6% annual return:

• $5,000 invested every year from birth through age 18
• $90,000 total contributions
• Approximately $155,000 by age 18

Then let it compound inside a Roth for another 40 years.

By age 60, you're looking at roughly $1.8 million of potentially tax-free wealth.

And that's assuming public market returns.

If alternative investments such as private equity, venture capital, or private businesses are utilized, the upside could be significantly larger.

If you're thinking about how to build wealth with the next generation, let's talk.

This article is for general educational purposes only and does not constitute investment, tax, or legal advice. 530A accounts, IRA conversions, and related strategies involve eligibility rules, contribution limits, and tax consequences that vary by household. Consult a qualified professional about your individual circumstances. Altenn Wealth provides tax planning and strategy, not tax preparation. Hypothetical returns are for illustration only and are not a guarantee of future results.