Saving for Your Child's Future: A Parent's Guide to Four Account Options
Based on an interview with Derrick Alexander, CEO and founder of Greater Works Wealth, on News on 6's "Your Money Matters" with Dave Davis. See video from News on 6 here
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Saving for a child's future used to mean picking between a savings account and, maybe, a 529 plan. Today parents have more choices and more decisions to make. Derrick Alexander, a Tulsa-based financial advisor, breaks the landscape down into four options: brokerage accounts, 529 plans, UGMA accounts, and the newly available Trump accounts.
His advice for sorting through them starts with one question: "What do I want my money to do?"
Start With Your Goal
Each account is built for a different job.
Saving for education? A 529 plan is, in Alexander's words, "the best tool for education." Contributions to Oklahoma's 529 plan qualify for a state tax deduction, the money grows tax-deferred, and withdrawals are tax-free when used for qualified education expenses — which now include some K-12 costs, not just college. If your child gets a scholarship, you can withdraw a matching amount without the usual penalty. And if one child doesn't need the money, you can simply change the beneficiary to a sibling.
Want maximum flexibility? A brokerage account works more like an earmarked savings account. Parents remain the legal owner and keep full control over how the money is used — there's no restriction to education or any other purpose.
Comfortable handing control to your child eventually? A UGMA (Uniform Gifts to Minors Act) account lets parents, grandparents, or other family members contribute money for a minor. The catch: the child ultimately owns the account, and control transfers to them at the age set by state law. There are no restrictions on how they can spend it — for better or worse.
Thinking further out, toward retirement? That's where the new Trump account comes in.
What Are Trump Accounts?
Trump accounts became available on July 4 and work differently from other investment accounts. They're opened through Robinhood, the current platform for these accounts, and require completing IRS Form 4547 before opening one.
A few key facts:
- Family members can contribute up to $5,000 a year.
- For children born between 2025 and 2028, a pilot program allows the government to add a $1,000 contribution.
- The money is invested in an S&P 500 index fund.
- At age 18, the account automatically converts into an IRA.
Unlike a traditional Roth IRA, which requires a child to have earned income, a Trump account removes that barrier entirely — giving even very young children a way to start building retirement savings.
Trump accounts can technically be used for education or trade school, but Alexander steers his clients toward a 529 for that purpose instead, since it offers more flexibility — including the ability to change beneficiaries if plans change.
The Tax Trade-Off
Every account comes with a trade-off between tax advantages and access to the money:
- 529 plans and Trump accounts offer more tax benefits — deductions, tax-deferred growth, or tax-free qualified withdrawals — but come with more rules about how and when you can use the money.
- Brokerage accounts and UGMAs use after-tax dollars, so you may owe taxes on investment income and gains. In exchange, you get liquidity — much easier access to the funds whenever you need them.
As Alexander puts it: the more tax-advantaged the account, the greater the incentive to leave the money alone. The more taxable and liquid the account, the easier it is to reach.
The Bottom Line
There's no single "best" account — only the account that matches your goal:
- Education is the priority → a 529 plan
- You want flexibility → a brokerage account
- You're comfortable giving your child full control eventually → a UGMA
- You want to give a young child a head start on retirement → a Trump account
"The important thing," Alexander says, "is to understand the purpose and rules of each account before deciding where your money should go."
Derrick Alexander is the CEO and founder of Greater Works Wealth in Oklahoma. This article is for educational purposes and is not individual financial advice.
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