Gavin Newsom says you should open a Trump account for your kid. Here's why

California Gov. Gavin Newsom is certainly no fan of President Donald Trump. But they've found common ground: the new Trump accounts for children.

The Democratic governor and frequent Trump critic recently said the tax-advantaged investment savings accounts were "one of the best things" the Republican president has done, and he's "enthusiastic" about parents opening these accounts for their kids.

Newsom's cross-party praise may be less surprising in light of a California precedent: In 2022, he launched the California Kids Investment and Development Savings Program , which seeds accounts for children. Unlike the broader Trump program, CalKIDS funds can be used only for college and career training.

Trump accounts came into existence through the Republican omnibus tax-and-spending bill signed by the president last summer. Parents have been able to open them since July 4 of this year.

With a Trump account, you can set aside money in an investment account for a person under 18 with a valid Social Security number. The money grows tax-deferred and can't be withdrawn until Jan. 1 of the year the child turns 18. At that point, the account is treated like a traditional IRA with rules that allow withdrawals for expenses such as education, a first home or retirement, subject to taxes and possible penalties.

Parents and other relatives can contribute up to $5,000 per year, per child, including up to $2,500 in contributions from their employer. For children born during the years of Trump's second term (2025 through 2028), the federal government will make a one-time deposit of $1,000.

With CalKIDS, eligible low-income California children receive up to $1,500 to grow and be used toward education and workforce training. All Californians born July 1, 2023, or later are eligible for a CalKIDS account with $100 in it, plus another $25 if a parent or guardian claims the account online . Linking that account to an existing ScholarShare 529 account nets another $50 deposit.

Eligible kids automatically get a CalKIDS account, though families have to register online to access it. More than 1 million accounts have been claimed so far out of about 6 million established and funded by the state, according to a news release from the governor's office.

Newsom acknowledged that in deep blue California, the Trump accounts have a branding problem and urged parents to look beyond politics.

The name has been a sensitive issue for some clients, said Brad Geddes, a certified financial planner at Decker Retirement Planning, which has offices in Sausalito and San Francisco.