Personal finance expert and Ramsey Solutions personality George Kamel, who co-hosts The Ramsey Show and hosts The Fine Print podcast, did not hesitate to claim the federal government's $1,000 seed contribution for his own young son when deposits began landing in newly launched Trump Accounts for eligible children in July. But even as he welcomed what he called "a little money back" from Uncle Sam, Kamel issued a cautious warning to parents across America about the program's tax fine print — and the costly mistake well-meaning families could make.

"As someone who has a 1-year-old and 3-year-old, I took advantage of this. And on the Fourth of July, that $1,000 came into the account for my son, and I went, 'Woo! A little money back from the government that I've given so much to,'" Kamel told Fox News Digital.

"If you can understand the power of compound growth, then this Trump Account was worth it just to get your mind thinking about it," he continued. "But the truth is, the tax benefits are not great on this."

The initiative, which debuted as part of the Trump Accounts rollout in 2026, is a provision of the new tax legislation — the One Big Beautiful Bill Act that President Trump signed in July 2025 — that provides $1,000 to every eligible newborn U.S. citizen whose parents enroll the child in the program. Children born between July 4, 2025 and January 1, 2029 qualify for the full $1,000, with the federal seed amount stepping down for children born in later years. No contributions are necessary, but parents can deposit up to $5,000 per year, with the funds invested in a qualifying U.S. stock index fund. The tax structure Kamel pointed to is closer to a tax-deferred vehicle than a Roth IRA: contributions go in after-tax, earnings are taxed as ordinary income when withdrawn, and penalty-free distributions are limited to qualified uses such as higher education, a first home, or a small business — a contrast that helps explain his remark that "the tax benefits are not great."

During a July 31 public Cabinet meeting, President Donald Trump said that more than 7 million Trump Accounts had been opened since the program's launch date.

Kamel walked through the potential long-term growth of the seed money. "Here's the math on this: If you get the free $1,000, well, that could grow to almost half a million or more by the time my kid is 65, without ever adding anything to it," he said, before turning to other ways of investing in children's futures.

"Save the 529 plan for education. That has way better tax advantages. You're using after-tax income, you withdraw it tax-free, it grows tax-free. That is the best move for education expenses," he explained. "When it comes to other things, like a custodial Roth IRA is great, but you need earned income. So the real power of the Trump Account is that there is no earned income needed."

Without any additional contributions, the account is estimated to be worth about $5,800 at age 18 and roughly $200,000 by age 55. Kamel also said it could grow to about $5 million by age 65.

His primary warning, however, was directed at parents who rush to invest for their children while neglecting their own debt, emergency funds, or retirement savings — an ordering that mirrors the Ramsey "Baby Steps" framework, which ranks retirement investing ahead of children's education funding.

"I love that we're bringing this conversation to the forefront with these Trump Accounts… But the sad truth is most Americans aren't investing for themselves, let alone have the ability to invest for their kids," he said. "We tell people, hey, become debt-free, don't owe other people money, have an emergency fund so that you have the margin to build wealth for yourself. And once you're investing 15% of your own income into your own retirement, then and only then should you be thinking about investing for your kids."

"The truth of the matter is, a lot of kids are having to support their aging parents who didn't plan for their own retirement. So now they're having to fund their retirement while trying to support their own life and their own kids. So this has put a real bind and burden on the younger generations," Kamel continued. "And I don't wanna do that to my kids."

"So if you can get this early, this mindset, that compound growth is the key… I hope that you have the ability to leave that legacy where your kids went, 'Wow, I can't believe the advantage that my parents gave me by setting me up in this way.'"

Source: Fox Business. FOX Business' Alexandra Koch contributed to this report.