As a CPA working with small business owners and families, I’ve been getting a lot of questions about the new “Trump savings account” for children. Mostly, my clients want to know if they should open one and how it’s different from a 529 plan. In today’s post, I’ll explain the differences in these investment accounts for kids so that you can make an informed decision about how and where to save your money.
What is a Trump savings account for kids and is it actually launching in 2026?
A Trump savings account, which is also called a “Trump account” or a “530A account,” is a new tax-advantaged investment account for children under 18 who have a Social Security number. These accounts are expected to launch on July 4, 2026 and contributions can begin after that date.
One unique aspect of a 530A account is that if your child is a U.S. citizen born between January 1, 2025 and December 31, 2028, the federal government will deposit $1,000 into their account to get it started. Another unique aspect is that unlike with a custodial IRA, the child doesn’t have to have earned income, so even babies can have an account and start saving.
Additionally, charitable foundations like the Dell Foundation have pledged to contribute money to older children’ s 530A accounts if their family lives in certain lower-income areas or in specific states. For example, Hoosier Brad Gerstner, founder of Alimeter Capital, has pledged to give $250 for every qualifying child under age 5 in Indiana.
How is a Trump account different from a 529 plan?
The simplest way to think about this comparison is that a Trump account (530A) is a retirement-style account for a child while a 529 plan is an education-specific savings account.
Aside from the initial $1,000 government contribution for eligible children, the other things to keep in mind are that contributions to a Trump account grow tax-deferred (not tax-free) and that the money can be converted to another account, like a traditional IRA, once the child turns 18.
On the other hand, contributions to 529 plans grow tax-free and the withdrawals are also tax-free as long as they are used for education expenses. And the money in a 529 plan can be transferred to another beneficiary or rolled over into a Roth IRA if unused.
Does a Trump account or a 529 plan have better tax benefits?
In terms of tax benefits, a 529 plan is the clear winner if the funds are going to be used for education. This is because unlike contributions to a 529 plan, contributions to a Trump account are generally made with after-tax money (not tax-deductible for individuals) and withdrawals are taxed as regular income.
This doesn’t mean that a Trump account is a bad idea. It just means that funds in 530A accounts are treated similarly to a traditional IRA when it comes to taxes, and that’s not the same as a 529 account.
Let me give you an example using real amounts:
Let’s say you contribute $10,000 into a savings account and that money grows to $25,000 by the time your child turns 18. If that money was in a Trump account, then your child would owe taxes on the $15,000 gain. If the money was in a 529 account, then your child would owe $0 in taxes if the money was used for qualifying education expenses.
Can you have both a Trump account and a 529 plan?
Yes, and having both is most likely your best strategy, especially if your child qualifies for the initial government or charitable deposit.
If you can, consider depositing money into a 529 plan to help fund your child’s education and contribute money to a Trump account to help your child grow their long-term wealth potential while also providing flexibility for how the money can be used.
What are the differences I should know about between a Trump account, 529 plan, and a custodial IRA?
There are several aspects to consider when choosing between these types of savings and investment accounts for your child. To make it easy, here’s a table with the key features to consider for each one:
How much money can I contribute to my child’s Trump savings account?
Starting July 4, 2026, parents, family members, friends, or employers can contribute up to $5,000 per year per child to a Trump account. Contributions from the government or from charities don’t count towards the $5,000 yearly limit. Employer contributions are capped at $2,500 annually and are tax deductible.
Another important distinction to keep in mind is that the tax status of contributions varies based on who is contributing the money. Individual contributions from parents or family members are made on an after-tax basis, but contributions from employers are made on a pre-tax basis. Because of this, many large companies have also added Trump account contributions to their benefit packages.
When will the $1,000 be deposited into the Trump account? What about other charitable contributions?
If your child qualifies for the $1,000 government contribution, the expectation is that the deposit will be made after July 4, 2026 once the Treasury confirms that the account is active.
If your child qualifies for a different charitable contribution like the $250 from the Dell Foundation, those contributions are expected to be made on a quarterly basis on or after July 4, 2026.
How can I get the money out of a Trump account?
Once your child turns 18, they can use their funds without penalty for qualifying expenses like education or starting a business. Withdrawals will be taxed as ordinary income.
How can I get a Trump savings account?
You can sign up for a Trump account by filing IRS Form 4547 with your annual tax return (starting in tax year 2025) or by completing the form online. Right now, the only timing requirement to open the account is that the election to open the account must be made before January 1 of the year that your child turns 18.
Where is the Trump account money held and invested?
Trump accounts are set up so that private banks and brokerages will manage the money and invest it in U.S. equity index funds that charge no more than .10% in annual fees.
Abridged by Amy
So should you sign up for a 503A account for your child? My advice is if your child is eligible for the $1,000 government contribution or could possibly be eligible for a charitable contribution, then go for it. Having an additional vehicle to help your child save money and grow their wealth isn’t going to hurt anything, even if you never make a single additional contribution to it.
In fact, when it comes to saving money in any way and for any reason, the biggest mistake I see families making is not saving soon enough. Whether you choose a 529 plan, an IRA, or a 503A, the real advantage will come from starting saving early and staying consistent with contributions. And if you can diversify and save in more than one type of account, then definitely don’t be afraid to do that too.
If you have questions about how savings and investments can impact your tax bill now and in the future, definitely reach out to a CPA who can help explain all of the options.
