We recently received a question about a new option coming in 2026 called 530A accounts, aka Trump Accounts, and how they compare to more familiar tools like 529 plans, UGMAs, and parent-held brokerage accounts. It is a timely question. These accounts are new, there is a lot of buzz around them, and they are starting to come up in real planning conversations with families who are already using other child savings strategies.
What Trump Accounts Are and Why They Are Getting Attention
Trump Accounts are drawing attention largely because of the government seed funding attached to them. For children born between January 1, 2025 and December 31, 2028, families who complete the required tax form can receive a $1,000 contribution from the government into the account.
That may not sound like much at first, but when you step back and think about compounding, it becomes meaningful. A $1,000 contribution invested over a full working lifetime at a reasonable long-term return could grow into a substantial retirement asset.
Beyond the seed funding, families can contribute up to $5,000 per year to the account. That limit is separate from the government contribution, and it applies even if the child was not born during the initial seed funding window. Any child under age 18 can have one of these accounts funded.
How the Account Actually Works
The easiest way to think about a Trump Account is as a custodial IRA that starts very early. Contributions go in while the child is a minor, and once the child turns 18, the account effectively becomes their own IRA.
Unlike a 529 plan, the account is not designed for education expenses. It is a retirement account. Withdrawals follow the familiar retirement rules, including age restrictions and penalties for early access.
This distinction is important because it clarifies where the account fits among other options.
Comparing Trump Accounts to 529s, UGMAs, and Brokerage Accounts
Each of the existing tools serves a different purpose.
A 529 plan is designed specifically for education. It offers tax advantages, but its use is limited to qualified education expenses. That focus can be helpful, but it also creates rigidity.
UGMAs and parent-held brokerage accounts offer much more flexibility. Funds can be used for a wide range of purposes, but they are taxable. They also introduce ongoing complexity around the kiddie tax rules and questions about whose tax rate applies as balances grow.
Trump Accounts sit in a different place. They are tax deferred, like a retirement account, and they avoid the ongoing tax reporting issues that come with taxable accounts. At the same time, they give up flexibility because the money is effectively earmarked for retirement.
In that sense, they fill a gap. They offer a way to fund long-term savings for a child without tying the money to education or creating a large taxable account in the child’s name.
The Power and the Tradeoffs of Long-Term Funding
If a family were to contribute the maximum $5,000 per year from birth until age 18, they could put roughly $90,000 into the account. Over decades, that could go a long way toward funding a child’s retirement.
That power comes with a clear tradeoff. Once the money is in the account, it is not flexible. It cannot be repurposed for education, housing, or other early-life needs. The benefit is tax deferral. The cost is restricted access.
For some families, that tradeoff is appealing. It creates a layer of separation between the child and the money and reduces the risk of a large balance being available at age 18.
Investment Structure and Cost Controls
One of my early concerns with these accounts was the quality and cost of the available investments. This is a common issue in other child-focused savings vehicles.
Trump Accounts address that directly. Investments are required to be low-cost index funds, with fees capped at 10 basis points. There is no leverage allowed. From an investment standpoint, the structure is simple and cost-conscious.
That setup makes it easier to feel comfortable funding the account over long periods without worrying about excessive fees quietly eroding returns.
When These Accounts May Make Sense
These accounts can be a good complement for families who already have education savings covered through 529 plans and are looking for a longer-term way to help their children without adding taxable complexity.
They may also appeal to families who want to save for their children but prefer not to place large sums into accounts that become fully accessible at adulthood.
Trump Accounts can be funded by parents and even by employers, and they do not have the income limitations typically associated with Roth IRAs. That flexibility broadens who can use them.
A New Tool, Not a Replacement
Trump Accounts are not a replacement for 529 plans, UGMAs, or brokerage accounts. They are a new tool that fills a specific role.
They sit between education-only savings and fully flexible taxable accounts. For families asking why they cannot simply fund an IRA for their kids early, this is essentially the answer.
Like any planning tool, the value depends on how it fits into the broader picture. For now, it looks like a useful and thoughtful addition to the child savings landscape.
This post is adapted from a recent episode of the Scholar Wealth Podcast. For more perspective on child savings strategies and long-term planning, listen to the full podcast episode here.