Key takeaways

• A Trump Account is an investment account owned by children and designed for long-term savings; it includes a 5,000 annual cap on contributions.
• A 529 plan is a tax-advantaged account designed to help children or other beneficiaries pay for qualified education expenses, with no federal contribution limits.
• Trump Accounts can help support long-term savings and retirement planning, while 529s can help build college funds and cover related education expenses.

Whether you’re saving for your child’s education or financial security later in life, opening a Trump Account or 529 plan can be options for families to consider. Newly launched Trump accounts are investment accounts for kids geared toward long-term wealth building, while 529 college savings plans have helped families save for college and other qualified education expenses since 1996. ¹

Learn how contributing to either tax-advantaged account, or both, may align with your financial goals, savings timeline, and anticipated access needs.

Trump Account vs. 529: Key differences at a glance

The table below highlights the key differences between Trump Accounts and 529s:

What are Trump Accounts and 529 plans designed for?

Trump Accounts are child-owned investment accounts

A Trump Account for kids (formally known as a Section 530A account) is a new type of traditional IRA created to benefit children. The accounts are child-owned but managed by the parent or legal guardian until the minor turns 18. Parents, relatives, employers, and eligible individuals can make contributions to the child’s account, and they can’t be used by or transferred to another individual unless in the case of death.

Any child under age 18 with a Social Security number (SSN) is eligible for a Trump Account. Children born between January 1, 2025, and December 31, 2028, also qualify for a one-time $1,000 government contribution under the new pilot program.²

The U.S. Treasury Department is responsible for setting up and administering the accounts, which became available on July 4, 2026.³

Read more: Trump accounts for kids: Eligibility, government contribution, and limits

529 plans are tax-advantaged education programs

Also known as a qualified tuition program (QTP), a 529 plan is a state-sponsored account to help pay for qualified education expenses, including college tuition, textbooks, and certain housing expenses. The account owner can save and invest money in the plan for a designated beneficiary — often their child. The accounts are entirely funded by family members and friends; there are no federal contributions like those available for some Trump accounts.

Typically, any U.S. citizen or resident over age 18 with an SSN or tax identification number (TIN) is eligible to open a 529 account. They can do so for themselves or for a designated beneficiary, such as their child, grandchild, or family friend Unlike Trump accounts, 529 plans generally allow the owner switch the beneficiary among qualifying family members, a plus for households with multiple children. It’s also possible to open and contribute to more than one 529 account, or to name the same beneficiary for multiple accounts.

Read more: Is a 529 plan worth it? Pros, cons, and when it makes sense

How do Trump Account and 529 taxes differ?

Trump Accounts and 529 accounts for kids offer unique tax benefits that help when saving for college or retirement.

Trump Account contributions create different tax buckets

Depending on how funds were contributed, Trump Accounts offer different tax advantages. Individual contributions are generally made with after-tax dollars. When distributions are taken, their tax treatment depends on the source of the contributions and applicable federal tax rules. In general, after-tax contributions are not taxed again when withdrawn, while earnings attributable to those contributions generally may be subject to ordinary income tax.

Government contributions, employer contributions, and contributions made through payroll deferrals are typically made pre-tax. These contributions can offer tax-deferred growth potential, but the account owner will pay taxes when withdrawing them.

Qualified 529 withdrawals are not subject to federal taxes

Similarly to Trump Accounts, 529 plans are typically funded through after-tax contributions made by parents, relatives, or friends. The account beneficiary can withdraw funds to pay for qualified education expenses without paying federal income taxes or penalties on earnings.

These expenses generally include college tuition, books, supplies, computers, and certain room-and-board costs for eligible students attending qualified schools.529 plans can also be used for K-12 education, apprenticeship programs, workforce training, and other certain qualified expenses.

Although 529 contributions are not federally deductible, more than 30 states offer their own tax deductions on 529 contributions. Before opening an account, check whether your state requires the use of an in-state 529 plan to qualify for the deduction.

Read more: Are 529 contributions tax deductible? Federal and state rules

How much can be contributed to a Trump Account vs. a 529?

Trump Accounts and 529s vary significantly in contribution limits and rules. This may impact the amount and frequency in which families contribute to either account.

Trump Account contribution limits and employer contributions

Up to $5,000 can be contributed per child to a Trump Account in 2026 and 2027. This combined annual total includes all contributions made by parents, relatives, friends, employers, and even children themselves as they get older. The limit does not include the initial government seed contribution, if eligible, or any philanthropic contributions. If offered, employer-funded contributions are capped at $2,500 annually per employee, but the amount may be split among children.⁴

529 contribution limits and gift-tax rules

There are no federal 529 contribution limits. However, each state sponsors its own 529 plan, which may be subject to aggregate or lifetime contribution limits. Those limits range from about $235,000 to more than $621,000 per beneficiary. Contributions can generally be made by anyone, including friends and relatives.⁵

Contributions made to a 529 are treated as gifts. If you contribute more than the 2026 annual gift tax exclusion— $19,000 per donor or generally $38,000 for a married couple — you'll typically need to file a federal gift tax return (IRS Form 709). 529 plans have a unique feature for “superfunding,” which allows you to contribute up to five years' worth of the federal annual gift tax exclusion into a 529 plan in a single year.

Read more: 529 contribution limits: How much can you put in?

*The married-couple amounts generally assume that each spouse uses their own annual exclusion or follows the federal gift-splitting requirements. Each spouse makes a separate five-year election when superfunding a 529 plan.

How do investment options differ between Trump Accounts and 529s?

As Trump Accounts and 529s are designed for different purposes, they differ in investment options and flexibility. This is especially important to understand when determining how either account may fit into your savings strategy.

Trump Account funds are invested in low-cost ETFs

Contributions to a Trump Account are initially invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM), a low-cost exchange-traded fund (ETF) that tracks the S&P 500 Index. Annual fees and expenses are capped at 0.1% of the balance of the investment or less. The Treasury Department plans to add index fund options for parents to choose from in the future.⁶

Investment restrictions are lifted from Trump Accounts at the beginning of the calendar year when child turns age 18. Funds left in the account can be invested similarly to funds within a traditional IRA.⁷ Depending on the account provider, this may include investments such as individual stocks, bonds, mutual funds, and other investments generally permitted in traditional IRAs.

529 investment menus can match education timelines

529 plans typically offer portfolios consisting of mutual funds or exchange-traded funds (ETFs), which can potentially grow tax-deferred to pay for qualified education expenses. Investments may be generally managed through age-based portfolios — which automatically shift from aggressive to conservative as the beneficiary nears college age — or static portfolios that maintain a fixed risk level.⁸

What are the differences in withdrawal rules and account access?

Both Trump Accounts and 529 plans have fairly strict rules regarding how withdrawals can be made. You might consider how these rules align with your overall contribution strategy and whether you’re using the account for long-term savings, education expenses, or both.

Trump Account withdrawals before and after the growth period

Withdrawals from a Trump Account are restricted until January 1 of the calendar year in which the beneficiary turns 18. After the account leaves its growth period, it becomes subject to general IRA rules. This means withdrawals before age 59½ are generally subject to income tax and a 10% penalty.⁹ Several exceptions to the 10% early withdrawal penalty exist, including withdrawals to cover higher education expenses.¹⁰

There are also several alternatives to leaving the money in the account after the child reaches age 18. All or some of the balance can be rolled over to another retirement account, such as a traditional IRA or another eligible retirement account. Alternatively, funds can be converted to a Roth IRA or Roth 401(k).

529 plan withdrawal flexibility and leftover funds

Unlike with a Trump Account, withdrawals can be taken from a 529 plan at any point. Funds can be withdrawn tax-free for qualified education expenses related to higher education, K-12 education, and certain professional training. However, if any earnings are withdrawn for nonqualified expenses, there may be taxes along with a 10% penalty.

Read more: 529 withdrawal rules: Taxes, penalties, and how it works

To avoid potential taxes and penalties on unused 529 funds, up to $35,000 can be rolled over to the beneficiary’s Roth IRA. This can occur once a child has completed their education and begins putting money away for retirement. The beneficiary designation can also be changed to another child or even yourself to help cover future education or professional training costs.

Read more: What to do if you have an overfunded 529 plan

How do Trump Accounts and 529 plans affect financial aid?

There is no official IRS or Department of Education guidance as of 2026 on how Trump Account assets will factor into a student’s FAFSA (Free Application for Federal Student Aid). They may potentially be treated the same as other student-owned assets and assessed at up to 20% of their value toward the Student Aid Index (SAI).¹¹

529s may have a lower impact on financial aid as they can be owned by parents, grandparents, and other relatives. Parent assets are typically assessed up to about 5.64% of their value, compared to up to 20% for student assets. However, 529 plans for dependent students are generally treated as parent assets regardless of whether the account is owned by the parent or the student. Grandparent-owned 529s are generally not reported as an asset on a student’s FAFSA, meaning they don’t impact federal financial aid.¹²

Can you have both a 529 plan and a Trump Account?

Yes, it is possible for a child to have both a 529 plan and a Trump Account. There are advantages to using both, especially for those who qualify for the Trump Account’s $1,000 federal contribution. Eligible families may wish to evaluate claiming the federal contribution as part of their long-term savings strategy, together with any additional contributions. At the same time, you can consistently contribute, even in small amounts, to a child’s 529 account.

By the time the child turns age 18, the funds invested in their Trump Account and 529 plan may grow to a significantly larger amount. The child can then use their 529 funds tax-free on eligible expenses related to college or professional development. Their Trump Account can be used to supplement their 529 as there are no federal tax penalties for eligible higher education expenses. The child can also choose to keep their Trump Account funds invested, even transferring them to a retirement account of their choice. They cannot, however, roll over balances directly between a Trump Account and a 529.¹³

Frequently asked questions

How do you open a Trump Account for kids?

Parents and legal guardians can open Trump Accounts for eligible children by making the election on IRS Form 4547 when filing their taxes or by completing the form electronically on the official Trump Accounts website. If your child is eligible for the $1,000 federal pilot contribution, be sure to elect it on the Treasury form as it is not selected by default.^{14, 15}

Why are Trump Accounts for kids trending?

Trump Accounts were launched nationwide on July 4, 2026. The $1,000 federal government contribution for those born between January 1, 2025, and December 31, 2028, has attracted strong interest. More than 4 million children have been signed up for Trump Accounts as of March 2026, with 1 million claiming the $1,000 pilot program contribution.¹⁶

When can you open a 529 plan?

Any U.S. citizen or resident over age 18 is generally eligible to open a 529 plan if they have an SSN or TIN. If saving for the education of a future child, you can open an individual 529 account for yourself, then change the beneficiary to the child.

Read more: How to open a 529 plan: A step-by-step guide

Can you use a 529 plan for out-of-state tuition?

Yes, education savings plans, including 529s, can generally be used to pay out-of-state tuition. The college, university, vocational school, or other postsecondary institution must be eligible to participate in a student aid program administered by the U.S. Department of Education.¹⁷

How much will a Trump Account be worth in 18 years?

Say a child receives a $1,000 government contribution as a baby, and an additional $5,000 is contributed each year until the child reaches the age of 18. Assuming a 6% annual return, the account could potentially grow to about $160,000, including about $69,000 in investment growth. This is a hypothetical illustration that assumes a 6% annual return; actual investment results will vary and are not guaranteed.

Read more: Trump accounts for kids: Eligibility, government contribution, and limits

Past performance is not a guarantee of future results.