Trump Accounts (a.k.a. 530A Accounts) are in the news and rightfully so, because they offer a great new way to jump start a child’s retirement savings. In addition to $1,000 from the government for newborns, the Dell Foundation, other philanthropists, and employers are also offering free money.
Trump Accounts have been automatically opened for all children with a Social Security Number born on or after January 1, 2025. Despite the desire to make Trump Accounts simple and easy to access, there are details you need to understand to claim the funds. Just because the account was opened for a child does not mean there is money in the account.
Once you claim the free money for your child, the next step is to determine how the Trump Account fits into your overall savings plan for each of your children. This article offers guidance to understand the benefits of Trump and 529 Accounts and links to these tools:
No matter how you save for your child’s future: Saving a Dollar Today is Better than Borrowing One Tomorrow®.
What Is a Trump (530A) Account?
A Trump Account is a special type of traditional IRA (individual retirement account) for children under the age of 18. The One Big Beautiful Bill (July 3, 2025) created them under Section 530A of the Internal Revenue Code. Any child who is a U.S. citizen with a Social Security number is eligible to have one account which benefits from a $1,000 gift from the government. To make the account creation process easy, children born on January 1, 2025 or later automatically have an account established for them.
Act NOW to claim the free money! The sooner you claim it, the sooner it goes to work for your child. Parents need to claim the account to get the free money for the child. An automatically opened account does not get the $1,000 on its own. To claim your child’s account, download the official Trump Accounts app (iOS or Android) or use trumpaccounts.gov. You’ll verify your identity and your relationship to your child. Use only the official app or website, and be wary of emails, texts, or calls asking for passwords or codes.
To make these accounts simple to understand and encourage long-term savings for the child, there are some important strings attached:
- Account is owned by the child. A parent or guardian manages the account until the child turns 18. There are no withdrawals before then for any reason, with one narrow exception for children with disabilities.
- No investment choices: Trump Accounts are required to be invested in low-cost stock index funds.
- Annual contributions are limited: Parents, grandparents, other family members, and friends can contribute up to a combined $5,000 per year. Employers can chip in up to $2,500 per year, and that amount counts toward the $5,000 limit. Personal contributions are not tax-deductible, but the money grows tax-deferred, so no taxes are owed while it stays invested.
- IRA rules apply. At 18, the account follows the same rules as any other traditional IRA, and your child takes full control. When your child withdraws money, the earnings are taxed as ordinary income. Withdrawals before age 59½ also carry a 10% penalty unless an exception applies. Exceptions include college costs and up to $10,000 toward a first home. The exception removes the penalty, not the income tax.
Children born from 2016 through 2024 don’t qualify for the $1,000. However, Michael and Susan Dell pledged $6.25 billion to deposit $250 into the accounts of about 25 million of these children who live in ZIP codes where the median income is below $150,000. No application is needed. The money goes straight into the automatically opened account, but you’ll need to claim the account to see it. You can check your ZIP code at investamerica.org/dell.
More free money may be available too. Dozens of large employers have pledged to contribute to accounts for their employees’ children, so it’s worth asking your HR department.
NOTE: Government and charitable deposits, including the $1,000 and the $250, do not count toward the $5,000 annual limit. They are taxed when withdrawn, just like the account’s earnings.
Take the Free Money
Opening a Trump Account is a no-brainer. Take the free money from the government, employers or philanthropists.
If you are also considering how best to save for child’s education, 529 Accounts are likely a very good compliment to the long-term retirement savings offered by Trump Accounts.
Trump Accounts vs. 529 Plans
Trump Accounts and 529 Plans are different tools built for different jobs. Understanding the key differences helps you decide how to use each one.
Tax treatment. This is the biggest difference. Money in a 529 Plan grows tax-free, and withdrawals for qualified education expenses are completely tax-free at the federal level. Many states also offer a tax deduction for 529 contributions. In a Trump Account, your own contributions come back tax-free, but every dollar of earnings is taxed as ordinary income when withdrawn, even when it’s used for college. Say a family puts $5,000 a year into each account for 18 years and earns 6% a year. The 529 would come out roughly $13,000 to $18,000 ahead after taxes, assuming a combined 20% to 25% tax rate on the Trump Account’s earnings. For college savings, the 529 wins by a wide margin.
Contribution limits. Trump Accounts are capped at $5,000 per year from all family members combined. With a 529 Plan, each person can contribute up to $19,000 per year (the amount of 2026 federal gift tax exclusion) without filing a gift tax return. You can also front-load five years at once: up to $95,000 per person, or $190,000 for a married couple. Families who can save more than $5,000 a year have far more room in a 529.
Access and flexibility. Trump Account money is locked until the year your child turns 18. After that, your child can use it for anything, but non-education uses before age 59½ usually trigger a 10% penalty on top of income tax. 529 money is available whenever you need it for qualified expenses. Those now include college costs, trade schools, apprenticeships, up to $20,000 a year for K-12 tuition, up to $10,000 toward student loans, and a rollover of up to $35,000 into the child’s Roth IRA.
Who’s in control. A 529 is owned by the parent or grandparent who keeps control and can change the beneficiary at any time. A Trump Account belongs to your child, and at 18 your child has full control of the money, no matter what you’d like it used for.
Financial aid impact. A parent-owned 529 is counted at no more than 5.64% in the federal aid formula. That means a $10,000 balance could reduce aid eligibility by at most $564. The Department of Education has not yet said how Trump Accounts will be treated. Some experts expect them to be ignored like other retirement accounts. Others expect them to count as a student asset, assessed at 20%, so a $10,000 balance could cut aid by up to $2,000. Either way, money your child withdraws during college is taxable income, and student income can reduce aid the following year.
What Should You Do?
For most families, the answer is simple: use both but give each one the right job.
Step 1: Claim your child’s Trump Account and the free money. Jump start your child’s IRA with the free money from the government, the Dells, your employer or other philanthropists. $1,000 invested for 18 years at a 6% average return becomes about $2,900. If the future stock market returns what it has recently, the result could be closer to $6,000.
Step 2: Make a 529 Plan the core of your college savings. 529 tax advantages are much stronger, the contribution limits are higher, you stay in control, and the financial aid treatment is favorable and clear. If your child ends up not needing all of it for education, you still have options. You can change the beneficiary to another family member, roll up to $35,000 into your child’s Roth IRA, use some of it to pay down student loans, or withdraw the money and pay taxes plus a 10% penalty on the earnings only.
Step 3: Know the trade-offs before adding your own money to the Trump Account. If you can save more than what goes into a 529, extra Trump Account contributions can build a long-term head start for your child’s first home or retirement. Just remember the trade-offs: the money is locked until 18, your child gets full control at that point, and earnings are taxed when withdrawn.
The Trump Account is designed to be a long-term savings account with a generous head start. 529 Plans are designed to help you save for education. Used together, they give your family a great combination of education and retirement savings for your child.
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