Trump Account vs 529: Which Is Better for Your Child? (Calculator)
Updated · Reviewed by Deepak Middha, Chartered Accountant
The short answer
A Trump account is a new IRA for children, created by the 2025 tax law. US-citizen children born 2025 through 2028 with a Social Security number can get a one-time $1,000 government deposit, which a parent must elect on Form 4547. For college a 529 is usually better, because 529 withdrawals for qualified education are tax-free, while Trump account growth is taxed when it comes out.
Trump account vs 529 calculator
On these assumptions the 529 plan leaves more after tax for college — $1,031 more. 18 years of contributions are assumed in each.
What to do next: claim the account and elect the $1,000 deposit at IRS.gov/TrumpAccounts, and check the other credits a child brings with the family tax credit finder.
Key takeaways
- Trump accounts take up to $5,000 a year, including up to $2,500 tax-free from an employer; contributions began July 4, 2026.
- The $1,000 government deposit is only for US citizens born 2025–2028 — and you must elect it.
- Nothing can come out before the year the child turns 18. After that, IRA rules — and the 10% early-withdrawal tax — apply.
- A 529 is tax-free for qualified education; a Trump account is taxed as income, so for college the 529 usually leaves more.
- Many families can use both: take the free Trump account money, and save for college in a 529.
Trump account vs 529: side by side
| Trump account | 529 plan | |
|---|---|---|
| What it is | A traditional IRA for a child, with special rules until 18 | A state-sponsored education savings plan |
| Free government money | $1,000 once, for US citizens born 2025–2028 (must be elected) | None federally |
| Yearly limit | $5,000 from all non-government sources (2026–2027) | No yearly cap; total can't exceed what the beneficiary's education needs |
| Employer money | Up to $2,500 a year, excluded from the employee's income (section 128) | Section 128 does not apply |
| Investments | Only US-company index mutual funds or ETFs during the growth period | The plan's own menu |
| Access before 18 | Generally none | Any time (taxed if not for education) |
| Tax on college use | Growth taxed as income; no 10% additional tax | Tax-free for qualified expenses |
| Tax on other uses | Growth taxed as income, plus 10% before 59½ unless an exception applies | Earnings taxed as income, plus 10% |
Can you take money out of a Trump account?
Not before the year your child turns 18. Until then the account is in its growth period, and the IRS allows only a rollover to another Trump account, an ABLE rollover at 17, a refund of excess contributions, or a payment on the child’s death. From January 1 of the year the child turns 18, traditional IRA rules take over: the growth is taxed as ordinary income, and withdrawals before 59½ carry a 10% additional tax unless an exception applies — such as qualified higher education expenses, or up to $10,000 for a first home.
Who gets the Trump account starter deposit, and how to claim it
The $1,000 pilot contribution is for US citizens born from Jan. 1, 2025, through Dec. 31, 2028, with valid Social Security numbers. Treasury began automatically enrolling eligible children on October 1, 2026, but the deposit still has to be elected: file Form 4547 and choose the pilot program contribution through the Trump Accounts app, the Trump Accounts website or your IRS Individual Online Account. Start at IRS.gov/TrumpAccounts. A new baby brings other breaks too — see tax breaks for a new baby and the family tax credit finder.
Frequently asked questions
Can you take out money from a Trump account?
Not while the child is under 18. During the growth period, which ends December 31 of the year before the child turns 18, the only payouts allowed are a rollover to another Trump account, an ABLE account rollover at 17, return of excess contributions, and payment on the child's death. From the year the child turns 18, traditional IRA rules apply, including the 10% additional tax before 59½ unless an exception fits.
Who gets the $1,000 Trump account deposit?
The federal government makes a one-time $1,000 contribution for children who are US citizens, were born from January 1, 2025 through December 31, 2028, and have a valid Social Security number. It is not automatic: a parent must elect it on Form 4547, through the Trump Accounts app or website or an IRS Individual Online Account, even if Treasury already opened the account.
Is a Trump account or a 529 better for college?
For college, a 529 usually wins on tax: withdrawals spent on qualified higher education expenses are tax-free. A Trump account used for college avoids the 10% additional tax through the higher-education exception, but its growth is still taxed as ordinary income. The free $1,000 deposit and any employer money can still make it worth opening alongside a 529.
How much can you put in a Trump account each year?
Up to $5,000 a year from all non-government sources combined, including up to $2,500 from an employer, for 2026 and 2027; both amounts are indexed for inflation after 2027. The $1,000 pilot deposit and contributions from governments or charities for a whole class of children do not count toward the limit. Contributions began July 4, 2026.
How is a Trump account taxed when the money comes out?
Like a traditional IRA. The money parents and relatives put in is basis and comes back tax-free. The $1,000 government deposit, employer contributions and all the investment growth are taxed as ordinary income when withdrawn. Before age 59½ a 10% additional tax also applies unless an exception does, such as qualified higher education expenses or up to $10,000 for a first home.
Are Trump account rules final?
Not entirely. The law is in place and the IRS has issued Form 4547, its instructions and Notice 2025-68, but the notice says Treasury and the IRS intend to propose regulations and expect them to be consistent with it. Some details may change when those regulations are issued, so check IRS.gov/TrumpAccounts before making a large contribution.
- IRS — Trump Accounts (reviewed 21-Oct-2026) →
- IRS — Trump Accounts frequently asked questions (reviewed 21-Oct-2026) →
- IRS — Instructions for Form 4547 (12/2025), Trump Account Election(s) →
- IRS Notice 2025-68 — Trump accounts →
- TrumpAccounts.gov — program information →
- IRS — Retirement topics: exceptions to tax on early distributions →
- IRS Publication 970 (2025), chapter 7 — Qualified Tuition Program →