Trump Accounts are officially here. Does that mean every parent should open one? Last week, I walked through the thought process of creating a financial plan for your kid. It’s important to clarify how you want to support your children financially as they grow. Doing so will help illuminate which accounts are better suited for what you need, and which accounts are not. The Trump Accounts are still relatively new, but that doesn’t necessarily mean you need one for each kid to be a financially good parent.
Key Takeaways
- Section 530(a) accounts, or Trump Accounts, are retirement accounts designed for children.
- If you are still focused on education or other general savings goals for your kids, then you don’t need to prioritize the Trump Account beyond getting the free $1,000 seed contribution if your child was born between 2025 and 2028.
What is a Trump Account?
Section 530(a) accounts, commonly known as Trump Accounts, were created under the One Big Beautiful Bill Act, passed in July of 2025. In broad terms, this new account is a retirement account designated specifically for children, not adults. I won’t go into too much extra detail here, since I wrote about the finer details earlier this year, but the main points remain the same:
- Any child under 18 with a valid Social Security number can have a Trump Account.
- While the account is for the child, a custodian must manage the account while the child is underage.
- Any child born between 2025 and 2028 can receive a free $1,000 seed contribution from the Treasury Department.
- Contributions are currently capped annually at $5,000 per child, no matter who contributes.
- No withdrawals can be made from the account until the child is 18.
- At 18, the account converts to a Traditional IRA in the child’s name, and they get full access to the account.
To open an account, you need to fill out and submit IRS Form 4547. Once the IRS approves the form, you can activate the account. When I did this for my son, it was possible to fill out the form through the newly created Trump Account app. Alternatively, you could fill out the form on your own or while filing your tax return. Ultimately, you need to be approved before the account can be opened or any seed contribution can be added.
It is worth noting that for now, Trump Accounts are exclusively opened through this dedicated app and/or website at trumpaccount.com. While we hope this changes in the future, Financial Advisors and other brokerage firms cannot currently open a Trump Account, where you may hold your 529, UTMA, IRA, or other accounts.
Where does a Trump Account fit in the plan?
When it comes to saving for our kids’ future, the biggest savings need parents prioritize is often education, and many do that specifically through 529 accounts. 529s serve a specific function by optimizing your savings and taxes if you are sure those funds will go toward education. Like the Trump Account, they provide tax-deferred growth while the account builds. If done correctly, you can then withdraw from 529 accounts tax-free for qualifying expenses.
Uniform Transfer to Minors Act, or UTMA, accounts are the opposite of the specific function of a 529 account. They are generally more like a savings account that the child can use for anything once they reach the age of majority. For parents who want to prioritize flexibility over education-specific tax benefits, the UTMA account fits the job nicely.
Trump accounts, in my opinion, are a mix of both the specific- and general-use accounts. By definition, the government created them to be specific retirement accounts. These new accounts were designed to help kids save for their long-term future. However, few parents I have talked to prioritize funding part of their child’s retirement over any other savings. At least, not until they have addressed education or other goals first. This means Trump accounts may be used more as an alternative/additional path to saving for education or other goals.
What should parents do now?
To figure out whether you need to open a Trump Account for your kid(s), we first need to understand why you would need one in the first place. Last week I dove into the reasons behind saving for your kid’s future. It is arguably more important than the savings themselves. For example, if you’ve decided that all the savings you have for your kids should go to education, you may not need a Trump Account.
It is worth opening an account if your child qualifies for the $1,000 government seed contribution. Even if you don’t plan to fund the account over time, a free $1,000 toward your kid’s future is a benefit that seems hard to ignore.
Next, look at how you are already saving and which accounts you are using. I personally don’t think too many people will replace a preexisting account they use with a Trump account. Not many of us will close a UTMA to move those funds into a Trump Account. Therefore, it appears that Trump Accounts will be in addition to the accounts you already have set up.
What can change, however, is where the next dollar goes from this point forward. Here is one example. If you feel like you have a decent handle on education savings, then one potential use of a Trump account is for when grandparents want to contribute money to the kid. In some scenarios, both parents and grandparents save more than enough for one kid’s education. If instead one saves for education and the other for retirement, a Trump Account could complement the 529 in some situations.
There is no reason that kids have to have only one savings account. Going forward, more parents will likely use some combination of accounts to save for their kids. Adding a Trump account alongside a UTMA or 529 could be a great way to strengthen an already working financial plan for your kid.
Plans Change
Ultimately, it is a good thing that the Trump Accounts were created. They provide another tool that can be useful when building your kids’ financial plan. If starting their retirement savings is something that is important to you, Trump Accounts can help. If you are still focused on education or other general savings goals, then you are not missing much by not having this account. Take the free $1,000 if it is available. Otherwise, focus more on why you are saving than where you are saving. That way, the best accounts for the job will speak for themselves.
