Trump Account vs 529 plan: which to fund first
Both help you save for a child. They're taxed very differently, and only one comes with free money attached.
By the Sproutcalc team · Figures last checked · How we calculate
Our take: claim the Trump Account anyway for any free money (the $1,000 deposit, employer and charity contributions). For your own savings toward college or school costs, a 529 usually wins, because qualified withdrawals are tax-free.
| Trump Account | 529 plan | |
|---|---|---|
| Who it's for | Any child under 18 with a Social Security number | Any beneficiary, any age |
| Free money | $1,000 Treasury deposit (born 2025 to 2028), employer up to $2,500 a year, charity deposits | Some states add matching grants |
| Yearly limit | $5,000 from family and employers | No federal yearly limit, state lifetime caps apply |
| Tax on contributions | Not deductible | Not deductible federally, many states give a deduction |
| Tax on growth | Tax-deferred, earnings taxed when withdrawn after 18 | Tax-free when spent on qualified education |
| When money can come out | Generally not before the year the child turns 18 | Any time, for qualified costs |
| Investments | US stock index funds only, fees capped at 0.1% | The plan's menu of funds |
| Best use | Long-term savings, first home, later retirement | College, K-12 tuition, training |
Who should pick which
- Your child was born 2025 to 2028: open the Trump Account to collect the $1,000, then put your own savings in a 529 if college is the goal.
- Your employer contributes: open the Trump Account so you don't leave employer money on the table.
- You want money for school in the next few years: a 529. Trump Account money stays locked until 18.
Same savings, side by side
Saving $1,200 a year from birth at 7% grows to about $40,799 by 18 in either account. A Trump Account for a child born 2025 to 2028 adds the $1,000 deposit, which grows to about $3,380. The difference is tax: 529 money spent on qualified education isn't taxed, while Trump Account earnings are taxed when withdrawn.
Questions people ask
Can I have both?
Yes. Nothing stops a child from having a Trump Account and a 529 at the same time.
Can I move money from a Trump Account to a 529?
No. During the growth period the only transfers allowed are rollovers into another Trump Account and a few others named in the rules.