After-tax value comparison
Goal: pay for college at 18
$0
529 plan (tax-free)
$0
Trump Account*
$0
Custodial Roth IRA*
Goal: retirement at 59½ (no withdrawals at 18)
$0
Custodial Roth IRA (tax-free)
$0
Trump Account*
$0
529 (non-qualified)*
*Model assumptions: identical contributions in each account from 2026 (or birth year, if later) through age 17; Trump Account includes the $1,000 federal seed for 2025–2028 births. College scenario: 529 withdrawals are tax-free for qualified expenses; Trump Account and Roth earnings used for college are taxed as ordinary income at your selected rate (the 10% early-withdrawal penalty is waived for qualified higher-education expenses); contributions/basis come out tax-free. Retirement scenario: Roth withdrawals are tax-free; Trump Account earnings, seed, and any pre-tax amounts are taxed at your selected rate; the 529 column assumes a non-qualified withdrawal (earnings taxed + 10% penalty) and ignores the limited 529-to-Roth rollover option. A custodial Roth IRA legally requires the child to have earned income — most young children don't qualify. Educational estimates only, not advice.
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Full rules comparison
| Feature | Trump Account | 529 Plan | Custodial Roth IRA |
|---|---|---|---|
| Free government money | $1,000 federal seed (U.S. citizens born 2025–2028) | None federal; some states offer small seed/match programs | None |
| Annual limit | $5,000/yr aggregate (indexed after 2027); employer up to $2,500 within cap | Effectively very high — up to gift-tax limits; 5-year front-loading of ~$95k allowed | IRA limit ($7,000 in 2026) — but only up to the child's earned income |
| Earned income required? | No | No | Yes — the child must have legitimate wages |
| Tax on growth | Tax-deferred; earnings taxed as ordinary income at withdrawal | Tax-free for qualified education expenses | Tax-free at 59½ (and contributions withdrawable anytime) |
| Investment choices | Restricted: low-cost U.S. equity index funds (e.g., S&P 500) | Plan menu incl. target-date funds, bonds | Nearly anything |
| Access before 18 | Locked (rare exceptions) | Anytime for education | Contributions anytime |
| Use at 18 for college | Allowed, but earnings taxed | Tax-free | Penalty waived for education; earnings taxed |
| Financial aid (FAFSA) | Retirement-type asset — generally favorable treatment expected (guidance pending) | Parent asset — counted at up to 5.64% | Retirement asset — not counted |
| Best for | Free $1,000 + simple long-horizon investing for any kid | Families confident the money is for education | Kids with real earned income (jobs, modeling, family business) |
So which should you actually use?
For most families this isn't either/or. The practical hierarchy looks like this:
- Claim the free $1,000 first. If your child was born 2025–2028, making the Trump Account election is free money — there is no scenario where leaving it unclaimed wins.
- Saving specifically for college? The 529's tax-free growth for qualified education expenses is hard to beat, and contribution room is far larger. Dollars you know will go to tuition generally do better in a 529.
- Child has earned income? A custodial Roth IRA is the strongest pure tax shelter available — tax-free forever — but it's limited to what the child actually earns.
- Employer offers Trump Account contributions? Take them. Up to $2,500/year excluded from your taxable income is an immediate, guaranteed return. Run the numbers →
- General long-term wealth for the child, beyond the basics? The Trump Account's $5,000/year of additional room is a reasonable supplement — just remember earnings come out as ordinary income, so it's closer to a traditional IRA than the "tax-free" headlines suggest.
Model your own numbers with the Trump Account growth calculator, or check the $1,000 eligibility rules.
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