Managing Partner, Jason M. Beischel, CFP®, on the questions families are actually asking about the new accounts.

The questions I’m getting aren’t really about the tax code. They’re more practical: should I open one, and does this replace what I’m already doing for my kids?

The short version is that they do different jobs. Here’s how I’ve been answering.

What is a Trump Account?

A Trump Account, formally a 530A Account after its section of the tax code, is structured as a traditional IRA for a child, created by the Working Families Tax Cuts Act of 2025.

• Any U.S. citizen child under 18 with a valid Social Security number is eligible, and each child may have only one account
• Children born between January 1, 2025, and December 31, 2028, may also qualify for a one-time $1,000 Treasury contribution
• Family, friends, and employers can generally contribute up to $5,000 per child per year, a limit indexed for years after 2027. Certain contributions from charities and government programs do not count against that cap
• Investments are limited to low-cost funds tracking broad U.S. equity indexes
• Money generally stays invested until age 18, after which the account operates largely like a traditional IRA

None of this is automatic. Someone has to open the account using IRS Form 4547 and elect the $1,000 contribution if the child qualifies. The form can be filed with a tax return or submitted electronically through your IRS Individual Account.

One common misconception: the 2025 through 2028 birth years determine eligibility for the $1,000 contribution, not for the account. Children born earlier can still have an account opened for them if they’re under 18. If you assumed your family was outside the window, look again.

How does it compare to a 529 or a custodial IRA?

In my view, these serve a different purpose than a 529 plan. A 529 is the base of funding a child’s education. Trump Accounts, like custodial IRAs, are long-term wealth building accounts. They’re there to create a nest egg for a child’s future.

The distinction that matters most to me comes down to earned income. A custodial IRA requires it, so you can only contribute once your child has a job, and most kids aren’t working a W-2 job before 15 or 16. A Trump Account has no earned income requirement during childhood, so it can bridge that gap.

A 529 plan sits alongside both the Trump Account and the custodial IRA, doing a different job entirely: funding education. That’s why I don’t think of these as competing options so much as different tools for different goals.

What if you can only fund one?

My starting point is usually to look for a way to fund both, since there’s often more room than families expect. But if education is the primary goal, I’d generally begin with the 529. Under current rules, unused 529 funds may be able to move toward retirement savings for the beneficiary, subject to specific limits, so wealth building can become the backup plan for those dollars.

Two things worth understanding before you fund one

It’s tax-deferred, not tax-free. Unlike a custodial Roth, where qualified withdrawals come out tax-free, earnings, the $1,000 federal contribution, and employer contributions are generally taxable as ordinary income when withdrawn.

Recordkeeping matters more than people realize. Because the account becomes a traditional IRA, responsibility for tracking after-tax contributions may fall to the taxpayer (via IRS Form 8606) rather than being handled automatically by the custodian the way 529 plans do, and guidance here is still developing. That’s potentially a multi-decade job, and lost records can turn a partly tax-free withdrawal into a fully taxable one. Keeping a running record now, with your tax professional involved, is the simple fix.

What actually gets in the way

It isn’t the rules, which are workable enough. The harder part is participation. Someone has to open the account and keep contributing over time, and that’s the piece no program can do for a family.

Why I think this matters

I don’t expect the true impact to show up for a while. But an entire generation of children will now have the ability to own investments and take advantage of an additional 18 years of compounding. That could fundamentally change this generation by turning them into equity shareholders from birth. As I see it, no generation up to this point has had that advantage.

There’s a nearer-term benefit too, and it’s the part I like most. These accounts are a great way to teach our kids about money. You can show a child something real that belongs to them, explain what a low-cost ETF is, and start the conversation about ownership and patience years earlier than most families do. Financial literacy is power.

A good place to start

The first step isn’t picking an account. It’s getting clear on what you’re trying to accomplish for your children, whether that’s education, long-term wealth, or both, and then matching the tools to those goals.

That’s a conversation I’m glad to have. If you’d like help thinking it through for your own family, contact us.

Sources: IRS instructions for Form 4547 · IRS on submitting Trump Account elections online · Morningstar on the basis-tracking challenge · Bipartisan Policy Center overview.