Trump Account vs 529 Plan: The Rules Side by Side (2026)
A Trump Account and a 529 plan compared rule by rule: who can open one, yearly limits, government money, tax, investments, withdrawals and who controls it.
A Trump Account is a traditional IRA for a child under 18, with a $1,000 Treasury seed for US citizens born 2025 to 2028, a $5,000 yearly limit and no withdrawals before the year the child turns 18. A 529 plan is a state education savings plan whose earnings are tax-free when spent on qualified education.
A Trump Account and a 529 plan are both ways to save for a child, but they follow different rules. A Trump Account is a type of traditional IRA owned by the child. US citizens born from 2025 to 2028 get a $1,000 Treasury seed, families can add up to $5,000 a year, and nothing can come out before the year the child turns 18. A 529 plan is a state or school education savings plan. Its earnings are free of federal tax when spent on qualified education.
This page lays the rules side by side and does not say which is better. To see what your child already qualifies for, use the Trump Account eligibility checker. To project growth, use the Trump Account calculator.
The rules side by side
| Trump Account | 529 plan | |
|---|---|---|
| What it is | A traditional IRA for a child, under 26 USC 530A | A qualified tuition program, under 26 USC 529 |
| Who can have one | A child under 18 with a valid Social Security number | Anyone can be the beneficiary, with no income limits |
| Government money | $1,000 Treasury seed for US citizens born 2025 to 2028 | None from the federal government |
| Yearly limit | $5,000 a child from all family, friend and employer sources (indexed after 2027) | No yearly cap; contributions can't exceed what is needed for the beneficiary's education |
| Employer money | Up to $2,500 a year, excluded from the employee's income | Not part of the federal rules |
| Federal tax deduction | No | No |
| Growth | Tax-deferred | Tax-free if spent on qualified education |
| Investments | US stock index funds with fees of 0.1% or less, no leverage | The plan's own menu |
| When money can come out | From 1 January of the year the child turns 18 | At any time |
| Tax on withdrawals | Taxed as ordinary income under traditional IRA rules; 10% extra tax before 59½ unless an exception applies | Earnings tax-free for qualified education; otherwise earnings are taxed plus a 10% additional tax |
| Who controls it | A parent or guardian until 18, then the child | The person who opened it |
| Changing the child | No: the account belongs to that child | Can switch to another family member without tax |
The Trump Account rules are from the IRS Instructions for Form 4547 and the White House FAQ of 2 December 2025. The 529 rules are from IRS Topic 313, the IRS 529 questions and answers and Publication 970. All were checked on 18 October 2026.
Trump Accounts in more detail
Opening. Trumpaccounts.gov says Treasury completed automatic enrolment on 1 October 2026 for eligible children who did not already have an account. A parent or guardian must still claim the account in the official app. Claiming is needed to manage it, to let family and employers contribute, and to receive the $1,000 seed. You can also make the election on IRS Form 4547. It must be made while the child is under 18 at the end of that year, so by 31 December of the year they turn 17.
Money in. Contributions have been accepted since 4 July 2026. The $5,000 yearly limit covers family, friends and employers together. The $1,000 seed does not count toward it, and neither does money from charities and governments given to a whole group of children, called "qualified general contributions". Michael and Susan Dell's gift, according to Invest America's Dell page, put $250 into the accounts of children born 2016 to 2024 in ZIP codes with a median family income of $117,300 or less, and deposits were finished by 9 October 2026.
Money out. Until the end of the year before the child turns 18, almost nothing can be taken out. The only exceptions are moving the whole account to another Trump Account provider, a rollover to an ABLE account at 17, and payments on death. From 1 January of the year the child turns 18, traditional IRA rules apply. Withdrawals are taxed as income, and those before 59½ may carry a 10% additional tax. Exceptions to that tax include higher education costs and a first home purchase.
529 plans in more detail
Opening. Every state has its own plan, and you can use another state's. Plans are either prepaid tuition or savings plans. Anyone can open one for anyone: a child, a grandchild, a friend or yourself.
Money in. There is no yearly federal limit. Contributions can't exceed what the beneficiary will need for qualified education. Large gifts may have gift tax consequences once a donor's gifts to one person pass $19,000 in a year. Contributions are not deductible on the federal return.
Money out. Earnings are free of federal tax when spent on qualified education expenses. These include college tuition, fees, books, and room and board at an eligible school. Kindergarten to grade 12 costs count too, up to $20,000 a year in total from all of a child's 529s, up from $10,000 before the end of 2025, according to IRS Topic 313 (updated 24 September 2026). The K-12 list now covers more than tuition:
- curriculum, books and other instructional materials;
- tutoring or classes outside the home;
- fees for standardised achievement tests, Advanced Placement and college admission exams;
- dual-enrolment fees;
- educational therapies for students with disabilities from a licensed or accredited provider.
The older IRS questions-and-answers page still shows the $10,000 rule.
Any other withdrawal makes the earnings taxable, plus a 10% additional tax, with exceptions such as the beneficiary's death or disability, or a scholarship. Since 2024 a 529 that has been open for at least 15 years can also roll money into the beneficiary's Roth IRA, up to a $35,000 lifetime limit and within the yearly Roth limit.
What changed recently
- 2025: the 2025 tax law, which the White House and the IRS call the Working Families Tax Cuts, created Trump Accounts. The IRS issued Form 4547 in December 2025.
- 2026: the federal K-12 limit for 529 money is $20,000 a year, up from $10,000 before the end of 2025 (IRS Topic 313).
- 4 July 2026: Trump Accounts opened for contributions and the full app launched (Treasury press release).
- 1 October 2026: Treasury completed automatic enrolment of eligible children.
- 9 October 2026: Invest America said all Dell $250 deposits had been made. The final ZIP threshold was $117,300, down from the $150,000 first announced, because automatic enrolment increased the number of eligible children.
This page is a summary of the rules, not financial or tax advice. Rules for both accounts can change as Treasury and the IRS issue new guidance.