Is a Trump Account better than a 529 plan?

They serve different purposes. 529 plans are best for education expenses (tax-free withdrawals). Trump Accounts are investment accounts that convert to traditional IRAs at 18. Most families should use both.

Which has higher contribution limits?

529 plans have much higher limits ($235,000–$600,000+ lifetime). Trump Accounts are limited to $5,000 per year.

Trump Account vs 529 Plan: Which Should You Choose?

Q: Can I have both a Trump Account and a 529?

Yes. They are completely separate programs. You can contribute to both simultaneously with no conflicts.

Last verified: 2026-02-12

Bottom Line

For education: 529 wins — tax-free withdrawals for qualified education expenses
For flexibility: Trump Account wins — money can be used for anything at 18
For free money: Trump Account wins — $1,000 federal deposit (2025–2028 births)
For high savers: 529 wins — $235K–$600K+ lifetime limits vs $5K/year
Best answer: Use both. They complement each other perfectly.

The short answer: these aren't competing products. A 529 is best for education savings. A Trump Account is best as a long-term investment account that your child controls at 18. Most financial advisors recommend opening both.

Side-by-Side Comparison

Feature	Trump Account	529 Plan
Legal basis	IRC §530A (OBBBA)	IRC §529
Federal deposit	$1,000 (2025–2028 births)	None
Annual contribution limit	$5,000/year	No annual limit (gift tax rules apply above $19K)
Lifetime limit	$5,000 x years until 18	$235,000–$600,000+ (varies by state)
Tax on contributions	After-tax (no deduction)	After-tax (state deduction in 30+ states)
Tax on growth	Tax-deferred (taxed on withdrawal)	Tax-free (for qualified education expenses)
Tax on withdrawals	Ordinary income tax (trad. IRA rules at 18)	Tax-free for education; 10% penalty + tax otherwise
Use of funds	Anything (at 18+)	Education expenses (K-12 up to $20K/yr, college unlimited)
Investment options	S&P 500 / broad U.S. equity index only	Multiple options (varies by plan)
Employer contributions	Up to $2,500/yr tax-free (§128)	Not available
Income restrictions	None	None
FAFSA impact	TBD (IRS guidance pending)	Parent-owned: minimal impact
Account owner at 18	Child (converts to their IRA)	Parent (can change beneficiary)
Roth IRA rollover	No (already an IRA at 18)	Up to $35,000 after 15 years

When to Choose a Trump Account

Your child was born 2025–2028 — claim the free $1,000 federal deposit
Your employer offers matching — get up to $2,500/year tax-free
You want flexibility — the money isn't restricted to education expenses
You're already maxing out a 529 — this is an additional savings vehicle
You want your child to have retirement savings early — it converts to a traditional IRA at 18

When to Choose a 529 Plan

Saving specifically for college or K-12 — tax-free withdrawals for education
You want to save large amounts — $235K–$600K+ lifetime limits
Your state offers a tax deduction — 30+ states give deductions for 529 contributions
You want to control the money — parent remains account owner (can change beneficiary)
You want investment choice — 529s offer multiple fund options, not just index funds

Best Strategy: Use Both

As J.P. Morgan, Fidelity, and most financial advisors recommend: the answer for most families is both. They serve different purposes and don't conflict with each other.

✅ Recommended strategy for newborns (2025–2028)

Step 1: Open a Trump Account to claim the $1,000 federal deposit.
Step 2: Open a 529 in your state for education savings (get the state tax deduction if available).
Step 3: Ask your employer about Trump Account matching ($2,500/yr tax-free).
Step 4: Split additional contributions based on your goals — education (529) vs general wealth (Trump Account).

Growth Comparison Example

Assuming 8% average annual return and $250/month contributions from birth:

At Age	Trump Account	529 Plan
5	~$19,800	~$18,300
10	~$46,500	~$44,600
18	~$108,000	~$105,400

*Trump Account starts with $1,000 federal deposit; 529 starts at $0. Both assume $250/mo contributions and 8% annual returns. These are estimates only.

Try our Growth Calculator to model your own scenario.

Frequently Asked Questions

Can I have both a Trump Account and a 529?

Yes. They are completely separate programs with separate limits. You can contribute to both.

Which is better for college savings?

529 plans are better for college specifically because withdrawals for qualified education expenses are completely tax-free. Trump Account withdrawals (as a traditional IRA at 18) are taxed as ordinary income.

What if my child doesn't go to college?

Trump Account: no problem — money can be used for anything at 18.
529: unused funds can be rolled into a Roth IRA (up to $35,000 after 15 years), transferred to another family member, or withdrawn with a 10% penalty + taxes on earnings.

Does a Trump Account affect 529 contributions?

No. The $5,000 Trump Account limit and 529 contribution limits are completely independent.