A Trump Account hands your newborn $1,000 of federal money and up to $2,500 a year of tax-free employer match: then taxes every dollar of growth as ordinary income decades later. 529s and custodial Roths do the opposite. Here is the math on all three.
Adjust the variables below to simulate outcomes, compare rates, and see real-time projections.
A direct comparison of features, rules, limits, and eligibility requirements.
| Feature / Detail | Trump Account (Section 530A) | 529 / Custodial Roth |
|---|---|---|
Annual contribution limit | $5,000 combined (individual + employer) | 529: $19,000 per donor before gift tax; Roth: $7,500 (2026) |
Free money at the start | $1,000 federal seed (births 2025-2028) + employer contributions up to $2,500/yr excluded from your income | None: every dollar is yours |
Tax on growth at withdrawal | Ordinary income tax on seed, employer money and all earnings; only your own contributions come back tax-free | 529: $0 for qualified education; Roth: $0 in retirement |
What happens at 18 | Automatically converts to a Traditional IRA in the child's name | 529 stays a 529; custodial Roth becomes the child's Roth IRA |
FAFSA treatment | Student asset: assessed at 20% | 529: parent asset at max 5.64%; Roth: excluded from assets |
Earned income required | No: fundable from birth | 529: no; custodial Roth: yes, child needs real wages |
Investment choices | US equity index funds with expense ratio ≤ 0.10% only, until 18 | 529: plan portfolios; Roth: any brokerage asset |
Escape hatches | None before 18, no hardship withdrawals, no loans | 529: $35,000 lifetime Roth rollover (SECURE 2.0); Roth: contributions withdrawable anytime |
Analyze the advantages and drawbacks of each financial product before making a decision.
Since July 4, 2026, families can contribute to Trump Accounts, and the pitch is simple: children born between January 1, 2025 and December 31, 2028 with a valid Social Security number get $1,000 deposited by the federal government. No income test, no matching requirement: you file the election and the money lands.
Employers sweeten it further: they can put up to $2,500 a year into an employee's child's account, and that money never appears in your taxable wages. A family capturing both collects $3,500 of outside money in year one: something no 529 or Roth can offer at any price.
That is the whole case for the account, and it is a genuinely good one. The problems start with what happens to the money over the next fifty years.
Fund any of these accounts with $5,000 a year at a 7.5% return and the balance at 18 looks the same: roughly $182,000 including the Trump Account's seed. Compounding does not care about the label on the account.
The label matters when money comes out. The Trump Account converts to a Traditional IRA at 18, and from then on the seed, the employer money and every dollar of growth are taxed as ordinary income: at the child's future rates, which nobody can predict. Withdraw earnings before 59.5 and a 10% penalty stacks on top. The 529's growth comes out at $0 tax for education; the Roth's at $0 tax in retirement.
On $130,000 of accumulated growth, a 22% ordinary rate means a $28,600 tax bill the other two accounts simply never send. That is the price of the $3,500 head start: roughly eight times its size, paid at the other end of the timeline.
Financial aid is where the Trump Account quietly costs college-bound families the most. Because the child legally owns it, FAFSA counts it as a student asset and assesses it at a flat 20%. A 529 owned by the parent is assessed at a maximum of 5.64%. A custodial Roth is not reported as an asset at all.
On a $50,000 balance in the aid year, that is a $10,000 reduction in aid eligibility from the Trump Account, $2,820 from the 529, and $0 from the Roth: every single aid year. For a family expecting need-based aid, the account choice can swing more money than the federal seed ever provided.
The playbook that respects all of this: open the Trump Account, claim the seed, take every employer dollar: then stop. College money goes to the 529; the first summer-job paycheck opens the custodial Roth. All three can coexist for the same child, and stacking them in that order captures every subsidy while sending the growth where it is never taxed.
The Trump Account wins the first dollar and loses the last one. Nothing beats a $1,000 federal seed plus $2,500 of employer money you never pay income tax on receiving: that is an instant, guaranteed return. But every dollar of growth compounds toward an ordinary-income tax bill, while the same dollar in a 529 or custodial Roth compounds toward zero tax. So the order of operations is mechanical: claim the seed, capture any employer match, then direct family savings to a 529 for college (5.64% FAFSA treatment vs 20%) and a custodial Roth once the child has real earnings. Families who max the Trump Account first out of brand recognition are paying decades of future tax for money that had cheaper homes.
Children born 2025-2028 (the seed is free), and families whose employers contribute: up to $2,500 a year of compensation that never hits your taxable income.
College savings (529) and any child with real earned income (custodial Roth): the tax-free compounding is unmatched once the free money is captured.
The rules and figures on this page are researched from official primary sources:
