If you have children, you’ve probably heard about the new 530A accounts, sometimes referred to as “Trump Accounts.”
Maybe someone has already asked if you’re planning to open one for your child, and you weren’t quite sure what to say. Let’s walk through what we know so far so you can decide whether it might make sense for your family.
What is a 530A account?
At a high level, a 530A account works somewhat like a custodial Traditional IRA for children under age 18, with one major difference: your child does not need earned income to contribute.
Once the child turns 18, the account can be rolled into a Traditional IRA in their own name.
Here are the key rules:
- Each child can have one account
- Annual contribution limit: $5,000
- Any adult can contribute on the child’s behalf
- In some cases, employers may contribute, though we won’t get into those details here
Contributions are made after tax. The contributions themselves can be withdrawn tax-free, but any investment growth is taxable when withdrawn. The account is invested in low-cost funds that track the stock market.
In addition, U.S. citizens born between January 1, 2025, and December 31, 2028 may receive a one-time $1,000 seed contribution from the federal government, if the account is claimed.
How do you claim the $1,000?
You’ll need to file Form 4547. Form 4547 can be filed with your 2025 tax return or submitted through trumpaccounts.gov. Online portals are expected to be available sometime in summer of 2026.
While they don’t currently qualify, there are already discussions about additional seed funding beyond the $1,000 for children born before 2025. For example, Michael and Susan Dell have pledged $250 per child in certain income-qualified ZIP codes.
Because of this, it may be worth opening an account simply to position yourself to receive any future “free money.”
Should you make additional contributions?
That depends on your financial goals for your child.
Are you saving for college? A first car? A home down payment? Retirement?
Each goal may call for a different type of account.
Personally, my priority is helping my son pay for college. My wife and I haven’t discussed helping him save for retirement, so it doesn’t make much sense for us to start funding that goal just because a new account exists. We’re still saving for our own retirement!
If retirement savings for your child is a priority, it’s worth comparing the 530A account to other options like:
- Custodial Roth IRA
- Custodial brokerage account
- A 529-to-Roth conversion strategy
What about the growth potential?
Some projections suggest the account could grow to around $270,000 by age 18 if you contribute $5,000 per year. The math works—assuming a 10% annual return. The bigger question is taxes.
At age 18, the account can be rolled into a Traditional IRA. Some planning gurus suggest converting that balance to a Roth IRA to create tax-free retirement savings.
This might sound like a no-brainer… until you consider the tax bill.
If your 18-year-old is still claimed as a dependent, those Roth conversions could be subject to the Kiddie Tax, meaning the income may be taxed at the parents’ rate—often 22% or higher.
If your child is no longer a dependent and is in a lower tax bracket, the conversion may be more tax-efficient. But there’s still one important question: who is paying the tax bill on that conversion?
The answer to that question will be different for every family and is worth carefully considering before you choose to leverage a 530A account and potentially take on a hefty tax bill.
So what am I doing?
There are still plenty of unknowns around these accounts. For now, my plan is simple: open the account, collect any available seed money and let it grow, without making any further contributions. In the meantime, we’ll continue funding a 529 plan for college unless our goals change over time.
Want to talk through your situation with an advisor? Let’s talk about if a 530A account makes sense for you.
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