You want to help your children financially in the future — but it’s not always clear what the best way to do it is, or which type of account makes sense for your family. A new option called a Trump Account has entered the conversation, alongside two that have been around for decades: 529 Plans and custodial accounts (UGMA/UTMA). Here’s a clear breakdown of what each one offers, who may qualify, and how to think about choosing, based on information currently published and depending on final implementation.
Key Takeaways
- Trump Accounts (IRC §530A) are a new tax-advantaged savings account for children, expected to be available starting July 2026, with details still being finalized.
- The $1,000 federal seed deposit is part of a pilot program — a child may qualify only if they are a U.S. citizen, have a valid SSN, and were born between January 1, 2025 and December 31, 2028.
- 529 Plans are state-sponsored accounts designed for education expenses, and in many cases may be accessible to families filing with an ITIN, depending on the state plan.
- Custodial accounts (UGMA/UTMA) may offer more flexibility — funds can generally be used for anything that benefits the child.
- The appropriate account depends on your family’s situation, your child’s eligibility, and what you’re saving for.
What Is a Trump Account (IRC §530A) and How Does It Work?
According to currently published information from the IRS, Trump Accounts are a new type of tax-advantaged savings account for children, created under recent federal legislation and classified under a new section of the tax code, IRC §530A. As currently published, the account is described similarly to a traditional IRA for a minor: contributions may grow tax-deferred, and withdrawals could be taxed at the beneficiary’s rate when taken after age 18, depending on final implementation.
Here is what the program contemplates, based on what has been published so far:
- The account may be held in the child’s name, with a parent or guardian as custodian until the child turns 18.
- Funds are expected to be invested in a diversified fund tracking a U.S. stock index.
- Accounts are expected to be available starting July 2026 — details and implementation guidance may still evolve.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future returns.
Who Actually Qualifies for the $1,000 Pilot Contribution?
You may have heard broad statements about a $1,000 deposit. As currently published, the reality is more specific. The federal $1,000 deposit is part of a pilot program, and a child may qualify only if all three of the following conditions are met:
- The child is a U.S. citizen.
- The child has a valid Social Security Number (SSN).
- The child is born between January 1, 2025 and December 31, 2028.
This means children with an ITIN are not eligible for the $1,000 seed deposit under the pilot as currently published. The program may also include other requirements, depending on final implementation. If your family’s situation is more complex, consider checking Investor.gov or consulting a qualified tax professional for guidance specific to you. Tax rules can vary based on your situation. Consider checking the IRS website or consulting a tax professional.
What Can Families Contribute to a Trump Account?
Beyond the pilot deposit, additional contributions to a Trump Account may be allowed from family members, and in some cases from employers or other entities. Annual limits may apply, and operational details are still being finalized, so the exact mechanics could change depending on final implementation. The key takeaway: contributions may be made with after-tax dollars, growth may be tax-deferred, and the child typically may not access the funds until age 18, based on currently published information.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future returns.
How Do 529 Plans Compare?
A 529 Plan is a state-sponsored, tax-advantaged account designed primarily for education expenses. Per Investor.gov, here’s what stands out:
- Growth may be tax-free when used for qualified education expenses.
- Contribution limits vary by plan and state.
- In many cases, 529 plans may be open to families filing with an ITIN, depending on the state plan’s requirements.
- Funds may often be transferred between eligible family members if plans change.
For many families — including some mixed-status households — a 529 plan may be a useful tool for long-term education savings, depending on the state and the institution.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future returns.
How Do Custodial Accounts (UGMA/UTMA) Compare?
A custodial account, also known as UGMA or UTMA, is a general-purpose account held for the benefit of a minor. According to Investor.gov:
- The money may typically be used for anything that benefits the child — not just education.
- Annual limits may apply under tax or gifting rules.
- The account may hold a range of investments.
- The child generally takes full control at the age of majority, which varies by state.
- In many cases, custodial accounts may be accessible to families using an ITIN, depending on the institution.
All investments involve risk, including the possible loss of principal. Past performance is not indicative of future returns.
How Should You Think About Choosing the Right Account?
This is what matters: the right account depends on your family’s situation, your child’s eligibility, and what you’re saving for. A few questions to start with:
- Is the goal education, or broader long-term savings? 529s are designed for education; Trump Accounts and UGMA/UTMA may be broader, based on currently published information.
- Does your child have an SSN, and were they born in the pilot window? If yes, the Trump Account may make them eligible for the pilot deposit if they are also a U.S. citizen. If not, 529s and UGMA/UTMA may remain options.
- How much flexibility do you want? UGMA/UTMA may be the most flexible; 529s are the most education-focused; Trump Accounts may sit somewhere in between, with funds generally unavailable until 18, depending on final implementation.
If you’d like to learn more about saving for your child’s future, our guide on back-to-school and college savings may be a helpful place to start.
Frequently Asked Questions
Can my child get the $1,000 Trump Account deposit if they have an ITIN?
As currently published, no. The pilot $1,000 deposit requires a valid SSN, U.S. citizenship, and a birthdate between January 1, 2025 and December 31, 2028. Children with an ITIN are not eligible for the seed deposit under the pilot as it stands today.
When will Trump Accounts actually be available?
Trump Accounts are expected to be available starting July 2026. Implementation details and guidance may still evolve, so checking IRS.gov for updates may help.
Can I open a 529 Plan if I file with an ITIN?
In many cases, yes — depending on the state plan and the institution. Requirements vary by state, so checking your specific state’s 529 plan rules may be a reasonable next step.
What’s the main difference between a Trump Account and a custodial account (UGMA/UTMA)?
Based on currently published information, a Trump Account is described similarly to an IRA for a minor, with funds generally unavailable until age 18 and invested in a diversified U.S. stock index fund. A custodial account may be more flexible — it can hold a wider range of investments and be used for anything that benefits the child.
Do I have to choose just one type of account?
Not necessarily. Depending on your family’s situation, you may be able to combine accounts — for example, a 529 for education and a custodial account for broader needs. Consider consulting a qualified tax or financial professional for guidance specific to your situation.
What’s the Next Step?
Trump Accounts are new, and the rules are still being finalized. The most reliable place to track updates is directly with the IRS and Investor.gov. For your specific situation — especially around eligibility and tax treatment — consider consulting a qualified tax professional. Tax rules can vary based on your situation. Consider checking the IRS website or consulting a tax professional.
If you want to learn more, you can explore your options and check eligibility based on the type of account and your family’s situation.
Suggested Reading
- Back to School: College Savings — a companion guide on saving for your child’s education.
- Financial Planning for Teens: A Simple Starter Guide — a next-step resource as your child grows toward financial independence.
Sources
- TrumpAccounts.gov
- Investor.gov — Trump Accounts
- IRS — Trump Accounts
- Investor.gov — 529 Plans
- Investor.gov — Custodial Account
This content is prepared and reviewed by the Finhabits team to ensure clarity and accuracy. It is intended for educational purposes only.
Disclaimer:
This material is provided for informational purposes only and is not intended to offer investment, legal, or tax advice. All images and figures are for illustrative purposes. Investment advisory services are offered through Finhabits Advisors LLC, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. Past performance is not indicative of future returns. All investments involve risk, including the possible loss of principal. Securities are offered through Apex Clearing Corporation, Member of FINRA, SIPC. Securities held at Apex are protected up to $500,000, which includes a $250,000 cash limit. See SIPC.org for more details.
© Finhabits, Inc. All rights reserved.
