COLLEGE SAVINGS OPTIONS FOR FAMILIES: TRUMP ACCOUNTS VS. 529 PLANS

Saving for a child’s future doesn’t have to be complicated — but choosing the right vehicle matters. Two popular (and very different) options are Trump Accounts and 529 Plans. Below is a plain-English breakdown to help you understand how each works and how they might fit into your overall tax strategy.

TRUMP ACCOUNTS

(Think: IRA-style savings that can be used for college — and more)

• Annual contribution limit: $5,000 per child

• Government contribution:

  • Children born between 2025–2028 receive a one-time $1,000 contribution, which does not count toward the $5,000 annual cap

• Employer contribution opportunity:

  • An employer may contribute up to $2,500 annually per employee’s dependents

  • This allows businesses to reduce taxable corporate profits while funding a child’s future

• Family contribution strategy:

  • Employer contributes $2,500 per child

  • Parents contribute the remaining $2,500 per child personally

• Access to funds:

  • Funds are locked until the child turns 18

• Start date:

  • Contributions can begin July 4, 2026

Tax treatment:

• Contributions are tax-deferred

• Withdrawals are taxed as ordinary income

Flexibility:

• Funds are not limited to education

• Can be used later for a home purchase, retirement, or other future needs

529 PLANS

(Education-specific savings with powerful tax benefits)

• Federal contribution limit: None

• Gift tax rules apply:

  • Annual gift tax exclusion applies

  • Superfunding allows up to $95,000 to be contributed in a single year

• Tax treatment:

  • Contributions are not pre-tax

  • No federal tax credit

• State tax benefits:

  • State rules vary

  • Indiana offers a 20% state tax credit, capped at $1,500

• Qualified uses:

  • K–12 education

  • College and higher education

• Growth & withdrawals:

  • Earnings grow tax-free

  • Withdrawals are tax-free when used for qualified education expenses

KEY DIFFERENCES AT A GLANCE

• Taxation

  • 529 Plan: Tax-free growth and withdrawals for education

  • Trump Account: Tax-deferred growth; withdrawals taxed as ordinary income

• Use of Funds

  • 529 Plan: Restricted to qualified education expenses

  • Trump Account: Can be used for any future purpose

• Planning Strategy

  • 529s are ideal for families certain funds will be used for education

  • Trump accounts offer broader flexibility and employer-based tax planning opportunities

WHICH OPTION IS RIGHT FOR YOU?

For many families, the answer isn’t either/or — it’s strategic coordination. Employer contributions, state tax credits, income levels, and long-term goals all matter.

If you’d like help setting up either option:

• 529 Plans are typically established through the state of Indiana

• Trump Accounts are established directly with the IRS

A FINAL THOUGHT

I’m a big believer in starting early. I spent my mid-30s paying off student loans when I could have been investing for retirement instead. Thoughtful planning now can change that story for the next generation.

If you’d like help evaluating or setting up these accounts, feel free to reach out.