A major shift in family finance hit headlines last week – and it could reshape how millions of Americans save for their children’s futures…

Tech billionaire Michael Dell and his wife, Susan – long known for their low profile but substantial philanthropy – just committed $6.25 billion to the nation’s soon-to-launch Trump Accounts.

Their gift will add $250 to the accounts of up to 25 million children, instantly turning a brand-new program into one of the largest direct investments in American families ever made.

For parents and grandparents, that shift matters:

Real money is now flowing into a savings vehicle that didn’t exist six months ago – and it’s arriving before the federal rulebook is even finished.

Families must soon decide how Trump Accounts fit alongside the tools they already use, like 529 plans and Roth IRAs.

And the timing couldn’t be more relevant…

The first accounts are set to open in Summer 2026. Funding’s already being allocated…

Yet key details – including registration, administration, and how the accounts will be treated for financial aid – are still in flux.

To help families understand where this new program may fit, here’s a clear look at how Trump Accounts are structured, what they offer, and where the gaps still exist…

How the Trump Account Program Works

Signed into law on July 4, 2025, the Trump Account represents a new attempt to help families save and invest for their children’s futures.¹

Originally dubbed “MAGA Accounts” (short for Money Accounts for Growth and Advancement), these accounts promise tax-deferred growth, government seed funding, and broad flexibility in how funds can be used.

On the surface, they resemble familiar tools like 529 plans or Roth IRAs.

But the fine print – how money goes in, who can add to it, what you can invest in, and when a child can access the funds – looks very different.

And those differences will matter once accounts begin opening.

Trump Accounts function similarly to 529 plans or to Individual Retirement Accounts (IRAs). In other words, they’re tax-advantaged investment accounts designed to help cover long-term expenses, and which family members can often use to help the generation get their futures off to a stronger start.

From here, the structure becomes much more specific – and in several places, even more restrictive – than the college-savings and retirement accounts families may already be familiar with.

The first major distinction is the way money enters the account…

No. 1: The Government Grant

The headline feature is substantial: Children born between 2025 and 2028 – the years of this presidential term – are eligible to receive a $1,000 federal seed contribution (essentially, a starter deposit from the government) to a new Trump Account opened in their name.

No matching contribution is required; it’s simply a grant from the government.

However, at this stage it’s unclear whether accounts will be opened automatically…

Or if the parents must take action.

Also yet to be determined is where you’ll be able to open an account—

The process could involve direct government accounts (like TreasuryDirect accounts, which can be cumbersome to use), custodian-managed accounts (like IRAs), or a hybrid model (like some state-sponsored 529 plans operated by third parties).

There’s some time for them to finalize these details. While the law applies retroactively to any child born from January 1, 2025, through January 1, 2029, the law includes a 12-month waiting period from its signing for rulemaking before the first accounts become available.

In other words, the earliest accounts won’t be available until July 2026.

No. 2: Additional Contributions and Limits

Beyond the one-time government grant, parents can contribute up to $5,000 annually.

But note the emphasis on parents.

This contrasts significantly with 529 plans, a popular choice for saving assets intended for children’s future education – which is also one of the qualified uses for Trump accounts (more on those in a minute).

With 529 plans, virtually anyone – grandparents, aunts, uncles, neighbors, or even friendly acquaintances – can contribute to an account that benefits your child. In fact, they can even open their own account with your child as beneficiary, since there’s no limit on how many 529s can share the same beneficiary.

Additionally, there’s no federal limit on 529 plan contributions.

Some states impose lifetime contribution limits per beneficiary or limit state tax deductions to their own plans. But…

• 529 caps run to the hundreds of thousands of dollars – far higher than the $5,000 limit on a Trump account.
• Should you reach one, there is no restriction on opening another account in a different state.²

Thus, unlike the low cap on a Trump account, 529 plans have no practical limit (other than the multi-million dollar lifetime gift exemptions) on how much can be socked away for tax-deferred growth.^{3 4}

However, it is definitely a leg up over a Roth or traditional IRA, which require earned income to cover contributions. Thus, they don’t become possible avenues for family support until a child is of working age. Whereas a 529 can begin even before a child is born, and a Trump account shortly thereafter, providing for potentially much longer to compound outside the reach of the tax man.

The Trump account does offer one additional option you won’t find in most other comparable long-term plans:

Employers can add up to $2,500 without it counting as taxable income to the recipient.

With 529 plans, all contributions are always after-tax; so, in this way, Trump accounts function more like 401(k) plans with employer contribution features.

Whether and when employers will support Trump Accounts remains uncertain…

But for those with supportive employers – or potentially self-employed individuals, pending further guidance – this could represent a valuable additional benefit.

Investment Options and Growth

One Trump Account provision that differs significantly is the investment choices…

…Or lack thereof.

See, many investors are accustomed to the freedom of brokerage-centered investment accounts. Like:

• Individual Retirement Accounts (IRA). There, they can typically invest in a vast array of publicly traded assets (and quite a few private ones through self-directed IRA routes)…
  
• 529 plans typically offer variety through state-sponsored options. For example, the New Hampshire 529 administered by Fidelity offers over a dozen different funds plus various age-based portfolios, which combine them in different proportions.⁵
  
• Similarly, 401(k) plans, where administrators are obligated to offer diverse asset choices,⁶ increasingly provide expanded options.

In contrast, Trump Accounts currently offer a single investment option—U.S. stocks—making it a take-it-or-leave-it structure for now.

Law firm Jenner & Block interprets the provision as follows:⁷

“Trump Accounts are required to be invested in a mutual fund or exchange traded fund which tracks a US stock index and does not have annual fees and expenses of more than 0.1%.”

Unless the law changes significantly before the first accounts become available, investors and their advisers will have limited choices.

Access and Usage

Trump Accounts offer a more varied set of qualified uses – cases where you can use the funds without penalty – than 529 plans, which are restricted to educational expenses, or IRAs.

Uses include qualified expenses like college education, job training, or first-time home purchases.

However, 529 assets can be used at ANY age – making them useful not just for college but also for elementary or secondary school tuition, fees, and supplies.

On the flip side, with a Trump Account, access is more restrictive:

• Below the age of 18, there is no qualified withdrawal.
• From the age of 18 until 25, when most students go to college, only 50% of the balance can be withdrawn for these qualified expenses.
• From 25 to 30, the full balance is available for qualified expenses.

Come age 30 it can come out for any reason (and will ‘pour out’ in tax parlance at age 31 to a regular taxable account).

Another difference is that once assets are contributed to a Trump Account, they legally belong to the child (beneficiary), with parents serving as custodians. One significant open question is how these will be treated when calculating need-based aid eligibility on the Free Application for Federal Student Aid (FAFSA).

If treated like Uniform Transfers to Minors Act (UTMA) account assets – as student assets – they could have a disproportionate impact on eligibility for financial aid compared to 529 plans, which are considered at a much lower rate (despite being earmarked for educational expenses) as assets of the parent, not the beneficiary. According to SavingForCollege.com, the less-favorable UTMA treatment appears more likely.⁸

It should also be noted that 529 plans offer the additional flexibility that assets can be redirected to different beneficiaries with no tax implications, while Trump Accounts as custodial assets do not.

Consider a parent who has over-funded a child’s 529 plan (perhaps the child attended a more affordable school, received a scholarship, or skipped college altogether). The parent has options: withdraw the funds for non-educational expenses and face ordinary income taxes plus a 10% penalty, or change the beneficiary.

The account owner – whether parent, grandparent, aunt, uncle, or others – can redirect the account to a different family member as beneficiary with no tax impact, preserving the tax-advantaged status of the funds.

This could be another child, a future grandchild, even to themselves to fund lifelong learning, or simply held until the right new recipient joins the family.

This ability to change beneficiaries is why 529 plans are considered parental assets, not children’s assets on the FAFSA. It also enables families to create multi-generational educational funds that grow tax-deferred and can potentially be withdrawn tax-free.

In contrast, Trump Accounts can only be rolled over in full to another Trump Account in the same child’s name, as they truly belong to the child, not the parents.

In that same scenario of a child who didn’t use all of the assets for education, the parents would be unable to transfer the assets to another beneficiary, like another child. But, the money could later be withdrawn for other qualified uses, or in its entirety after age 30 for any use without facing penalty. The use cases are both more and less (when it comes to education) flexible, but the required pour out at age 30 limits how long the funds can grow tax-deferred compared to a 529 or even an IRA.

Tax Treatment

Trump Accounts may be described as a form of IRA in the bill – but their tax treatment is unlike any IRA or comparable account currently in use.

Withdrawals for qualified expenses are taxed at long-term capital gains rates.

Non-qualified or early withdrawals are taxed as ordinary income, plus a 10% penalty.

Compare this to other popular tax-advantaged account types, each growing tax-deferred:

Account Type	Tax Status of Contributions	Tax Treatment on Qualified Withdrawals
Traditional IRA	Up to $7,000 per year, pre-tax (depending on income)9	Ordinary Income (currently up to 37%)10
Roth IRA	Up to $7,000 per year, always post-tax (depending on income)11	Tax-free
529 Plan	No federal limit; always post-tax federally. Some states offer tax deductions; all participating states have lifetime caps ($230,000-$600,000)	Tax-free
Trump Account	Up to $5,000 per year personal contributions, post-tax. Up to $2,500 per year employer contributions, pre-tax	Capital Gains (currently up to 20%)12

Traditionally, tax-advantaged accounts have followed one of two models:

• Pre-tax, ordinary income out (like a Traditional IRA); and
• Post-tax in, tax-free out (like a Roth IRA or 529).

But Trump Accounts introduce a third category: post-tax in, taxed at capital gains rates on withdrawal.

That opens up some nuance for families thinking about long-term uses like education funding. Take this hypothetical:

• A parent contributes $5,000 annually to both a Trump Account and a 529 for 15 years ($75,000 total contributions).
  
• Over time, tax-deferred growth brings each account to $200,000 by the time the child turns 18.

Now, let’s say the family wants to use that money for college:

• With a Trump Account, only $100,000 can be used for college without facing penalties.
  
  And when that amount is withdrawn, it will be subject to capital gains taxes. While guidance hasn’t been issued, given the account is technically a form of IRA, it is reasonable to assume it will be taxed “pro rata” to the contribution basis.
  
  In other words, since the basis is $75,000 out of $200,000, or 37.5%, then the remaining 62.5% of the withdrawal will be subject to tax.
  
  At a capital gains tax rate of 20%, that would be $12,500 in taxes… leaving $87,500 to pay eligible bills.
  
• With a 529 Plan, the full $200,000 is available, tax-free, for qualified education expenses.

In other words, with a Trump Account, despite having saved nearly $200,000, as little as $87,500 could be available to use for college; that’s a significant difference from a dedicated savings vehicle, like a 529 Plan, where 100% of the $200,000 would be available.

Now, what happens to any leftover funds?

• Trump Account balances can continue to grow tax-deferred, until they must be withdrawn by age 31. Whether used for other qualified expenses, or withdrawn at that age, they will be taxed at capital gains rates.
  
• 529 plans can continue to grow tax-deferred as well, be directed to other beneficiaries, and even partially rolled into a Roth IRA (up to $35,000 per beneficiary) under new rules¹³ – offering more options for long-term tax-advantaged growth.

Is the Trump Account Right for Your Child?

If you’ve made it this far, you may be wondering whether this new hybrid account structure makes sense for your family.

Is it worth taking the $1,000 government grant today… if it could complicate your child’s financial aid situation, or limit your options down the road?

That depends – and the best next step may be a conversation with an experienced adviser.

At WorthNet, we connect families like yours with vetted, independent financial advisors – professionals who understand the ins and outs of tax-advantaged accounts, college planning, and long-term savings strategies.

If you’d like a second opinion – or even a first – on your strategy for college savings, consider connecting with one of our adviser partners.

Simply fill out our quick, confidential questionnaire by clicking the button below. It takes less than a minute. And you’ll be matched with an adviser aligned to your goals from our invitation-only network for a free consultation.