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Congress recently introduced Trump accounts, a new type of savings program, prompting families to wonder:

How are these different from established options like 529 plans?

Trump accounts are considered individual retirement accounts (IRAs) and generally follow the federal rules for IRAs. The U.S. Department of the Treasury will be responsible for setting up and managing these accounts when they launch.

When Will Trump Accounts Be Available?

The first Trump accounts are expected to launch nationwide by January 1, 2026, although that timeline could be extended.

How Are Trump Accounts Different from 529 Accounts?

Trump accounts are not education savings accounts. Unlike 529 plans, which are designed to help families save for education expenses, Trump accounts are legally defined as IRAs. That means the money in them will generally follow IRA rules for contributions and withdrawals. There are also other federal law restrictions and limits on contributions to and withdrawals from Trump accounts. At this time, funds from Trump accounts cannot be rolled over or transferred into a 529 plan.

Is There Seed Funding?

Yes. A proposed federal pilot program will provide $1,000 in seed funding for eligible children born between December 31, 2024, and January 1, 2029. The Treasury Department will issue details on how families can claim and deposit this money. Seed funds must remain in a Trump account and cannot be moved into a 529 account.

Commonwealth Savers and Invest529 does not provide tax, legal or investment advice. Consult your tax, legal or investment advisor for more information about your specific tax situation and tax consequences.