Trump Account vs 529 vs custodial (UGMA/UTMA) vs Roth IRA for kids
Short answer: They do different jobs. A Trump Account is a child's IRA with a possible $1,000 Treasury seed and a $5,000 yearly limit; a 529 is for education costs; a custodial account is an irrevocable gift the child controls at the state's age of majority; a Roth IRA needs the child to have earned income. Every row below links to IRS, SEC, FINRA or OCC pages. We don't say which is right for your family.
Last verified:
| Trump Account | 529 plan | Custodial (UGMA/UTMA) | Roth IRA for a child | |
|---|---|---|---|---|
| What it is | A type of traditional IRA for a child under 18 (section 530A). IRS Instructions for Form 4547 (verified Oct 16, 2026) | State-sponsored "qualified tuition plan" for education costs. SEC Investor.gov: 529 plans (verified Oct 16, 2026) | Account where property is set aside for a minor, under state UGMA/UTMA law. HelpWithMyBank.gov (OCC): What is a UGMA or UTMA account? (verified Oct 16, 2026) | Individual retirement account; qualified distributions are tax-free. IRS: Roth IRAs (verified Oct 16, 2026) |
| Who can have one | Child who has not turned 18 by year-end of the election, with a valid SSN. IRS: Trump Accounts page (verified Oct 16, 2026) | Saves for a designated beneficiary's qualified education expenses. IRS: 529 plans questions and answers (verified Oct 16, 2026) | A minor, with an adult custodian. HelpWithMyBank.gov (OCC): What is a UGMA or UTMA account? (verified Oct 16, 2026) | Anyone with taxable compensation; contributions can't exceed it. IRS: IRA contribution limits (verified Oct 16, 2026) |
| Free government money | $1,000 pilot contribution for U.S.-citizen children born 2025-2028. IRS: Trump Accounts page (verified Oct 16, 2026) | None at the federal level. | None. | None. |
| Yearly contribution limit | $5,000 combined (2026-2027); employer up to $2,500 of it. The $1,000 seed doesn't count. IRS Notice 2025-68 (PDF); IRS Instructions for Form 4547 (verified Oct 16, 2026) | No annual federal limit; contributions can't exceed what's needed for the beneficiary's qualified expenses. Gifts over $19,000 a year may have gift-tax consequences. IRS: 529 plans questions and answers (verified Oct 16, 2026) | No federal account limit found in the cited sources. | 2026: $7,500 or the child's taxable compensation if less. IRS: IRA contribution limits (verified Oct 16, 2026) |
| Investments | Only low-cost funds/ETFs tracking a mostly-U.S. index, fees no more than 0.1%, during the growth period. IRS Notice 2025-68 (PDF) (verified Oct 16, 2026) | Set by each state plan. SEC Investor.gov: 529 plans (verified Oct 16, 2026) | Managed by the custodian. FINRA Regulatory Notice 20-07 (UTMA/UGMA accounts) (verified Oct 16, 2026) | Not covered in the cited IRS pages. |
| Taxes | Traditional-IRA rules after the growth period; early distributions may face a 10% additional tax unless an exception applies. IRS Notice 2025-68 (PDF) (verified Oct 16, 2026) | Earnings not federally taxed when used for qualified education expenses; contributions not deductible. IRS: 529 plans questions and answers (verified Oct 16, 2026) | Child's unearned income over $2,700 may be subject to the kiddie tax. IRS Topic 553: kiddie tax (verified Oct 16, 2026) | Qualified distributions are tax-free. IRS: Roth IRAs (verified Oct 16, 2026) |
| Access / withdrawals | Generally no withdrawals before the year the child turns 18 (limited exceptions). IRS Instructions for Form 4547 (verified Oct 16, 2026) | Tax-free for qualified education costs, including up to $10,000 a year of K-12 tuition. IRS: 529 plans questions and answers (verified Oct 16, 2026) | Transfers are typically irrevocable and belong to the child; custodianship ends at the state's age of majority or termination age. HelpWithMyBank.gov (OCC): What is a UGMA or UTMA account?; FINRA Regulatory Notice 20-07 (UTMA/UGMA accounts) (verified Oct 16, 2026) | See the IRS Roth IRA page for qualified-distribution rules. IRS: Roth IRAs (verified Oct 16, 2026) |
Things to know
- Money you may need soon belongs in savings, not an investment account. Compare dated rates from FDIC-insured banks on our rate tracker.
- State tax treatment (for example, California's treatment of Trump Accounts) can differ from federal rules; we haven't found an official state source to cite yet.
FAQ
Is a Trump Account better than a 529?
It depends on your goal; we don't give personal advice. Federally, a 529's earnings are tax-free for qualified education costs, while a Trump Account follows traditional-IRA rules after the growth period and may get a $1,000 Treasury seed for children born 2025-2028 (IRS, verified Oct 16, 2026).
Can a child have a Roth IRA?
Only with taxable compensation: 2026 contributions are limited to $7,500 or the child's taxable compensation, whichever is less (IRS IRA contribution limits, verified Oct 16, 2026).
Who owns a custodial UGMA/UTMA account?
Transfers are typically irrevocable and belong to the child, while a custodian controls the account until the custodianship ends under state law (OCC HelpWithMyBank, FINRA, verified Oct 16, 2026).
General education only, not financial, tax or legal advice. We don't recommend any product to you personally. Rules and programs change, so always confirm on the linked official source.