Saving for a child’s future can involve several different accounts, each with its own rules, benefits, and tax treatment. Now, a new option—the Trump Account, or 530A—has entered the mix. Learn here how each account can help you save for your kids.
Trump Account details
Created under federal law in 2025, Trump Accounts are custodial-style traditional IRAs for minors. The account is owned by the child but administered by an adult, and is slated to become available July 4, 2026. These accounts have generated a lot of interest, especially with the introduction of a one-time $1,000 seed contribution for eligible children born from 2025 through 2028.
An eligible parent or guardian can file IRS Form 4547 to open the account. Form 4547 also allows families to opt in to the $1,000 seed contribution, if the child qualifies. The election can also be made on TrumpAccounts.gov. Trump Accounts will be invested in a default low-fee mutual fund or ETF that follows the stock market for long-term growth potential.
As interest in the new accounts grows, one question keeps coming up: How might the Trump Account fit into the mix of accounts families already use to save for a child’s future?
For a full overview of eligibility, contributions, rules, and investment options, read Fidelity Viewpoints: Trump Accounts: A new way to save for kids
Options to save money for kids
Including the new Trump Account, families can choose from 4 major account types when saving for a child’s future. Each plays a different role.
1. What are 529 plans? Tax-advantaged education savings
529 plans are purpose-built for education. Contributions have tax-deferred growth potential and withdrawals for qualified education expenses are tax-free. Some states offer tax benefits for contributions. Assets count as parent or grandparent assets on financial aid forms—and typically have less of an impact on financial aid eligibility than child-owned accounts.
Read Fidelity Viewpoints: The ABCs of 529 savings plans
2. What are UGMA/UTMA accounts? Flexible multi-use after-tax account
These custodial accounts allow broad use as long as the money benefits the child. There are no annual contribution limits (gift-tax rules still apply). UGMA/UTMA accounts are taxed in 3 tiers on unearned income (interest, dividends, capital gains), with the first $1,350 (2025/2026) exempt, the next $1,350 taxed at the child's rate, and amounts over $2,700 taxed at the parents' marginal rate. These rules are known as the kiddie tax.
Children take full ownership at the age of majority. UGMAs/UTMAs are often used for expenses that arise between ages 18 and 35—college extras, a first apartment, a car, or a first home.
Read Fidelity Viewpoints: Must-know facts about UGMA/UTMA custodial accounts
3. What is a Roth IRA for kids? An option for a child with earned income
If a child has earned income, a Roth IRA offers powerful long-term growth potential. Contributions (but not necessarily earnings) can be withdrawn at any time tax and penalty-free. Qualified withdrawals of earnings after age 59½ are tax-free, as long as certain conditions are met.1
Read Fidelity Viewpoints: Turbocharge your child’s retirement with a Roth IRA for Kids
Some exceptions allow you to withdraw earnings from a Roth IRA before age 59½ without penalty, including for a first-time home purchase and for qualified education expenses. Plus, your contributions to the account can always be withdrawn, anytime, tax- and penalty-free.
To learn more, read: Early withdrawals from your IRA
In addition to these long-term savings vehicles, teens can also begin managing their own money through the Fidelity Youth® Account.
4. Fidelity Youth® Account: An investing starter account for teens
For teens who want hands-on experience managing their own money, the Fidelity Youth® Account is a teen-owned brokerage account that can be opened at age 13, with a parent or guardian as the linked adult. Teens up to age 17 are eligible for this account. Unlike a custodial account, the teen makes their own investing decisions, while the parent has full visibility. Teens also get a debit card with no ATM fees in the US, no subscription fees, account fees, or minimum balance requirements.2
Learn more: Introducing Fidelity Youth®
How to decide which account to use when saving for kids
Before choosing an account, start by identifying your primary goal for the money: education, general savings, or retirement.
Separately, some families may be eligible for a one-time $1,000 government seed contribution in a Trump Account. Because it’s essentially free money intended for long-term retirement savings, it can make sense to claim it early if you qualify—regardless of your broader goal—then focus new contributions on the account best aligned with what you’re saving for.
If your top goal is education costs
If your child is eligible for the Trump Account seed contribution, consider claiming it first. From there, ongoing savings should be directed to the account best suited for education costs.
1. Make a 529 your primary account for college savings.
529 plan contributions and any earnings have tax-free growth potential and qualified withdrawals are federal tax-free; nonqualified withdrawals may be subject to tax on the earnings portion and a 10% penalty. Parent-owned (or student-owned for a dependent student) 529s are treated as parent assets on the FAFSA, which is typically more favorable for financial-aid eligibility than child-owned accounts.
In addition, 529 plans offer diversification benefits, as professionally managed portfolios spread money across a mix of asset classes—helping reduce the risk that comes with relying on a single investment.
2. Roll over leftover 529 money to a Roth
If you end up with leftover funds in a 529 plan, current SECURE 2.0 rules allow up to $35,000 over a lifetime to be rolled into the beneficiary’s Roth IRA, subject to strict requirements including annual contribution limits, earned income requirements for the year of the rollover, and a minimum 15-year holding period for the 529 plan. Read Fidelity Viewpoints: How unused 529 assets can help with retirement planning
If your top goal is general savings or a future first home for the young adult
1. Start by opening a Trump Account and claiming seed money, if your child is eligible.
If your child qualifies for the $1,000 seed, it will be placed into a low-fee mutual fund or ETF that seeks to track the stock market, giving the account the potential for long-term growth.
Because Trump Accounts are designed for retirement, this step can be a long-term complement to accounts that may be better suited for general savings goals for children.
2. If available, contribute to the Trump Account via your workplace plan.
Some employers may provide a direct contribution up to $2,500 per year per employee on behalf of the employee’s dependent. If you have multiple children, the employer may split the contribution among them. For example, if you have 2 children, it could be split $1,250 per child. These pre-tax contributions are not treated as income to the parent, and the amount is determined by the employer.
Employees can elect to redirect part of their pay pre-tax into a child’s Trump Account through their employer’s benefits plan. If your employer allows contributions to a Trump Account through a Section 125 cafeteria plan, aim to contribute the full amount—up to $2,500 per year per employee. Combined pre-tax employer and employee contributions cannot exceed $2,500 per employee per year.
Both types of contributions, employer and employee, count toward the annual contribution limit for Trump Accounts, which is $5,000 per child. Withdrawals, which will generally only be allowed after age 18, will be taxable because the contributions were made pre-tax.
Not all employers will offer these features; if yours doesn’t, move to the next step.
3. Use an UGMA/UTMA to save for broad goals.
UGMA/UTMA accounts can help build savings for life’s early milestones—cars, rent deposits, travel, or even a first home. Earnings may be subject to the kiddie tax each year, and withdrawals of earnings during the college years would be taxed at the parent’s rate, including withdrawals of capital gains. Withdrawals made after college are taxed at the child’s presumably lower rate.
Alternatively, a child-owned brokerage account like the Youth® Account.
For children aged 13 through 17, the Fidelity Youth Account is a brokerage account owned by the child. It is not a custodial account, but a parent or guardian must open the account for the teen. Taxes on any earnings do follow the same treatment as applied to UGMAs/UTMAs.
4. Add a Roth IRA for minors when earned income begins.
Once your child has earned income, a Roth IRA becomes a powerful, flexible long-term tool. Contributions can be withdrawn tax- and penalty-free at any time, and any earnings can be used tax- and penalty-free (up to $10,000) for a first-time home purchase once the account has been open at least 5 years. This makes the Roth especially valuable for young adults building toward a first home.
If your top goal is retirement savings for your child
1. Open the Trump Account and claim the seed contribution if your child qualifies.
If your child is eligible, the $1,000 seed contribution can give their long-term retirement savings an early boost.
2. If available, contribute to the Trump Account via your workplace plan.
As mentioned above in the steps for a general savings goal, take note of any direct contributions offered by your employer to this account, and the tax treatment of these contributions. Consider whether you should elect to make your own contributions to the Trump Account. And remember that combined pre-tax employer and employee contributions cannot exceed $2,500 per employee per year.
3. Continue saving up to the $5,000 limit in the Trump Account until the child has earned income.
If your employer does not offer a qualifying cafeteria plan, skip the payroll deduction step and fund the account directly. Note that because Trump Accounts may include a mix of after-tax and pre-tax contributions, keeping good records may be helpful to avoid the possibility of double taxation down the road.
Currently, contributions to Trump Accounts are limited to $5,000 a year, and contributions from family or friends are not eligible for the gift tax exclusion. Such gifts may count against the giver’s lifetime gift limit or incur gift tax, and the gift-giver would need to file a gift tax form along with their tax return. This difference in treatment from other account types is under review by the Department of the Treasury and may change.
4. Use an UGMA/UTMA if the Trump Account is maxed and your child does not yet have earned income.
UGMA/UTMA contributions are after-tax and do not offer retirement-specific tax benefits, but they allow additional saving until the child can qualify for a Roth IRA.
5. Begin Roth IRA contributions as soon as the child has earned income.
A Roth for Kids works like a regular Roth IRA once opened. Contributions can be withdrawn tax- and penalty-free at any time; withdrawals of any earnings are tax- and penalty-free after age 59½. Because contributions come out first, Roth IRAs offer long-term growth potential plus some flexibility.
When to consider converting a Trump Account to a Roth IRA
When it fits your child’s plan, some or all of a Trump Account could be converted to a Roth IRA after it becomes a traditional IRA on January 1 of the year the child turns 18. Conversions may make sense in low-income years (often early career) when the child may be in a lower tax bracket.
Important considerations:
- Watch out for conversions during the college years.
If your child converts while they’re still in school, the taxable portion of the conversion counts as unearned income—and that can trigger the kiddie tax, which often means being taxed at the parent’s rate. Waiting until after college, when their own tax rate is typically lower, can help avoid that. - Each conversion starts its own 5-year clock.
Every time you convert, that converted amount must stay in the Roth for 5 years before it can be withdrawn tax- and penalty-free. Earnings follow the usual Roth IRA rules, including waiting until age 59½ for tax- and penalty-free access. Read Fidelity Viewpoints: What to know about the Roth IRA 5-year aging rule - This strategy is optional—and separate from the 529-to-Roth rollover.
Roth conversions are just one advanced tool in the kit. They’re completely independent of the SECURE 2.0 rule that allows leftover 529 assets to be rolled into a beneficiary’s Roth IRA under specific conditions.
How to use Trump Accounts and other investment accounts to save for your kids
For most families, the hierarchy looks like this:
- Open Trump Account via IRS Form 4547 or on TrumpAccounts.gov and claim the seed money if eligible.
- Consider a 529 plan for education expenses.
- The Trump Account is purpose-built for retirement, so it can serve as a complementary long-term savings tool.
- Then consider an UGMA/UTMA, which offers the spending flexibility for your child.
- Once the child has earned income, a Roth IRA can provide long-term growth potential.
This blend of accounts can help balance tax advantages, flexibility, and long-term planning.
| I want to: | Save for my child’s education | Save for my child’s retirement | Save in general on behalf of my child |
|---|---|---|---|
| 1. | Receive the Trump Account seed money if eligible | Receive the Trump Account seed money if eligible | Receive the Trump Account seed money if eligible |
| 2. | Save in a 529 plan | Full contribution through cafeteria plan, if available through employer | Full contribution through cafeteria plan, if available through employer |
| 3. | Consider a Roth rollover if there’s money left over | Contribute the max in Trump Account. Consider UGMA/UTMA | Save in an UGMA/UTMA or Youth Account |
| 4. | Contribute to Roth IRA for minors once the child has earned income | Contribute to Roth IRA for minors once the child has earned income | |
| 5. | Consider a Roth conversion from a Trump Account |
The bottom line on saving and investing for kids
Consider these accounts to be tools in your toolbox. Your goals help determine which tool may be the best choice for your family.
The good news: There’s flexibility in the way you can accomplish your goals. A thoughtful plan and consistent saving can put your child on a stronger financial path from the start. Be sure to consult a tax professional about your specific situation.