With Trump Accounts officially launching in July 2026, parents now have another tax-advantaged way to invest for their children.

But how do Trump Accounts compare with a 529 plan or a custodial Roth IRA - and where should a family’s next dollar go?

The quick answer:

• Use a Trump Account to claim available government, employer, or philanthropic contributions.
• Use a 529 plan when education is the primary goal.
• Consider a custodial Roth IRA when the child has legitimate earned income and the goal is long-term, potentially tax-free retirement wealth.

For many families, these accounts are complements rather than substitutes.

Trump Account vs. 529 vs. custodial Roth IRA

What is a Trump Account?

A Trump Account is a type of individual retirement account established for an eligible child under 18.

Unlike a custodial Roth IRA, the child does not need earned income to receive contributions.

Children born from January 1, 2025, through December 31, 2028 may qualify for a one-time $1,000 contribution from the U.S. Treasury. An authorized adult must open the account and elect to receive the contribution - it is not deposited automatically.

Children who do not qualify for the federal seed may still be eligible for other contributions. For example, Michael and Susan Dell committed to providing $250 to as many as 25 million qualifying children, subject to age, ZIP code, Social Security number, and account-activation requirements.

Key Trump Account rules

• Most family, individual, and employer contributions are subject to a combined $5,000 annual limit during the childhood growth period.
• Employer contributions can total up to $2,500 and count toward the $5,000 limit.
• Certain government and charitable contributions do not count toward the limit.
• Investments are restricted to qualifying low-cost funds that track indexes composed primarily of U.S. companies.
• General withdrawals are not permitted before the year the child turns 18.
• After the childhood growth period ends, traditional IRA rules generally apply.

A Trump Account may make sense when:

• Your child qualifies for the $1,000 Treasury contribution.
• An employer, government, or charity will contribute.
• Your child does not have earned income.
• You want to begin investing without limiting the funds specifically to education.

What is a 529 plan?

A 529 is a tax-advantaged account designed primarily for education.

The child does not need earned income, and the account owner - usually a parent - generally retains control over the funds.

Investment earnings can typically be withdrawn free from federal income tax when used for qualified education expenses. Depending on the state and plan, contributions may also qualify for state tax deductions, credits, or other benefits.

Qualified expenses can include certain:

• College tuition and fees
• Books, supplies, and technology
• Room and board
• Apprenticeship and credential expenses
• Student-loan repayments
• Elementary and secondary education expenses

Unused 529 funds may also be eligible for a rollover into the beneficiary’s Roth IRA, subject to restrictions including annual contribution limits, a 15-year account requirement, and a $35,000 lifetime rollover cap.

A 529 may make sense when:

• Education is the family’s primary savings goal.
• Your state offers a valuable tax benefit.
• You want to contribute more than the Trump Account’s annual limit.
• You want the option to change beneficiaries if education plans change.

What is a custodial Roth IRA?

A custodial Roth IRA is a retirement account owned by a child and managed by an adult custodian until the applicable age of transfer.

The defining requirement is taxable compensation from legitimate work. Gifts, investment income, and ordinary allowance payments do not by themselves make a child eligible to contribute.

For 2026, the child can contribute up to the lesser of:

• $7,500, or
• The child’s taxable compensation for the year

For example, a child with $3,000 of qualifying compensation could contribute no more than $3,000. A parent or grandparent may provide the money deposited into the Roth IRA, but the child must still have earned at least that amount.

A custodial Roth IRA may make sense when:

• Your child has legitimate earned income.
• You want to start retirement investing as early as possible.
• You want qualified retirement withdrawals to be tax-free.
• You value broader investment choices.
• You want greater flexibility around withdrawing prior contributions.

Its primary challenge is not opening the brokerage account. It is properly establishing and documenting the earned income that supports the contribution.

Which account should parents fund first?

There is no universal order, but this framework can help.

1. Claim available free contributions

If your child qualifies for the $1,000 Trump Account contribution, the Dell-funded contribution, or an employer contribution, consider claiming that money first.

Receiving outside funding does not require you to direct all future family savings into the same account.

2. Match the account to the goal

Use a 529 for money primarily intended for education.

Consider a custodial Roth IRA for a child with earned income when the goal is long-term retirement wealth and potentially tax-free qualified withdrawals.

3. Preserve flexibility

A Trump Account generally locks funds until 18. A 529 is most tax-efficient when used for education. A Roth IRA is intended for retirement, even though prior contributions may be accessible.

Before contributing heavily to one account, consider when and why your child may need the money.

Can a child have all three?

Generally, yes.

A family might:

1. Open a Trump Account and claim any available government or third-party contributions.
2. Save for education through a 529.
3. Fund a custodial Roth IRA up to the child’s earned-income limit.

Each account serves a different purpose and operates under separate contribution rules.

Where Halfmore fits

A Trump Account and a 529 do not require the child to work. A custodial Roth IRA does.

Halfmore helps parents document legitimate household employment, track completed work, process payroll, prepare tax forms, and coordinate contributions to a custodial Roth IRA held at the family’s chosen brokerage.

This can help families manage the employment and documentation requirements that make a child’s Roth IRA more complicated than simply opening an investment account.

The bottom line

There is no single best account for every child.

• Choose a Trump Account to capture available government, employer, or philanthropic contributions.
• Choose a 529 plan for education-focused savings.
• Consider a custodial Roth IRA when the child has legitimate earned income and the goal is decades of potentially tax-free retirement growth.

For many families, the strongest strategy may include all three.

See how Halfmore can help your family document earned income and begin funding a custodial Roth IRA.

Sources

• Internal Revenue Service: Trump Accounts and Form 4547 instructions
• U.S. Department of the Treasury: Official Trump Account launch
• Internal Revenue Service: 2026 IRA contribution limits
• Investor.gov: Introduction to 529 plans
• Invest America: Michael and Susan Dell contribution eligibility