Money Girl 529 Plan vs. Trump Account for Kids’ Education Expenses
Jan 23, 2026
Explore the differences between 529 plans and Trump accounts for funding kids' education. Learn about eligibility, tax advantages, and the benefits of keeping both accounts. Discover new uses for 529s, from vocational training to homeschooling expenses. Laura highlights contribution limits, withdrawal rules, and the unique rollover option into a Roth IRA. Gain insight on optimal strategies to maximize savings and ensure flexibility in educational investments. This episode is packed with practical financial guidance!
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Open A Separate Trump Account For The $1,000
- Open a Trump account to capture the $1,000 federal deposit for eligible children born 2025–2028 or for children born earlier without the bonus.
- You must open a separate Trump account because you cannot roll 529 funds into a Trump account or vice versa.
Trump Accounts Become IRAs At 18
- A Trump account converts to a traditional IRA when the child turns 18 and becomes subject to IRA rules and taxes.
- Education withdrawals from the resulting IRA avoid the 10% early-withdrawal penalty but still incur ordinary income tax on earnings.
Prefer A 529 For Tax-Free Education Withdrawals
- Use a 529 plan for education savings because qualified withdrawals are federal tax-free, preserving all investment growth when used for education.
- Expect to pay ordinary income tax on earnings withdrawn from a Trump-account-converted IRA even if the 10% penalty is waived for education.