Trump Accounts Launch in July With $1,000 Treasury Deposits as 529 Plans Gain New Flexibility
Updated
Updated · CNBC · May 19
Trump Accounts Launch in July With $1,000 Treasury Deposits as 529 Plans Gain New Flexibility
4 articles · Updated · CNBC · May 19
July will bring the rollout of Trump Accounts, with the Treasury depositing $1,000 for babies born from 2025 through 2028 to seed tax-deferred savings accounts.
The program is aimed at narrowing wealth gaps, while some older children born before 2025 could receive $250 if they live in ZIP codes with median income of $150,000 or less under Michael and Susan Dell's $6.25 billion pledge.
Trump Accounts carry limits that may push families to compare alternatives: assets must stay in U.S. stock funds, withdrawals before age 18 are tightly restricted, and early distributions after that generally face income tax plus a 10% penalty.
529 plans remain a strong fallback for many families, advisers say, because earnings and qualified withdrawals are tax-free and recent law changes expanded eligible uses to apprenticeships, K-12 costs up to $20,000 a year and Roth IRA rollovers up to $35,000.
Only about 23% of parents currently use 529 plans, underscoring how the July launch could widen attention on child-saving options even as participation still skews toward higher-income households.
The new child savings accounts promise to close the wealth gap. Could they accidentally make it wider?
Are new Trump Accounts a wealth-building tool or a risky gamble with their 100% U.S. stock investment rule?