Trump accounts are drawing growing support from big employers and philanthropists — with Bank of America and JPMorgan saying Wednesday they would match the government’s $1,000 deposits into accounts set up by employees — but they are unlikely to rival 529 plans, experts told The Post.
Parents can open the new accounts for kids under 18 who have Social Security numbers. For little ones born from 2025 through 2028, the US Treasury will seed the accounts with $1,000.
But Trump accounts do not have the same tax advantages as 529 accounts, which are deferred savings plans designed to help pay for college expenses, or Roth IRAs, retirement plans that enable tax-free withdrawals.
Unlike those plans, withdrawals from Trump accounts are not tax-free and the savings must be invested in low-cost index funds.
“Some people [will] say, ‘Hey, you’ll put $1,000 in my thing, I’m gonna take it!’” Ken Mahoney, chief executive of Mahoney Asset Management, told The Post.
“But I don’t think it should change college planning for people who have already been putting money into the 529 plan,” Mahoney added. “I still think to save for college, the old … 529 plan is way better.”
Withdrawals from Trump accounts are not permitted until the child turns 18, at which point savings will be rolled into an IRA and taxed.
Trump accounts were established in last year’s One Big Beautiful Bill Act — President Trump’s signature second-term legislation — which aimed to make it easy for major corporations and philanthropists to contribute to those accounts on a large scale.
The bill limits Trump account contributions to $5,000 per year, with the employer portion of contributions expected to be restricted to $2,500 annually.
“It’s gonna be very similar to a 401K match in the sense that this is just free money,” Nathan Goldman, a member of the American Accounting Association and professor at North Carolina State University, told The Post.
But the $1,000 seed money, along with any other contributions, will remain locked in the Trump account until the child turns 18 – so if that’s your only reasoning for opening the account, you’ll have to wait quite a while to reap the benefits.
These employer contributions are likely an attempt to assuage voters who opposed the large tax cuts for corporations wrapped into Trump’s Big Beautiful Bill, Goldman added.
“Whether or not it’s a huge impact, it could just look good on paper,” he said.
Trump accounts have been promoted as an alternative to 529 accounts, which have a stiff 10% penalty on withdrawals not used for education. Trump accounts can go toward a child’s education, starting a business or paying a down payment on a house.
Also, parents can diversify their savings with Trump accounts – for example, putting 75% of savings in a 529 and keeping 25% in a Trump account, Goldman said.
While there are more teens today choosing not to pursue a college education, the majority of high school graduates move onto college – and it’s unclear how often parents find themselves with substantial savings sitting in an untapped 529.
Critics have argued Trump accounts offer little help to poor families and don’t offset cuts to food assistance programs and Medicaid, which were also a part of the One Big Beautiful Bill.
To establish a Trump account for your kids, fill out IRS Form 4547. You can also elect the $1,000 Treasury contribution on the form if your children are eligible. The form can be filed at any time.
Starting in May, the Treasury will send out information to parents to activate the accounts.
Prior to Bank of America and JPMorgan’s Wednesday announcements of support for Trump accounts, Michael and Susan Dell pledged $6.25 billion to seed such accounts.
Rap star Nicki Minaj, who joined the president at a summit touting the program on Wednesday, is expected to contribute between $150,000 and $300,000 to Trump accounts.
