If you’re looking to invest for the kid(s) in your life, there’s a new option to consider in 2026. The U.S. Treasury launched the official Trump Accounts app on May 28, 2026, and contributions plus the one-time $1,000 federal seed began on July 4, 2026.
That puts three popular accounts on the table: the Trump Account, the 529 plan, and the custodial account (also called a UGMA or UTMA account). This guide will look at how each one compares on eligibility, contributions, taxes, flexibility, and control, so you can choose what fits your goals. And one quick reassurance up front: you don’t have to pick just one. Many families open a combination of accounts, and the best investment account for kids really depends on what you’re saving for. If you’re just getting oriented, our guide to investing for kids covers the fundamentals.
In short, a Trump Account is a retirement-style account for kids invested in U.S. stock index funds, a 529 plan is built for education with the potential for tax-free qualified withdrawals, and a custodial account (UGMA/UTMA) is the most flexible, because the money can be used for anything that benefits the kid.
What each account is, in one line
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A Trump Account is a traditional IRA for kids, created under IRC §530A and invested in U.S. stock index funds.
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A 529 plan is a tax-advantaged account designed for education savings.
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A custodial account (UGMA/UTMA) is a flexible brokerage account that an adult manages on a kid’s behalf.
For the full background on the newest of the three, see our explainer on what is a Trump Account. You can also read up on what is a 529 plan and the UGMA/UTMA custodial account.
Who qualifies for a Trump account, and when the $1,000 seed starts
Trump Account contributions and the one-time $1,000 federal seed began on July 4, 2026. Any U.S. kid under 18 with a Social Security number can have a Trump Account, but the seed is limited to U.S. citizens born between January 1, 2025, and December 31, 2028.
To claim it, a parent or guardian has to opt in using IRS Form 4547. There’s a limit of one funded account per kid. Kids born before 2025 can still have a Trump Account, but they won’t get the $1,000 federal seed. Separately, the Michael and Susan Dell Foundation has pledged $6.25 billion to add a one-time $250 deposit for up to 25 million kids age 10 and under who were born before 2025 and live in ZIP codes with a median income of $150,000 or less.
By comparison, 529 plans and custodial accounts are simpler on eligibility. Anyone can open either one for any kid, with no age or income limits and no special start date.
How much you can contribute
Trump Accounts limit total contributions at $5,000 per year, while 529 plans and custodial accounts have no federal annual limit. With a Trump Account, the $5,000 cap is inflation-adjusted starting in 2027, and an employer can add up to $2,500 within that limit, with the first $2,500 excluded from the employee’s income. The federal seed and any qualifying charitable or government deposits won’t count toward the $5,000 contribution limit.
For 529 plans and custodial accounts, there’s no federal annual contribution limit, though federal gift-tax rules apply. In 2026, you can give up to $19,000 per recipient without triggering gift-tax reporting. A married couple can combine their exclusions to give twice as much. 529 plans also have higher contribution limits that vary by state.
What you can invest in
Trump Accounts can only hold low-cost U.S. stock index funds, 529 plans offer a menu of preset portfolios, and custodial accounts give you the widest range. With a Trump Account, investments are limited to mutual funds or ETFs that track a broad U.S. equity index like the S&P 500, with expense ratios capped at 0.10%. A 529 plan typically offers a set lineup of plan portfolios, often including age-based options that grow more conservative as your kid nears college. A custodial account behaves like a regular brokerage account, so you can invest in individual stocks, bonds, and ETFs.
How the three accounts are taxed
A Trump Account offers tax-deferred growth potential and is taxed as ordinary income at withdrawal, a 529 plan offers the potential for tax-free growth and tax-free qualified education withdrawals, and a custodial account is taxed under the kiddie tax rules. Trump Account contributions are made with after-tax dollars, the money has the potential to grow tax-deferred, and withdrawals are taxed as ordinary income, much like a traditional IRA.
A 529 plan has tax-free growth potential and qualified education withdrawals come out tax-free at the federal level, with a possible state tax deduction depending on where you live. Thanks to the SECURE 2.0 Act, up to $35,000 of unused 529 funds can roll into the beneficiary’s Roth IRA.
A custodial account follows the kiddie tax rules. In 2026, the first $1,350 of a kid’s unearned income is tax-free, the next $1,350 is taxed at the kid’s rate, and anything above $2,700 is taxed at the parent’s rate.
When you can use the money, and who controls it
A Trump Account is locked until the kid turns 18, a 529 plan can be tapped anytime (with tax consequences for non-qualified withdrawals), and a custodial account can be used anytime for the kid’s benefit.
With a Trump Account, no withdrawals are allowed before age 18, and after that, traditional IRA rules generally apply, including a 10% penalty on early withdrawals before age 59½, with some exceptions. A parent or guardian serves as custodian until the kid turns 18.
A 529 plan stays in the account owner’s control, usually a parent, who can even change the beneficiary. Non-qualified withdrawals owe income tax plus a 10% penalty on earnings. A custodial account is available anytime as long as the money is used for the kid’s benefit, and the funds transfer to the kid at the age of transfer, which is 18 or 21 depending on the state.
How each plan affects financial aid
For FAFSA, a parent-owned 529 plan is treated as a parent asset, while a custodial account counts as the student’s asset and could be taxed more heavily, at up to 20%. Since Trump Accounts have just launched, it has not yet been determined whether they will be treated as a parent asset, student asset, or something else. It’s best to check Federal Student Aid as more details are confirmed.
For a deeper look at how these 529 plans and custodial accounts interact with aid, see our comparison of custodial accounts vs. 529 plans.
Trump Account vs. 529 plan vs. custodial account: side by side
Here’s how the three accounts stack up across the factors that matter most:
| Trump Account | 529 plan | Custodial account (UGMA/UTMA) | |
| What it is | A starter traditional IRA for kids (IRC §530A), invested in U.S. stock index funds | A tax-advantaged account built for education savings | A flexible brokerage account an adult manages for a kid |
| Eligibility | Any U.S. kid under 18 with a Social Security number. The $1,000 seed goes to U.S. citizens born Jan. 1, 2025 to Dec. 31, 2028 | Anyone can open one for any beneficiary, with no age or income limits | Anyone can open one for a kid, with no age or income limits |
| Contribution limit | $5,000 per year combined (inflation-adjusted from 2027). Employers can add up to $2,500 within that cap | No federal annual limit, however gift-tax rules can apply ($19,000 per recipient in 2026), plus high state lifetime caps | No limit, however gift-tax rules can apply ($19,000 per recipient in 2026) |
| Investments | Low-cost U.S. equity index funds only, with expense ratios capped at 0.10% | A menu of preset plan portfolios | A full range, including stocks, bonds, and ETFs |
| Taxes | After-tax in, tax-deferred growth potential, taxed as ordinary income at withdrawal | Tax-free growth potential and on qualified education withdrawals, plus a possible state deduction | Kiddie tax applies. In 2026, the first $1,350 of a kid's unearned income is tax-free |
| Access and withdrawals | Locked until 18, then traditional IRA rules (10% penalty before 59½, with exceptions) | Available anytime, but non-qualified withdrawals owe tax plus a 10% penalty on earnings | Available anytime, as long as it is used for the kid's benefit |
| Who controls it | A parent or guardian until the kid turns 18, then the kid | The account owner (usually a parent) keeps control | Funds transfer to the kid at the age of transfer (18 or 21, depending on the state) |
So which account is best for your kids?
There’s no single best account. A 529 plan is usually best when the goal is education, a custodial account is best when you want flexibility, and a Trump Account adds a $1,000 federal seed and a long runway for eligible kids born 2025 to 2028.
A simple way to think about it is to start with your main goal:
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If your main goal is education, a 529 plan is usually the strongest fit, thanks to its tax-free qualified withdrawals and possible state deduction.
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If your main goal is flexibility, a custodial account gives you the most freedom, since the money can go toward anything that benefits your kid, not only college. A custodial account like Acorns Early Invest is one way to do this.
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If your kid is eligible for the $1,000 seed and you have a long time horizon, a Trump Account adds free starter money that can compound for years.
And remember, these aren’t either-or choices. Plenty of families open more than one, like a 529 for school and a custodial account for everything else.
Where Acorns fits in
Acorns doesn’t offer Trump Accounts or 529 plans. The account Acorns offers for kids is Acorns Early Invest, a UTMA custodial account available on the Acorns Gold plan. With Acorns Early Invest, each kid can get their own expert-built, diversified ETF portfolio that has the potential to grow alongside them. Acorns Gold customers can also get a 1% match on the first $7,000 you invest per year per kid, as long as the funds stay invested for 4 years. Like other custodial accounts, the money can be used for anything that benefits your kid, not only education, and the accounts are SIPC-protected up to $500,000. If flexibility is what you’re after, it’s worth a look.
Start investing for the kids in your life with Acorns Early Invest.
Frequently asked questions
What’s the difference between a Trump Account, a 529 plan, and a custodial account?
A Trump Account is a retirement account for kids, a 529 plan is built for education with tax-free growth potential, and a custodial account (UGMA/UTMA) offers the most flexibility, because the money can be used for anything that benefits the kid.
Can I open more than one account for my kid?
Yes, and many families do. A common combination is a 529 plan for education and a custodial account for everything else, and now, eligible kids can also have a Trump Account on top of those.
Who qualifies for the $1,000 Trump Account seed, and when do contributions start?
The one-time $1,000 federal seed goes to U.S. citizens born between January 1, 2025, and December 31, 2028, as long as a parent or guardian opts in using IRS Form 4547. Contributions and the seed both began July 4, 2026.
Which account has the most flexibility?
A custodial account (UGMA/UTMA) offers the most flexibility out of the three. The money can be used for anything that benefits the kid, and you can invest in a full range of stocks, bonds, and ETFs.
How does each account affect financial aid?
On the FAFSA, a parent-owned 529 plan is assessed as a parent asset at a lower rate, while a custodial account counts as the student’s asset and is assessed at up to 20%. Trump Accounts are still developing, so be sure to check Federal Student Aid on the latest details.
Does Acorns offer a Trump Account or a 529 plan?
No. Acorns offers Acorns Early Invest, a UTMA custodial account on the Acorns Gold plan, which lets you invest for your kids in your life. Acorns does not offer Trump Accounts or 529 plans.
Trump Account structure (a traditional IRA under IRC §530A), eligibility for any U.S. child under 18 with a Social Security number, the index-fund-only investment limit, the post-18 traditional IRA rules, and the May 28, 2026 app launch, according to Investor.gov (SEC). Source: https://www.investor.gov/introduction-investing/investing-basics/investment-accounts/tax-advantaged-accounts/trump-accounts
Trump Account $1,000 pilot program seed, eligibility for U.S. citizens born Jan. 1, 2025 to Dec. 31, 2028, the July 4, 2026 contribution start, and the Form 4547 opt-in, according to the IRS. Source: https://www.irs.gov/newsroom/4-million-children-have-been-signed-up-for-trump-accounts-with-1-million-claiming-the-1000-pilot-program-contribution
Michael and Susan Dell Foundation $6.25 billion gift funding $250 deposits for up to 25 million kids age 10 and under born before Jan. 1, 2025 in ZIP codes with median income of $150,000 or less, according to CNBC. Source: https://www.cnbc.com/2025/12/02/michael-susan-dell-trump-accounts.html
Trump Account $5,000 annual contribution cap (inflation-adjusted starting 2027) and the up to $2,500 employer contribution (first $2,500 excluded from the employee's income), according to the U.S. Department of the Treasury (May 28, 2026). Source: https://home.treasury.gov/news/press-releases/sb0508
2026 federal gift tax annual exclusion of $19,000 per recipient, according to the IRS. Source: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
SECURE 2.0 Act provision allowing up to $35,000 of unused 529 funds to roll into the beneficiary's Roth IRA over their lifetime, per Acorns. Source: https://www.acorns.com/learn/investing/what-is-a-529-plan/
2026 kiddie tax figures (the first $1,350 of a kid's unearned income is tax-free, and unearned income above $2,700 is taxed at the parent's rate), according to IRS Revenue Procedure 2025-32. Source: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
FAFSA asset treatment (a parent-owned 529 is assessed as a parent asset at a lower rate, while a custodial account is assessed as a student asset at up to 20%), according to Federal Student Aid. Source: https://studentaid.gov/
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Acorns does not provide tax or legal advice, you should consult with a tax or legal professional to address your particular situation.
Trump Accounts, 529 plans, and custodial accounts each carry tax rules that depend on your individual circumstances and may change. The 2026 figures referenced (including the gift tax annual exclusion, kiddie tax amounts, and Trump Account contribution and seed details) are set by the federal government for the 2026 tax year and are subject to change. Acorns does not offer Trump Accounts or 529 plans.
Trump Account $1,000 pilot program seed, eligibility for U.S. citizens born Jan. 1, 2025 to Dec. 31, 2028, the July 4, 2026 contribution start, and the Form 4547 opt-in, according to the IRS.
Trump Account $5,000 annual contribution cap (inflation-adjusted starting 2027) and the up to $2,500 employer contribution (first $2,500 excluded from the employee's income), according to the U.S. Department of the Treasury.
