What Utah parents need to know about Trump Accounts

TLDR: A Trump Account can be worth opening for one simple reason: free money. If your child qualifies for a government seed deposit, an employer match, or the separate $250 philanthropic bonus, it makes sense to pay attention. But if there is no free money attached, most parents will usually come out ahead by prioritizing a 529 first—especially because Utah parents get a state credit on contributions, and unused 529 funds can now be rolled to a Roth IRA up to a $35,000 lifetime limit.

How Trump Accounts work

Trump Accounts are tax-advantaged investment accounts created under the One Big Beautiful Bill Act, available for any U.S. child under 18 with a valid Social Security number. Here are the key mechanics:

• Children born from January 1, 2025 through December 31, 2028 may receive a one-time $1,000 federal seed deposit
• Families, employers, and others can generally contribute up to $5,000 per year combined, with inflation adjustments starting after 2027
• Employer contributions up to $2,500 per year are excluded from the employee's taxable income, but count toward the annual $5,000 cap
• Charitable and certain government contributions do not count against the family's $5,000 annual limit
• Investments are limited to U.S. broad market index funds only (no individual stocks, active funds, or bonds)
• The account locks until age 18, then converts to a traditional IRA with standard early withdrawal rules (10% penalty before age 59.5). Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

Free money is free money

There are three potential sources of free money, and they're worth understanding separately.

The $1,000 federal seed deposit

If your child was born between 2025 and 2028, the Treasury deposits $1,000 into their account automatically. You just need to open it. Not opening the account means forfeiting that money entirely.

The $250 philanthropic bonus

Children who are 10 or under but born before January 1, 2025 (meaning they don't qualify for the $1,000 seed) might still be eligible for a one-time $250 bonus contribution funded by a $6.25 billion philanthropic pledge anchored by the Dell family. A few important rules apply:

• Income threshold by ZIP code: Your child must live in a ZIP code with a median household income at or below $150,000. This sounds like a tight filter, but only about 3% of U.S. ZIP codes exceed that threshold. The Invest America Charitable Foundation estimated the bonus could reach roughly 80% of American children across 75% of ZIP codes — so the vast majority of families will qualify
• First-come, first-served: The first 25 million eligible children are expected to receive the $250 contribution. Once that pool is exhausted, the bonus is no longer guaranteed. Waiting significantly increases the chance you miss it
• No separate application required: Opening the account and meeting the eligibility rules is generally sufficient — the $250 is deposited on your child's behalf once eligibility is confirmed
• Age is the primary gate: Your child must be 10 or under at the time of application

Bottom line on the $250: If your child is 10 or under, opening an account makes sense simply to get in line. The eligibility bar is low, and no extra paperwork is required. The cost of opening the account is essentially zero. The cost of not opening it could be $250 in free money.

Employer matching

Companies including JPMorgan Chase and Coinbase have pledged to match the government's $1,000 deposit for employees' children. Nearly 30 companies and philanthropists have committed to some form of matching or contribution program, with employer contributions up to $2,500 per year excluded from your taxable income.

This is exactly the same logic as not contributing to your 401(k) up to the employer match. If your employer is offering a match and you don't open an account, you're walking away from free compensation. Check with your HR department to find out if your company has committed to a program.

The magic of compounding

Compounding—when your returns earn returns—is genuinely powerful over the timeline parents are have to work with. The key variable is time, and new parents have a lot of it.

Here's what $500 per year contributed annually from birth through age 17 looks like at a 7% average annual return (roughly in line with long-term U.S. stock market historical averages after inflation):

Bump your annual contribution to $1,000 and the 18-year balance grows to roughly $34,000. Max the account at $5,000 per year and you're looking at approximately $170,000 by age 18, before the account even converts to an IRA. The $1,000 federal seed alone, invested at birth and untouched at 7% for 18 years, becomes roughly $3,380 without a single additional dollar contributed.

Waiting even three to four years cuts meaningfully into your final balance, because those early years are when the compounding foundation is built. A dollar contributed at birth is worth more than a dollar contributed at age 5 because it simply has more time to grow. This logic applies regardless of which account type you choose.

The tax factor

All three accounts use after-tax contributions, meaning you put in money that's already been taxed. But what happens to the growth is very different.

Trump Accounts: Growth is tax-deferred, not tax-free. When your child eventually withdraws money, they'll owe ordinary income tax on the gains. The principal comes back out without additional tax, but every dollar of growth gets taxed at their income rate at withdrawal. After age 18, the account converts to a traditional IRA, so the same ordinary income tax treatment follows the money into retirement.

Roth IRAs: Also funded with after-tax dollars, but qualified withdrawals—both principal and gains—come out completely tax-free after age 59.5. You pay taxes once, upfront, and never again, including on decades of compounding. The catch: a Roth IRA requires earned income, so your child can't contribute until they have a job.

529 Plans: Contributions go in after-tax, but qualified education withdrawals — including every dollar of growth — come out completely tax-free. And starting in 2024, unused 529 funds can be rolled into a Roth IRA up to a $35,000 lifetime limit, as long as the account has been open at least 15 years and the child has income. The old knock on 529s was that the money was stranded if your kid didn't go to college. Now, up to $35,000 can move into a Roth IRA, where it grows and comes out tax-free in retirement.

The gap between tax-deferred and tax-free compounding is real money over a long horizon. In a Trump Account, the gains on that $34,000 will be taxed at ordinary income rates when withdrawn. In a 529 or Roth, they wouldn't be. Extend the runway to age 65 and the tax drag compounds right alongside the returns.

Note: Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

A note for Utah parents

If you live in Utah, there's one extra reason the 529 argument gets even stronger: Utah is one of only four states in the country that offers a state income tax credit for contributions to my529, Utah's official 529 plan.

For 2026, the credit is 4.45% of contributions, up to $2,560 per beneficiary for single filers and $5,120 for married couples filing jointly. The credit comes directly off your state tax bill, which makes it more valuable than a standard deduction where the savings depend on your marginal rate.

What that looks like with a $500 per month contribution

If you contribute $6,000 to a my529 account for your child in 2026, here's the math:

• Utah state tax credit (4.45%): ~$267
• Net cost to you: ~$5,733

4.45% isn't neccessarily life-changing, but that $267 is a direct reduction of what you owe the state at tax time, not a reduction in taxable income, but a dollar-for-dollar cut to your actual bill. It stacks on top of the tax-free growth and tax-free education withdrawals the account already provides.

The credit applies each year you make a contribution, for as long as the beneficiary was under 19 when first designated on the account. For parents starting early, this is not a one-time perk. It's a long-running annual benefit.

The takeaway for Utah parents: The 529 advantage over a Trump Account is already meaningful on the tax-free growth side. The my529 state tax credit adds another layer on top. If you're in Utah and choosing between the two, the 529 wins more decisively here than it does in most other states.

How the three accounts stack up

* A plan participant leaving an employer typically has four options (and may engage in a combination of these options): 1. Leave the money in their former employer’s plan, if permitted; 2. Roll over the assets to their new employer’s plan, if one is available and rollovers are permitted; 3. Roll over to an IRA; or 4. Cash out the account value

Should you open a Trump Account?

For most parents, the answer depends almost entirely on whether free money is available.

Open a Trump Account if:

• Your child was born between 2025 and 2028 (the $1,000 seed is a no-brainer)
• Your child is 10 or under and may qualify for the $250 bonus — apply before the 25M cap is reached
• Your employer offers matching contributions (treat it like a 401(k) match)
• You've already funded a 529 and want to layer in additional savings

Prioritize a 529 if:

• No matching, seed, or bonus contributions are available to you
• Your primary goal is college savings
• You want investment flexibility beyond U.S. index funds
• You want the option to roll unused funds into a Roth IRA down the road

The smartest approach for most families is to start with a 529, at least to the point where the $35,000 Roth rollover is fully seeded if education funds go unused. If employer matching or government seed money is available, open the Trump Account and capture every dollar of it. After that, contribute to whichever account fits your goals best.

What to do next:

1. Check with HR: Find out if your employer has committed to any matching contributions for Trump Accounts. Treat this like asking about a 401(k) match.
2. Confirm your child's eligibility: For the $1,000 seed (born 2025–2028), the $250 bonus (age 10 or under, qualifying ZIP code), or both. If your child qualifies for the $250, apply sooner rather than later given the first-come, first-served cap.
3. Make sure your child has a Social Security number on file: This is required to open the account.
4. Run the tax math on your specific situation: The gap between tax-deferred and tax-free growth over 18+ years is real money. A financial planner can help model the scenarios for your household.
5. Contribute consistently: If you do decide to open a Trump Account for your child, contribute early and often. Even $50-100 a month supercharges the compounding clock, and early years are the most valuable ones on the timeline.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. LPL Financial does not provide legal advice or services, or tax advice or services. Please note that information regarding Section 530A (Trump) accounts is still evolving and is not final. To ensure you receive the most updated information, please refer to IRS.gov or Trumpaccounts.gov.