Trump Account vs 529 calculator
See what each plan could leave for college at age 18, after tax and a financial aid estimate. If your child qualifies, you can claim the free $1,000 either way, so the real question is where your own monthly savings should go. Nothing you type is saved.
Change the assumptions
| At age 18 | Plan AEverything into the Trump Account | Plan B$1,000 in Trump, monthly in a 529 |
|---|---|---|
| You put in | $21,600 | $21,600 |
| Grows to | $41,672 | $41,672 |
| Tax when spent on college | −$2,007 | −$294 |
| Less first-year aid (estimate) | −$8,334 | −$2,772 |
| Left for college | $31,331 | $38,606 |
Plan B leaves about $7,275 more for college.
Both plans grow the same money at the same rate, so the difference comes from the rules. A 529 is tax-free for college, while Trump Account growth is taxed as your child's income, and financial aid may count a Trump Account at up to 20% of its value versus 5.6% for a parent's 529. Either way, claim the free $1,000: it costs you nothing.
Where a Trump Account can make sense: if the money may go to a first home or retirement rather than college, if an employer contributes, or once you've reached what you want in a 529. Many states also give a tax deduction for 529 savings, which this does not include.
An illustration, not a forecast or advice. Assumes 6% yearly growth for both accounts, deposits every month until 18, and that the money is spent on college. Trump Account family contributions come back tax-free; growth and the $1,000 are taxed at 10%. Financial aid is a first-year estimate at the maximum assessment rates. It uses the cautious case, because the Department of Education has not yet said how Trump Accounts count.
How the calculator works
- Plan A puts your monthly savings in the Trump Account. Anything above $5,000 a year goes into a 529.
- Plan B puts your monthly savings in a 529. The Trump Account holds only the $1,000, if your child gets it.
- Tax: family contributions to the Trump Account come back tax-free, while its growth and the $1,000 are taxed. Qualified 529 withdrawals are not taxed.
- Financial aid: this is a cautious first-year estimate, because the Department of Education has not yet said how Trump Accounts count.