Andrew Shilling at MarketWatch asked how parents saving for college should think about Trump accounts, which launched July 4 with a $1,000 federal seed for children born between 2025 and 2028. Seventy percent of parents already worry about paying for college, so the question was whether this replaces the 529.
It does not. Trump accounts are not a replacement for 529 plans. They serve a different tax function and carry a different risk profile. A 529 grows tax-free for education; a Trump account grows tax-deferred and is taxed as ordinary income on the way out.
The control question is the biggest underappreciated risk. A parent-controlled 529 stays parent-controlled until the money is spent. You can change the beneficiary or move leftover money to a Roth IRA if plans change. A Trump account hands full control to the child at 18. That is a pretax pool of money with investment decisions suddenly sitting with a teenager. Some handle it well. Most do not. None of those exit options exist in a Trump account, and that optionality has real dollar value when college plans change.
The right framework for most families is to run both in parallel: the 529 doing the heavy lifting for tuition, and the Trump account building a longer runway for everything that comes after. Take the $1,000. Keep the 529 as the workhorse.
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