Investing for the next generation
UTMAs, Trump Accounts, and 529s all get pitched as “accounts for your kids.” They are built for three different jobs, and the differences only show up years later, usually when someone needs the money. Here is what each one actually does, with a link to the statute, IRS document, or agency page behind every rule.
Federal figures are for 2026 and were checked against the primary sources listed at the end of this page on September 5, 2026. Trump Account rules rest partly on proposed regulations that are not yet final.
Was your child born in 2016 or later? They may qualify for a deposit into a Trump Account at no cost to your family: $1,000 from the federal government for children born 2025 through 2028, or $250 that Michael and Susan Dell have pledged for many children born 2016 through 2024. The deposit stays locked until the year the child turns 18, is taxed as income when withdrawn, and the account may carry trustee fees.
Or skip to the calculatorNearly every rule below follows from these three sentences. If you remember nothing else, remember these.
A brokerage account that belongs to the child, opened under your state’s Uniform Transfers to Minors Act. An adult, the custodian, manages it, but the money is legally the child’s from day one. It becomes theirs outright, with no strings, at the age their state sets. In Texas that is 21 for gifted money.Tex. Prop. Code §141.021
A traditional IRA with a kids’-savings label. The statute says a Trump Account is treated like a traditional IRA. The penalties and the tax bill follow from that one fact. The statute adds one more rule on top: nothing comes out before the year the child turns 18.26 U.S.C. §530A(a)
An education account. Growth is free of federal income tax when the money pays for qualified education, including certain credential programs. Used for anything else, the growth is taxed and penalized.26 U.S.C. §529
Enter what your family could realistically set aside, pick what matters most, and press Calculate to see one way the three accounts could work together, along with what each might be worth at 18, 25, and 65 under a return assumption you choose.
Read this before you use the tool. This is an educational illustration, not personalized investment, tax, or legal advice, and it is not a recommendation to open any account. The split it shows comes from a short, fixed set of rules described under How this tool works. It does not know your income, your other savings, your state’s rules, or your child.
Every dollar figure is a hypothetical estimate. Projections use an assumed annual return that you choose. The presets are informed by long-run U.S. stock market history, but past returns do not predict future returns, actual results will differ, and any of these accounts can lose value. Results will change each time you change an input.
Press Calculate to see, for the numbers you entered:
The lines are smooth only because the tool assumes an identical return every year. Actual account values fluctuate and can fall below the amount contributed. Hypothetical illustration, not a projection of any account’s value.
The same projected balance, then what is left for a specific use once the rules in the tables below are applied. “Locked” means the law does not allow the withdrawal at that age.
| Milestone and use | UTMA | Trump Account | 529 |
|---|
Figures reflect federal rules for 2026. A few items, most notably the age a UTMA ends, are set by state law and vary. Each small link goes to the statute, IRS document, or agency page that sets the rule.
| UTMA | Trump Account (§530A) | 529 Plan | |
|---|---|---|---|
| What it legally is | The child’s own taxable brokerage account, held by a custodian under state lawUniform Transfers to Minors Act | Treated as a traditional IRA under §408(a), with extra rules until the year the child turns 18§530A(a) | A tax-advantaged “qualified tuition program”§529 |
| Who controls it, and when | A custodian manages it; the child takes full control at the age the state sets. Texas: 21 for gifted money. Elsewhere the default is 18, 21, or 22 (Louisiana), and several states let the giver choose a later age when the account is opened, as late as 25 in some states and 30 in Wyoming; see the state table belowTex. Prop. Code §141.021 | The child owns it. Apart from rollovers, the return of excess contributions, and a distribution on the child’s death, nothing can come out before January 1 of the year the child turns 18; after that it works like any traditional IRA, tax and penalty includedIRS IR-2025-117 | The account owner, not the child, directs the account under the plan’s terms: the owner decides on withdrawals, and that does not end when the child becomes an adult. The owner can also move the account to another family member without tax§529(c)(3)(C) |
| Government deposit (taxed when withdrawn) | None | A one-time $1,000 deposit for U.S.-citizen children born 2025 through 2028 with a valid Social Security number. Someone must make the election on Form 4547 while the child can still hold a Trump Account, which under the statute means through the year the child turns 17. It comes out taxed as income like the rest of the accountIRS: Trump Accounts Form 4547 | None federally (your state may offer its own incentive; check your state’s plan) |
| Annual contribution cap | None. The gift-tax annual exclusion is the practical limit: $19,000 per giver, per child, in 2026Rev. Proc. 2025-32 §4.42 | $5,000 a year from family, friends, and employers combined, through the year before the child turns 18. Indexed for inflation after 2027. The $1,000 federal deposit does not count against it§530A(c) | No federal cap. $19,000 per giver, or up to five years of exclusions at once ($95,000 in 2026, $190,000 for a couple) using the 5-year election§529(c)(2)(B) |
| How multiple givers are treated | Each giver has their own $19,000 exclusion. Five relatives could give $95,000 in a year | Everyone shares one $5,000 bucket. Anything above it is an excess contribution that has to come back outNotice 2025-68 | Each giver has their own exclusion, same as a UTMA |
| Investment choice | Broad. Stocks, bonds, funds, or a professionally managed portfolio, subject to the custodian’s duty to invest prudently (see “How we are paid” at the end of this page) | Locked by law until the year the child turns 18: a mutual fund or ETF tracking an index of mostly U.S. stocks, no leverage, fees of 0.10% a year or less. The family may choose among the trustee’s eligible index funds; nothing else is allowedIRS IR-2026-96 | A menu of portfolios set by the plan; you can change investment direction no more than twice a calendar year§529(b)(4) |
| Tax while it grows | Taxed every year under the “kiddie tax.” In 2026: the first $1,350 of unearned income is sheltered, the next $1,350 is taxed at the child’s rate, and anything above $2,700 is taxed at the parents’ rateRev. Proc. 2025-32 §4.02 IRS Topic 553 | Nothing. Tax-deferred like any IRA | Nothing. Tax-deferred |
| Tax coming out | Long-term capital-gains rates (0%, 15%, or 20%, depending on income) on positions held over a year. Gains above the kiddie-tax threshold realized while the kiddie tax applies are taxed at the parents’ rate, and high earners may also owe the 3.8% net investment income taxIRS Topic 409 §1411 | Growth comes out as ordinary income. Family contributions come back tax-free because they were made with after-tax money. The $1,000 federal deposit and any employer contributions were never taxed, so they come out as income tooNotice 2025-68 | Federal tax-free for qualified education. Otherwise, the growth is ordinary income plus a 10% penalty§529(c)(3), (c)(6) |
| Getting money out before 18 | Anytime, by the custodian, for the child’s benefit | Not possible. No withdrawals until January 1 of the year the child turns 18, apart from rollovers, the return of excess contributions, and a distribution on the child’s death§530A(d) | Anytime for qualified education, including K-12 costs (up to $20,000 a year for those)§529(c)(7), (e)(3) |
| Penalty for other uses | None. The only limit is the custodian’s duty to use the money for the child’s benefit | 10% on the taxable part before age 59½, unless an exception applies (higher education, up to $10,000 for a first home, and a few others)§72(t) | 10% on the growth, plus ordinary income tax on it§529(c)(6) |
| Effect on college aid (FAFSA) | Counted as a student asset, assessed at 20%, the harshest treatmentFSA Handbook 2026–27, ch. 3 | The FAFSA excludes retirement accounts from reported assets, and a Trump Account is treated as an IRA, so the same treatment is expected; the Department of Education has not addressed Trump Accounts specifically. A withdrawal would be expected to count as the student’s income, as IRA distributions do (taxed and untaxed portions), and student income is assessed at 50% above an allowanceFSA Handbook 2026–27, ch. 2 | A parent-owned 529 is a parent asset: 12% of it counts as available, and that amount is assessed at 22% to 47%, so at most about 5.64% of the balance (our arithmetic from the Handbook’s rates), the most favorable treatmentFSA Handbook 2026–27, ch. 3 |
| Can you change which child benefits? | No. It is that child’s property permanently | No. One account, one child | Yes. The beneficiary can be changed to another member of the family with no tax§529(c)(3)(C) |
| Where it is held | Any brokerage. It can sit alongside the family’s other accounts | Opened through the Treasury program with Robinhood as the initial trustee. Once open, it can be moved to another qualified IRA trustee that offers a Trump AccountTreasury, Apr. 6, 2026 Notice 2025-68 Q&A A-5 | Through a state-sponsored plan. You are not limited to your own state’s plan |
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The age at which a custodial account created by a lifetime gift transfers to the child, read from each state’s Uniform Transfers to Minors Act on September 5, 2026. Several states let the giver choose a different age when the account is opened; the notes say how. Transfers by will or trust can follow different rules. Confirm with the statute before relying on it. This table is general legal information, not legal advice, and is not a substitute for the advice of an attorney. How a particular account is treated depends on how and when it was created.
| State | Ends at | Can the giver change it? | Statute |
|---|---|---|---|
| Alabama | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Ala. Code § 35-5A-21 |
| Alaska | 21 | Default is 21. The giver can set any age from 18 to 25 in the transfer wording when the account is opened; the custodian may later extend the term by written notice, subject to the child’s right to demand the money. | Alaska Stat. § 13.46.190(1); § 13.46.195(a), (c), (e); § 13.46.197 |
| Arizona | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Ariz. Rev. Stat. § 14-7670 |
| Arkansas | 21 | The giver may only shorten the term (to 18 or later), never lengthen it. | Ark. Code Ann. § 9-26-220 (read from law.justia.com) |
| California | 18 | Default is 18. For a lifetime gift the giver can set any age up to 21 in the transfer wording; ages up to 25 are available only for transfers by will, trust, other fiduciary, or exercise of a power of appointment, not for an outright gift. | Cal. Prob. Code §§ 3920(a)–(b), 3920.5(a), (e) |
| Colorado | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Colo. Rev. Stat. § 11-50-121 (read from law.justia.com) |
| Connecticut | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Conn. Gen. Stat. § 45a-559e |
| Delaware | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Del. Code Ann. tit. 12, § 4520 |
| District of Columbia | 18 | Default is 18. The giver can extend to 21 by adding “(21)” (or substantially similar language) to the account designation. | D.C. Code § 21-320(1); § 21-309(d) |
| Florida | 21 | The giver can extend to 25, but the child can still demand the money at 21 unless a specific notice procedure was set up at creation. | Fla. Stat. § 710.123 |
| Georgia | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | O.C.G.A. § 44-5-130 (read from law.justia.com) |
| Hawaii | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Haw. Rev. Stat. § 553A-20 |
| Idaho | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Idaho Code § 68-820 |
| Illinois | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | 760 ILCS 20/21(a)(1) |
| Indiana | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Ind. Code § 30-2-8.5-35 |
| Iowa | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Iowa Code § 565B.20 |
| Kansas | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | K.S.A. 38-1721(1) |
| Kentucky | 18 | Ends at 18; the statute gives the giver no option to extend it. | KRS 385.202(1) |
| Louisiana | 22 | Louisiana raised the age to 22 in 2023 for every kind of transfer, and applied it to existing accounts in 2024. | La. R.S. 9:770(1) |
| Maine | 18 | Default is 18. The giver can extend to 21 only by putting the statute’s wording (or its substantial equivalent) in the transfer. | 33 M.R.S. § 1671(1) |
| Maryland | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Md. Code Ann., Est. & Trusts § 13-320(1) |
| Massachusetts | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Mass. Gen. Laws ch. 201A, § 20(1) |
| Michigan | 18 | Default is 18. The giver can extend to 21 by adding “until age __” wording to the transfer. | MCL 554.546(a) (Sec. 26); MCL 554.547 (Sec. 27) |
| Minnesota | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Minn. Stat. § 527.40, subd. 1(1) |
| Mississippi | 18 | Mississippi lowered the age from 21 to 18 in 2023 (Laws 2023, ch. 507); many older summaries still say 21. The link is to the 2023 session law that made the change. | Miss. Code Ann. § 91-20-41(a) |
| Missouri | 21 | The 21 applies to gifts from a donor; an 18 alternative exists only for court-ordered or fiduciary transfers at the child’s request. | RSMo § 404.051.5(1)(a) |
| Montana | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Mont. Code Ann. § 72-26-803 |
| Nebraska | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Neb. Rev. Stat. § 43-2721 |
| Nevada | 18 | Default is 18. The giver can extend to 21 in the account registration; 25 applies only to transfers by will, trust, or power of appointment. | Nev. Rev. Stat. § 167.095(1); § 167.034(4)(a) |
| New Hampshire | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | N.H. Rev. Stat. Ann. § 463-A:20 |
| New Jersey | 21 | The giver may shorten to 18–20, never lengthen. | N.J. Stat. Ann. § 46:38A-52 (read from law.justia.com) |
| New Mexico | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | N.M. Stat. Ann. § 46-7-31 (read from law.justia.com) |
| New York | 21 | The giver may shorten to 18 with an “age eighteen election,” never lengthen. | N.Y. Est. Powers & Trusts Law § 7-6.20(a); § 7-6.21 |
| North Carolina | 21 | The giver may shorten to 18–20, never lengthen. | N.C. Gen. Stat. § 33A-20 |
| North Dakota | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | N.D. Cent. Code § 47-24.1-20 |
| Ohio | 21 | The giver can extend to 25 (or shorten to any age from 18 to 21) in the gift instrument; if extended past 21, the child may still demand the money in writing within 60 days of turning 21 unless the gift instrument bars it. | Ohio Rev. Code §§ 5814.04(D), 5814.09(A), (D) |
| Oklahoma | 18 | Default is 18. The giver can extend to 21 in the transfer language. | Okla. Stat. tit. 58, § 1221 |
| Oregon | 21 | The giver can extend to 25. | Or. Rev. Stat. § 126.869(1); § 126.872(1) |
| Pennsylvania | 21 | Pennsylvania’s 25 option does not apply to lifetime gifts; a gifted account ends at 21. | 20 Pa. Cons. Stat. § 5320(1); § 5321(e) |
| Rhode Island | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | R.I. Gen. Laws § 18-7-21 |
| South Carolina | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | S.C. Code Ann. § 63-5-700 |
| South Dakota | 18 | Ends at 18 for every kind of transfer; no extension. | S.D. Codified Laws § 55-10A-22 |
| Tennessee | 21 | The giver can extend to 25 if the instrument says so; for a lifetime gift the instrument must also expressly state that deferring past 21 makes the transfer a gift of a future interest that may have gift-tax consequences. | Tenn. Code Ann. § 35-7-121(a)(1) (read from law.justia.com) |
| Texas | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Tex. Prop. Code § 141.021 |
| Utah | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Utah Code Ann. § 75A-8-121 |
| Vermont | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | 14 V.S.A. § 3230 |
| Virginia | 18 | Default is 18. The giver can elect 21 or 25 by adding “(21)” or “(25)” to the account designation (25 only for transfers on or after July 1, 2019). If a gift is set to 25, the child can still demand the money at 21 by written request within the statute’s 30-day windows. | Va. Code Ann. § 64.2-1919(A), (B); § 64.2-1908(D), (E) |
| Washington | 21 | The giver can extend to 25 in the initial nomination of the custodian. | RCW 11.114.200(1)(a), (2) |
| West Virginia | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | W. Va. Code § 36-7-20 |
| Wisconsin | 21 | No. The statute sets 21 for gifts and gives the giver no option to change it. | Wis. Stat. § 54.892 |
| Wyoming | 21 | The giver can set a different age in the transfer, as far as 30. The custodian may also extend by written notice, but the child can block that extension by demanding distribution within the statutory window. | Wyo. Stat. Ann. § 34-13-133(a)(i); § 34-13-138(a), (d); § 34-13-139 |
The differences above stay abstract until a specific thing happens. These are the moments that actually come up.
| The situation | UTMA | Trump Account | 529 Plan |
|---|---|---|---|
| Grandparents want to give $10,000 at once | All $10,000 goes in today, well within their $19,000 exclusion | Only $5,000 of room exists for the whole year, shared with everyone else. The rest waits until January | All $10,000 goes in, and the 5-year election allows far more |
| Five relatives chip in at a birthday party | All of it lands. Each giver has a separate exclusion; together they could give $95,000 | Family, friends, and others can contribute, but all of them draw on one $5,000 bucket. Anything over the cap is an excess contribution and comes back outRobinhood, Jul. 6, 2026 | All of it lands, same as a UTMA |
| A 12-year-old wants to invest their own birthday money | Yes, no limit. It is already legally their money | Yes, and unusually, no job is required. A regular IRA demands earned income; a Trump Account does not until the year the child turns 18Notice 2025-68 | Yes, though the money is committed to education |
| A 16-year-old earns $4,000 at a summer job | No change, but the job makes the child eligible for a custodial Roth IRA ($7,500 or their earnings, whichever is less), a fourth account type this page does not compareNotice 2025-67 | They can contribute, but the job was never required anyway. Still capped at $5,000 | No change. The job also unlocks a custodial Roth |
| A business owner wants to contribute through the company | No mechanism. It is a personal gift with after-tax dollars | Yes. A written §128 program lets a business put in up to $2,500 a year pre-tax. Catch: the limit is per employee, not per child, and it counts against the $5,000 cap§128 Notice 2025-68 Q&A I-1 | No federal mechanism for pre-tax employer funding |
| The family needs $3,000 when the child is 15: braces, a car, a summer program | Yes. The custodian can spend it for the child’s benefit. This is the whole point of a UTMA | Not allowed. No withdrawal is allowed before the year they turn 18, apart from rollovers, the return of excess contributions, and a distribution on the child’s death | Only if it is a qualified education expense. A car is not |
| Paying for college | Available. Gains taxed at capital-gains rates. Hurts aid as a student asset (20%) | The higher-education exception waives the 10% penalty but not the income tax, and, by analogy to IRA rules, the withdrawal would be expected to count as student income on a later FAFSA§72(t)(2)(E) | What it is built for. Federal tax-free for qualified costs, and the most favorable of the three on aid |
| Private K-12 tuition | Yes. The custodian can pay for it | No. Nothing comes out before the year they turn 18 | Yes, up to $20,000 a year starting in 2026, and the list now includes curriculum, books, tutoring, testing fees, and dual-enrollment fees§529(c)(7), (e)(3)(A) |
| Trade school or a professional credential | Yes, no restrictions | Only if it meets the IRA higher-education exception, and income tax still applies§72(t)(7) | Yes. Since 2025, 529s cover recognized postsecondary credential programs, including required testing and continuing-education fees§529(f) |
| A first-home down payment in their early twenties | Theirs outright once they pass the state’s age. No penalty, no restrictions | The first-home exception waives the penalty on up to $10,000; income tax is still due. Above that: tax and penalty§72(t)(2)(F), (t)(8) | Not a qualified expense. Ordinary income plus 10% penalty on the growth |
| Starting a business at 25 | Theirs. No penalty | No purpose-based exception exists. Ordinary income tax plus a 10% penalty on the growth | Not qualified. Tax plus penalty on the growth |
| They come of age and aren’t ready for a windfall | They get 100% of it and can spend it on anything. The UTMA’s real risk | Harder to spend. Tax and a 10% penalty apply to most withdrawals before 59½, which discourages early use | Under the owner’s control. The owner decides what gets paid |
| They never need it. Let it compound to retirement | It stopped being a kids’ account once they came of age; it is simply their brokerage account now | The account finally working as designed. After 59½: ordinary income, no penalty | Leftovers can move to a Roth IRA (see below), be reassigned to another family member, or come out with tax plus penalty on the growth |
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This is the part most comparisons miss. Each account can end up as tax-free retirement money, but the route, the cost, and the catch are different in each case.
It cannot be “converted.” It is not a retirement account. But once the child has earned income, you can sell UTMA holdings and use the proceeds to fund a Roth IRA, up to $7,500 or their earnings in 2026. Once the kiddie tax no longer applies, those sales can land in the 0% capital-gains bracket. Same destination, gated on them having a job.Notice 2025-67
Starting the year the child turns 18, ordinary IRA rules apply, including Roth conversions. Family contributions are already-taxed basis, so only the growth, the $1,000 federal deposit, and any employer money would be taxable at conversion. Some families consider converting in a year when the child’s income is low; after a conversion, qualified Roth withdrawals are tax-free, subject to the Roth five-year and age rules. Whether and when to convert depends on the child’s tax situation in that year.Notice 2025-68
Leftover education money can roll to the child’s Roth IRA, up to $35,000 over a lifetime. The account must be at least 15 years old, the contributions must have seasoned 5 years, the child needs earned income, and each year’s rollover counts against the annual Roth limit.§529(c)(3)(E)
Summary
These accounts are not competitors so much as tools for different jobs. For qualified education costs, a 529 is the only one of these three where growth comes out free of federal income tax (a Coverdell ESA, not covered here, also does this). A UTMA is the most flexible, and the only one of the three whose investments are not limited to a set menu. You pay for that flexibility with an annual tax bill and by handing over control when the child comes of age. A Trump Account is a retirement account with a one-time $1,000 federal deposit available, on election, for children born 2025 through 2028; the deposit is locked until the year the child turns 18 and taxed as income when withdrawn. It is designed for the child’s retirement and expensive to tap in their twenties. The three can be used together.
A few details reliably cause problems, and none of them are obvious at first glance:
The tool above is a simple, transparent model. Here is exactly what it does, what it assumes, and what it leaves out, so you can judge how much weight to give it.
Every rule on this page traces to one of these. Checked September 5, 2026. Figures are re-checked when the IRS publishes 2027 inflation amounts, when final Trump Account regulations issue, and at least every 90 days.