Trump Accounts, also called 530A accounts, launched on July 4. The accounts can be opened for any U.S. child under 18 with a Social Security number, though only babies born between Jan. 1, 2025, and Dec. 31, 2028, qualify for a one-time, $1,000 Treasury deposit.
The money grows tax-deferred, and withdrawals are generally taxed under rules similar to a traditional IRA. Many withdrawals before age 59½ are subject to a 10% penalty, though some exceptions apply, such as for a first home purchase or qualified education expenses.
Beyond the initial $1,000, accounts can also receive additional contributions, including from employers and charitable organizations. While those funds have the potential to grow through compound returns, investment choices are currently limited.
At launch, all contributions are invested in a single low-cost S&P 500 ETF, with Treasury planning to add four more ETF options in the coming months. Parents looking for broader investment choices may also want to consider alternatives such as 529 plans, UGMA or UTMA custodial accounts or brokerage accounts for teens. Here’s how those options compare.
Alternatives to Trump Accounts
529 plans
State-sponsored 529 plans are best known for helping families save for college, but recent federal law expanded the list of qualified education expenses to include certain trade and vocational programs, professional licensing, continuing education and some K-12 expenses.
Unlike Trump Accounts, 529 plans offer tax-free investment growth and tax-free withdrawals for qualified education expenses. Many states also provide tax deductions or credits for contributions. Investment menus vary by plan but typically include age-based portfolios and static allocation options, giving savers more flexibility than the single ETF currently available in Trump Accounts.
You don’t have to use your home state’s 529 plan, though it’s worth comparing tax benefits, investment options and fees before choosing one. Many plans can be opened online without working with a financial advisor.
CNBC Select recommends Utah’s my529 for its low fees and broad investment options, and Illinois’ Bright Start College Savings 529 plan for its no-minimum opening balance and online gifting feature. Both plans are available to residents nationwide.
my529 (Utah)
Information about my529 has been collected independently by CNBC Select and has not been reviewed or provided by the issuer prior to publication.
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Minimum opening balance
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Maximum overall contribution
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Portfolio options
4 age-based options with various risk tolerance, which automatically rebalances each year; 10 static options based on risk tolerance and U.S. stocks and bonds (investors will need to manually change their allocations); 2 customizable options (either age- or static-based)
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Underlying funds
Investors can choose from Dimensional Fund Advisors mutual funds, PIMCO Interest Income Fund, Vanguard Group funds and FDIC-insured accounts from Sallie Mae Bank and U.S. Bank
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Fees and expenses
Total asset-based expense ratio: 0.131% to 0.136% for my529 target-date options; 0.130% to 0.455% for customized static and age-based options, depending on investment mix; 0.211% for stable value option
Pros
- Available to residents of any state
- Offers low fees
- Diverse investment options
- Tax benefits for residents
- No minimums
- Offers online tool to share gift contribution link with family and friends
Cons
- Expense ratios may be higher compared to other providers on our list
Bright Start College Savings (Illinois)
Information about Bright Start College Savings has been collected independently by CNBC Select and has not been reviewed or provided by the issuer prior to publication.
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Minimum opening balance
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Maximum overall contribution
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Portfolio options
Choose from age-based, target (based on risk tolerance and/or fixed-asset allocation) and individual fund portfolios
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Underlying funds
Investors can choose from 11 funds including ones through DFA, Dodge & Cox, T. Rowe Price and Vanguard
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Fees and expenses
Total asset-based expense ratio: 0.07% to 0.79%
Pros
- Available to residents of any state
- Offers low fees
- Diverse investment options
- Tax benefits for residents
- No minimums
- Offers online tool to share gift contribution link with family and friends
- Offers risk tolerance questionnaire to help investors looking for some guidance
Cons
- Expense ratios may be higher compared to other providers on our list
- Performance is lower than others on list
Coverdell ESA
A Coverdell education savings account (ESA) offers tax-free growth and tax-free withdrawals for qualified education expenses, similar to a 529 plan. Unlike many 529 plans, Coverdell ESAs typically allow a broader range of investments, including stocks, bonds and mutual funds. Some self-directed Coverdell ESAs may even allow alternative investments.
However, eligibility is limited. To make the full $2,000 annual contribution, your modified adjusted gross income must generally be below $95,000 for single filers or $190,000 for married couples filing jointly, with contributions phasing out above those limits.
UGMA/UTMA custodial accounts
A Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account is a custodial brokerage account where an adult manages assets for a child until they reach the age of majority, typically 18 or 21 depending on the state. Unlike education-specific accounts, these funds can be used for any purpose that benefits the child.
These accounts can hold assets such as cash, stocks and bonds, while UTMAs may also allow assets like real estate. Contributions aren’t tax-deductible, and investment earnings may be taxable under the rules for a child’s unearned income. There are no income limits or annual contribution limits, though large gifts may have tax implications.
Many brokerages, including Fidelity and Schwab, offer UGMA/UTMA accounts.
Fidelity Investments
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing.
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Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over, which includes access to unlimited 30-minute coaching calls with a Fidelity advisor and tax-loss harvesting on taxable accounts).
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Bonus
None currently. Check Fidelity’s promotions page for the latest offers here.
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Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:Fidelity Investments 529 College Savings; Fidelity HSA®
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Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Fidelity Go® portfolios use Fidelity Flex® mutual funds with zero expense ratios
- Human advisors manage day-to-day Fidelity Go® portfolio decisions
- Unlimited 30-minute coaching calls with a Fidelity advisor for accounts of $25,000 and over (at no extra cost)
- Tax-loss harvesting available on taxable Fidelity Go® accounts with $25,000 or more
- Abundant educational tools and resources with research from 20-plus independent providers
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
- Fidelity Go® invests only in Fidelity Flex® mutual funds (no third-party ETFs or individual securities available)
- No socially responsible or ESG portfolio option through Fidelity Go®
- Some of Fidelity’s mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One®Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One®Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One®Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Award-winning thinkorswim®trading platforms and all their cutting-edge tools are now available at Schwab.
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Custodial Roth IRAs
A custodial Roth IRA allows children with earned income to start saving for retirement while gaining experience investing. Like adult Roth IRAs, contributions can generally be withdrawn at any time without taxes or penalties. However, withdrawing earnings before retirement age may trigger taxes and a 10% penalty unless an exception applies, such as qualified education expenses or a first-time home purchase.
Joint teen brokerage accounts
Schwab Teen Investor™ Account
Information about the Schwab Teen Investor™ Account has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
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Minimum deposit and balance
No minimum initial deposit and no account maintenance fees
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Fees
$0 commissions on online listed equity trades; no hidden fees
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Bonus
Teens who complete theQuick Start to Stock Investingcourse within 45 days of opening their account receive $50 in fractional shares split across the top five stocks in the S&P 500. Terms apply.
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Investment vehicles
Taxable joint brokerage account (Schwab Teen Investor™ Account)
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Investment options
ETFs, mutual funds, fixed-income products (such as U.S. Treasury Bills and bonds), fractional shares, and Schwab Investing Themes (curated investments in specific sectors like cybersecurity or AI)
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Educational resources
Teens get access to an education series covering four themes: personal finance essentials, Investing 101, how to invest in stocks, and how to trade at Schwab, plus ongoing access to Schwab’s education hub with videos and articles for investing beginners.
Pros
- No account minimums or monthly fees
- Educational investing resources tailored for teen investors, including a New Investor Content Hub and an interactive “Quick Start to Stock Investing” course
- Joint account structure gives parents full visibility into all transactions, statements, trade confirmations and account activity, with the ability to set up alerts for trading activity and money transfers
- Teen debit card available; parents can set up spending alerts and must be the ones to open or close the debit card account
- Parent does not need to already have an existing Schwab account to open one for their teen
- 24/7 access to Schwab professionals by phone or chat
Cons
- Only available to teens aged 13 to 17
- Debit card won’t be issued until a $100 funding requirement is met
Fidelity® Youth Account
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Minimum deposit and balance
Teens aren’t tied to any account minimums and there are no monthly fees
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Fees
$0 commissions for online U.S. stocks*
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Bonus
For a limited time: When you (parent or guardian) initiate the opening of a new Youth Account and your teen (aged 13 to 17) downloads the Fidelity Mobile®App and activates the new account, your teen will receive a $50 deposit as a reward1
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Investment vehicles
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Investment options
Stocks, ETFs and mutual funds
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Educational resources
Teens can access a financial curriculum made just for them to learn about saving, spending and investing
Pros
- No account minimums or monthly fees
- Educational investing resources customized for young teens
- Requires parental oversight: In order for a teenager to sign up, their parent or guardian must already have an existing Fidelity account. Parents can monitor their child’s account activity and set up notification alerts for trades, transactions and spending
- Teen users get access to a free debit card with no subscription fees, no account fees, and no minimum balances
Cons
- Only available to teens aged 13 to 17
- In order to sign up as a teen, parent or guardian must already have an existing Fidelity account
*$0.00 commission applies to online U.S. equity trades and Exchange-Traded Funds (ETFs) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Clearing & Custody Solutions® are subject to different commission schedules.
The Fidelity Youth Account can only be opened by a parent/guardian. Account eligibility limited to teens aged 13-17.
1Limited Time Offer. Terms Apply. Before opening a Fidelity Youth Account, you should carefully read the account agreement and ensure that you fully understand your responsibilities to monitor and supervise your teen’s activity in the account.
FAQs
What is a Trump Account?
A Trump Account, also called a 530A account, is a investing account available to children with a U.S. Social Security number. Family, parent’s employers and others can contribute up to $5,000 per year per child, and funds are invested in an exchange-traded fund (ETF).
Should I open a Trump Account for my child?
Opening a Trump Account could allow you to receive seed money available from a parent’s employer, philanthropists or the federal government. However, these accounts have a contribution limit of $5,000 per year and investments are currently restricted to one ETF, so those wanting to contribute more or invest with other types of assets should consider another account type in addition to the Trump Account.
What is a 529 account?
A 529 account is an education savings account that can come with tax advantages while saving for a child’s future education expenses. These accounts can be used for college expenses, as well as qualified trade education programs and continuing education costs.
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