Trump Accounts, 529s, Roth IRAs, and Buying a Home
There’s a common theme we’ve noticed after years of sitting across the table from clients with children: they aren’t just focused on their own retirement. Many are thinking more about their children and grandchildren. Whether it’s helping with a first home, a car, medical insurance or making sure a grandchild doesn’t graduate from college under a mountain of debt, many clients want to give the next generation a leg up. And, in most cases, they need it.
There have been some big changes recently in how you can save and gift money. Let’s get right to the practical stuff you can use.
The New “Trump Accounts”
You may have started hearing questions about these recently. Formally created under the One Big Beautiful Bill Act, Trump Accounts are a new federal, tax‑advantaged savings vehicle designed for American children under 18 who have a Social Security number.
- Starting July 4, 2026: Families can contribute up to $5,000 per year to these accounts through the government plan. Form 4547, Trump Account Election(s) is the new form to establish the accounts. You can start by going to https://trumpaccounts.gov.
- Federal Seed Money: For children born between January 1, 2025, and December 31, 2028, the government provides a $1,000 initial deposit.
- The Michael and Susan Dell Foundation Contribution: In a historic $6.25 billion private commitment, the Dell Foundation is providing a $250 seed deposit for children age 10 or younger (born between 2016 and 2024).
- Dell Eligibility: To qualify for this private boost, the child must live in a ZIP code where the median household income is $150,000 or less. To find out eligibility, go to https://investamerica.org/dell/
- Investment Rules: By law, funds must be invested in broad, low-cost stock index funds or ETFs to seek long-term growth.
- Age 18 Transition: It’s worth mentioning that at age 18, these funds roll into a Traditional IRA for the child.
- To learn more, go to https://investamerica.org/ or https://trumpaccounts.gov.
529 Plans: They Aren’t Just for College Anymore
529 plans are still best known as college savings accounts (as they grow tax-free if used for qualified education expenses), but their flexibility has expanded significantly—and many families haven’t caught up to the changes.
- K-12 Tuition: You can now withdraw up to $20,000 per year per student for private elementary or secondary school tuition.
- Expanded Uses: Qualified expenses now include tutoring, apprenticeship programs, and even certain homeschooling materials.
- The “Unused Money” Solution: If there is money left over, you can pursue a rollover of up to $35,000 (lifetime limit) into a Roth IRA for the beneficiary.
- The Roth IRA Rules: The 529 account must have been open for at least 15 years, and the beneficiary must have earned income that year to qualify for the transfer.
Roth IRAs for Working Kids
If your kids or grandkids are earning money—whether they have a summer job with a W-2 or a small side hustle with a 1099—they can open a Custodial Roth IRA.
- 2026 Limits: The maximum contribution for 2026 has increased to $7,500 (under age 50).
- The Rule: They cannot contribute more than they actually earned and reported to the IRS. (For example, if a child earns $2,000 lifeguarding, then $2,000 is the maximum they can contribute.)
- Growth: Starting early allows for decades of potential tax-free growth.
Gifting Money for a First Home
We’re also seeing a growing trend toward helping children sooner rather than later, especially when it comes to housing. In some cases, parents and grandparents find that helping with a down payment fulfills both a financial and an emotional goal while they’re still here to see the impact it can make.
- Annual Exclusion: For 2026, you can gift up to $19,000 to any individual each year. Direct payments for tuition or medical expenses are allowed in addition to this amount and are not subject to the annual limit.
- Married Couples: Together, married couples can gift $38,000 per recipient annually.
- Lifetime Exemption: Most people won’t owe tax immediately on larger gifts; it simply counts against your lifetime exemption, which is currently $15 million per person. Larger gifts do require filing a gift tax return.
There are many ways to support the next generation’s financial path. Whether you are looking at a long-term savings account for a newborn or helping a child move into their first home today, the key is understanding how these different tools can work together for your family’s unique situation.
While helping has many advantages, it does need to be weighed against your personal long-term retirement goals. We can help you find the right level of assistance if that is one of your priorities.
If you have questions about which of these options fits your family’s plan, we’re always here to help you look at the details and determine a path that can meet your objectives.
Sources:
The White House: Landmark Dell Gift Supercharges Trump Accounts
IRS.gov: Tax Benefits for Education (Pub 970)
Fidelity: 529 Contribution Limits for 2026
Fidelity: Roth IRA for Kids Guide
IRS.gov: Gift and Estate Tax Exemptions for 2026
Invest America Trump Accounts https://investamerica.org/
IRS Newswire (IR-2026-42): IRS Announces 4 Million Children Signed Up for Trump Accounts.
