Prioritizing Trump Accounts, 529 Plans, and UTMAs

Every family we work with is trying to do the same thing: give their kids, or grandkids, a real head start. That means the confidence to take a chance on a business, the freedom to choose meaningful work over a bigger paycheck and a running start into adulthood. That kind of opportunity is worth more than a guaranteed life or a pile of money sitting in an account. That is the goal. Everything below is just mechanics in service of it.

Where Families Get Stuck

A client with four kids asked us recently where to start. Between Trump Accounts, 529 plans, and UTMAs, that could mean twelve accounts for one family. A Trump Account converts again at 18, automatically becoming a traditional IRA. Here is the rule that actually limits you: the IRS lets you give any one child up to $19,000 a year without filing a gift tax return or touching your lifetime exemption ($38,000 if you and a spouse both give). That limit applies across everything you contribute to that child combined: one shared ceiling for every account you fund.

For a family with four kids, funding every account to that ceiling for every child adds up to $76,000 a year. Most families lack that kind of cash flow, and most can reach the goal above without it.

Decide what amount actually gets your family there, and let that be your baseline.

How to Actually Prioritize

1. Claim the free money first. Open a Trump Account regardless. If your child was born between 2025 and 2028, the federal government adds $1,000 at no cost to you.

2. Settle the education question next. Expect to pay for private school or college? Fund the 529. Unsure? Fund it lightly. Even if it goes unused, the first $35,000 converts tax-free into a Roth IRA later.  You can also change beneficiaries between the family without penalty. 

3. Decide how “locked-away” the rest should be. Want your child to be able to use it for anything, at any age? Add to a UTMA. Want it untouchable until retirement? Add more to the Trump Account beyond the free seed.

A Couple of Things Worth Asking

Is a meaningful inheritance likely down the road? That can change how hard you need to push today. Do you own a business? A growing number of employers now match contributions to Trump accounts for their employees' children, creating a business deduction.

The conversation behind these accounts matters more than the accounts themselves. The rules will likely keep evolving.

The question we started with stays the same: what kind of start do you want for your kids?

We would love to talk it through.

Clarke Norvell, JD, CPA

Partner

Price Consulting