A new government-backed savings account for children called “Trump Accounts” is launching this summer, giving families another way to invest for their kids’ futures. But financial planners say many parents may still be better off using a tool that has existed for decades — the 529 college savings plan.

The bigger surprise: most American families aren’t using either one.

According to a recent Edward Jones report, only about 23% of parents currently use a 529 savings plan, despite its major tax benefits.

For everyday families, the issue comes down to something simple: how to save money for children in a way that grows over time without getting heavily taxed.

Starting July 4, 2026, children born between January 1, 2025 and December 31, 2028 will automatically qualify for the new Trump Accounts program. Eligible children will receive a one-time $1,000 deposit from the federal government to help jump-start savings.

Parents can then contribute up to $5,000 per year until the child turns 18.

The accounts are designed somewhat like retirement accounts for children. The money can grow through investments over many years, potentially helping with future expenses such as buying a home, retirement or other long-term needs.

But financial planners say 529 plans still offer stronger tax advantages if the primary goal is saving for education.

Here’s the key difference:

With a Trump Account:

• Parents contribute after-tax money.
• Investments grow over time.
• Withdrawals later are taxed as ordinary income.

With a 529 plan:

• Parents also contribute after-tax money.
• Investments grow tax-free.
• Withdrawals used for qualified education expenses are completely tax-free.

That distinction can make a huge difference over 10 to 20 years of investment growth.

“At its core, 529 plans are one of the best tax-advantaged ways for families to save for college,” said Andy Esser, a Certified Financial Planner at Edward Jones.

529 plans can typically be used for:

• College tuition
• Private K-12 education
• Apprenticeship programs
• Student loan repayment

Many states also offer additional tax deductions or credits for contributions to 529 accounts.

Still, Trump Accounts have one major advantage that immediately grabs attention: free government money.

“A free $1,000 for newborns makes Trump accounts a no-brainer,” JPMorgan wealth advisors wrote in guidance to clients.

Financial planners increasingly say the ideal setup for families who can afford it may be using both:

• A 529 plan for education savings
• A Trump Account for broader long-term wealth building

The challenge is that many families struggle to save consistently at all.

Rising housing costs, childcare expenses, inflation and retirement pressures often leave little money available for long-term child savings accounts.

That’s one reason participation in 529 plans remains surprisingly low despite decades of availability.

The new Trump Accounts program is also receiving criticism from both sides politically.

Some conservatives argue the government is creating another unnecessary savings program when existing options already exist.

Some progressives argue wealthier families will benefit most because they are the ones most likely to afford the additional annual contributions.

Financial advisors acknowledge that reality.

Families with higher incomes and the ability to consistently invest thousands of dollars annually are likely to see the greatest long-term gains from either program.

There are also investment differences between the accounts.

529 plans generally offer a wide variety of investment options, including age-based funds that automatically become more conservative as children approach college age.

Trump Accounts are expected to be more limited, with investments largely tied to broad stock index funds.

Some planners say that makes 529s easier for families specifically targeting college savings timelines.

Still, many advisors say the Trump Accounts could help introduce more Americans to long-term investing — especially families who otherwise might never open a dedicated savings account for their children.

The $1,000 federal deposit guarantees every eligible child begins life with at least some invested savings, regardless of family income.

Whether families continue contributing beyond that initial deposit may ultimately determine how meaningful the program becomes.

For now, financial planners say the main takeaway for parents is straightforward:

• If college savings is the priority, 529 plans usually provide the strongest tax benefits.
• If families want broader long-term savings flexibility, Trump Accounts may add value.
• And for many households, simply starting to save consistently matters more than choosing the “perfect” account.

— JBizNews Desk

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