Meritage Periodical July 2026

Prompting critical thinking and conversations around issues in our industry.
Not intended as personal financial advice.

530A: A New Framework for Building Generational Wealth

A 530A account is a tax-advantaged investment account established for children under age 18. The account is opened in the child's name, with a parent or guardian serving as custodian until adulthood, and the menu of investment options is limited to broad U.S. equity index funds.

These new accounts were launched on July 4, 2026. While the media has generally referred to them as "Trump Accounts," they actually grew out of the Invest America Foundation created by Brad Gerstner, philanthropist and CEO of Altimeter Capital. He built the Invest America Foundation with his sons to promote financial literacy and education. He has also been instrumental in recruiting philanthropists and corporations to contribute to these new 530A accounts.

In our view, these accounts represent one of the most significant additions to family financial planning in decades. 530A accounts will connect future generations with the power of saving, investing, and compound growth. The ambition of these accounts is to help bridge the wealth gap and have more Americans directly participate in the country’s economic growth.

Contribution Rules and Government Funding

Any eligible U.S. child under age 18 with a Social Security number may have a 530A account established on his or her behalf. A special pilot program provides a one-time $1,000 federal contribution for children who are U.S. citizens born between January 1, 2025 and December 31, 2028.

The U.S. Treasury introduced a dedicated mobile application, called Trump Accounts, intended to simplify enrollment and ongoing contributions. The app generates a unique QR code that can be shared with family members, friends, employers, and others who wish to contribute. This functionality essentially modernizes gifting and creates a simple mechanism for birthdays, holidays, graduations, and other milestones.

Additional contribution rules include:

•  Annual contributions from family members, friends, and employers are currently limited to $5,000 per year, subject to future inflation adjustments.
• Employers may contribute up to $2,500 annually through an approved employer contribution program, with those contributions counting toward the overall annual limit, but without creating taxable income for the employee.
• Philanthropists may also make qualifying contributions, with the option to benefit children in specific zip codes and age brackets. Donors can make contributions using cash or transfer approved publicly traded company stock.
• Funds generally cannot be withdrawn prior to the year the beneficiary turns 18.

The result is an account structure specifically designed to maximize the impact of long-term compounding over a child's formative years.

What Happens at Age 18?

When a beneficiary turns 18, the account automatically converts into a Traditional Individual Retirement Account (IRA). At this point, the child gains full legal ownership and control over all investment and distribution decisions.

For many families, this may create an opportunity for a child to begin adulthood with an already-established investment account and years of compounding behind them.

Specific changes and rules that take effect include:

• Contribution Halt: New contributions to the 530A account generally cannot be made after December 31st of the year prior to the child turning 18.
• Investment Freedom: The requirement to invest only in pre-selected funds is lifted. The beneficiary can choose to manage the converted IRA with a wider range of investments.
• Withdrawal Rules: The account transitions to standard Traditional IRA rules. After-tax contributions can generally be withdrawn tax-free, but investment earnings and government seed money are taxed as ordinary income upon withdrawal.
• Early Withdrawal Penalty: Withdrawals taken before the age of 59 1/2 may trigger a 10% early distribution penalty, though exceptions apply (such as using the funds for qualified higher education expenses or up to $10,000 toward a first-time home purchase).

Our Perspective

As financial advisors, we believe 530A accounts deserve serious consideration from nearly every family with children. The combination of government seed money for those eligible, tax-deferred growth, potential employer contributions, philanthropic support, simplified gifting, and the extraordinary power of long-term compounding creates a compelling opportunity. Families that establish and consistently fund these accounts early may provide their children with far more than investment capital—they may provide them with a lifelong connection to saving, ownership, and financial confidence