Working to build generational wealth can take time, which is why it is critical for parents to start saving for their children early in life. Local governments can play a key role in ensuring that their youngest residents are able to leverage all available resources to support their future. For many years, local leaders have been doing this work by creating Children’s Savings Account programs and encouraging city employees to take advantage of state 529 accounts. The passage of the federal 2025 H.R.1 (the One Big Beautiful Bill) Act created long-term wealth-building opportunities for children through the nation’s tax system. The creation of 530A Accounts, also known as Trump Accounts, as well as a pilot program that provides $1,000 in the accounts of eligible children born between January 1, 2025, and December 31, 2028. City leaders can work to make families aware of these accounts and encourage them to utilize this mechanism for wealth building.
What are 530A Accounts?
Launched in July 2026, 530A Accounts, named for the section of the tax code that authorized them, are structured similarly to a traditional Individual Retirement Account (IRA). However, they are designed for children to begin building wealth at birth. The accounts are held under a child’s name, with the parent or guardian serving as the custodian. Funds are invested in broad-based index funds. Federal tax incentives encourage investments by families, nonprofit organizations, state and local governments, employers or other entities. Similar to 529 accounts, 530A accounts do not require the beneficiary to have an earned income, and there is no income limit for participation.
Since these accounts are intended to accelerate wealth, accounts are managed by a parent or guardian until the child turns 18 and beneficiaries are prohibited from making withdrawals before that time. 530A accounts are more flexible than 529 accounts in that they can be used for qualified education activities, the purchase of a first home, to build or launch a business, or be moved into savings within a different retirement product. As 530A accounts are traditional IRAs, taxes must be paid when the money is withdrawn or rolled into a different investment.
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