Ohio families now have another option to help save for their children’s future.
The new federally backed “Trump Accounts” officially launched July 4, allowing parents to open investment accounts for children under 18. Babies born between 2025 and 2028 are also eligible for a one-time $1,000 government contribution.
But while the new accounts have generated national attention, Ohio already has a long-running savings program designed to help families prepare for education expenses.
Officials with Ohio’s CollegeAdvantage 529 plan say the two programs aren’t mutually exclusive, and parents don’t necessarily have to choose one over the other.
“They certainly can be in both programs,” said Dave Kemp, interim executive director of Ohio’s CollegeAdvantage program. “There’s no issue with that.”
How do Trump Accounts work?
Created under President Donald Trump’s One Big Beautiful Bill Act, Trump Accounts are investment accounts owned by a child but managed by a parent or guardian until the child turns 18.
Any child younger than 18 can have an account, but only U.S. citizens born between 2025 and 2028 qualify for the federal government’s $1,000 “seed” contribution.
Families and others can contribute up to $5,000 per year to the child’s account. The money is invested in index funds and generally cannot be withdrawn until the child reaches adulthood.
Beginning July 4, parents can apply online through trumpaccounts.gov using IRS Form 4547.
How are Trump Accounts different from Ohio’s CollegeAdvantage plan?
While both programs help families save money, they’re designed with different goals in mind.
CollegeAdvantage, Ohio’s 529 savings program established in 1989, is specifically intended to help families save for education expenses.
“It’s really designed as an education savings account,” Kemp said.
Money saved through the plan can be used tax-free for qualified expenses ranging from K-12 tuition and apprenticeship programs to college costs, graduate school, certain student loan repayments and, under certain conditions, Roth IRA rollovers.
Trump Accounts, on the other hand, are designed for broader, long-term savings goals.
“They’re kind of designed a little bit differently,” Kemp said, noting the accounts can be used for education, retirement and a first home.
Another major difference involves taxes.
Ohio residents who contribute to CollegeAdvantage can deduct up to $4,000 per beneficiary each year on their Ohio state income taxes, Kemp said. Trump Accounts do not include a comparable state tax deduction for contributions.
CollegeAdvantage also allows account owners to transfer unused funds to another eligible family member if the original beneficiary doesn’t pursue higher education.
“Trump Accounts don’t offer that level of flexibility,” Kemp said.
In addition, the Ohio program offers more than 20 investment options, while Trump Accounts currently begin with a single default investment option, with additional choices expected later.
Do parents have to choose one or the other?
Not necessarily.
Kemp said families are allowed to participate in both programs and should think first about what they hope to accomplish before opening an account.
“I think each family has different goals and objectives,” Kemp said. “We’d encourage them to do the research of both types of accounts and determine which one works best for them, or if both of them work best for them.”
He also recommends families speak with a financial adviser or tax professional if they’re unsure which option best fits their situation.
Why should Ohio families start saving early?
Whether families choose a Trump Account, Ohio’s CollegeAdvantage plan or both, Kemp said the most important step is simply getting started.
“Our goal is really to help families save for what their education needs are and find a way to not have an extreme amount of student debt,” Kemp said of Ohio’s 529 College Advantage plan.
For parents considering Ohio’s 529 plan, Kemp said many are surprised by how much flexibility it offers.
If a child decides not to attend college, families can transfer the account to another eligible family member, roll funds into a Roth IRA if IRS requirements are met, or withdraw the money, though taxes and penalties may apply in some cases.
Another common misconception, Kemp said, is that Ohio’s CollegeAdvantage plan can only be used at schools in the state.
“It is not just limited to Ohio,” Kemp said.
Funds can be used at accredited colleges, universities and other eligible educational institutions nationwide that participate in federal financial aid programs.
Families considering a Trump Account should also know that children born before 2025 aren’t eligible for the federal government’s $1,000 seed contribution, but they can still open an account if they are younger than 18.
Those accounts may also qualify for future charitable or private contributions, including a recently announced pledge from philanthropists Michael and Susan Dell to contribute $250 for eligible children under age 10 who meet certain requirements.
Ultimately, Kemp said families should evaluate their long-term goals before deciding which savings option – or combination of options – makes the most sense.
“I think each family has different goals and objectives,” he said. “We’d encourage them to do the research of both types of accounts and determine which one works best for them, or if both of them work best for them.”
Trending reporter Amani Bayo can be reached at abayo@dispatch.com.
This article originally appeared on The Columbus Dispatch: Trump Accounts are here. Here’s what Ohio parents should know
Reporting by Amani Bayo, Columbus Dispatch / The Columbus Dispatch
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By Amani Bayo, Columbus Dispatch | USA TODAY Network
