Parents and grandparents of children born between January 1, 2025, and December 31, 2028, may have access to a new planning opportunity: a one-time $1,000 federal contribution to a Trump (530A) Account established for an eligible child. At first glance, $1,000 may not seem particularly significant. However, when that contribution is combined with annual family funding and decades of tax-deferred investment growth, the long-term impact can be substantial.
While the government contribution is the headline, for estate planning purposes, the more important story may be what families can do after that initial deposit.
A New Wealth Transfer Vehicle
The recently enacted 530A Account rules create a new option for families seeking to transfer wealth to younger generations. Prior to the enactment of the One Big Beautiful Bill Act, families generally relied on custodial accounts, 529 plans, trusts, and direct gifts to move assets to children and grandchildren. 530A Accounts add another tool to that planning toolkit.
Under current law, eligible children may maintain a 530A Account funded by parents, grandparents, employers, and others. Contributions generally are limited to $5,000 per year, and investment growth accumulates on a tax-deferred basis. Certain children born between January 1, 2025, and December 31, 2028, may also qualify for the one-time $1,000 federal contribution.
The Estate Planning Opportunity
While the federal contribution has attracted much of the attention, the more significant estate planning benefit may be the ability to begin shifting future appreciation to younger generations at an early age.
Consider a grandparent with several grandchildren. Rather than waiting to make larger transfers later in life, the grandparent could contribute the annual maximum amount to each grandchild’s 530A Account beginning when the child is young. Although the annual contribution limit is relatively modest, tax-deferred growth combined with a lengthy investment horizon may result in meaningful account values by adulthood.
From an estate planning perspective, each contribution removes assets from the donor’s estate while transferring future appreciation to the younger generation. The earlier contributions begin, the greater the potential amount of growth that occurs outside the donor’s taxable estate. For families focused on multigenerational wealth planning, that feature may ultimately be more valuable than the initial $1,000 government contribution.
530A Accounts Are Not a Substitute for Traditional Estate Planning
Families should avoid viewing 530A Accounts as a replacement for traditional estate planning structures. Under the statutory framework, the beneficiary ultimately gains control over the account. Parents and grandparents cannot impose the same level of asset protection, distribution controls, or creditor protection provisions that a properly drafted trust can provide.
In addition, annual contributions remain subject to statutory limits. Current law generally limits contributions from individuals and employers to a combined $5,000 annually, with certain inflation adjustments scheduled in future years.
For larger wealth transfers, business succession planning, asset protection planning, special needs planning, and long-term multigenerational wealth preservation, revocable and irrevocable trusts will continue to play a central role.
A Useful New Tool—Not a Complete Solution
530A Accounts are unlikely to replace sophisticated estate planning strategies. They may, however, provide a simple and tax-efficient way to begin transferring wealth to younger generations at an early age while allowing decades of potential investment growth.
For families with children or grandchildren who may qualify for the $1,000 federal contribution, now may be an appropriate time to evaluate whether 530A Accounts should be incorporated into their broader gifting, tax, and estate planning strategy. The Estate Planning Attorneys at Berliner Cohen, LLP would be happy to guide you through the estate planning process and discuss incorporating 530A Accounts into your overall estate plan. Please contact Joseph H. Feldman at (408) 286-5800 or joseph.feldman@berliner.com.
