The One Big Beautiful Bill Act created a new savings account for kids, nicknamed a Trump account. It is not a 529 replacement. It is not a miracle. It is one more bucket, with its own rules.
Who it is for
A child under 18. The account is invested and grows without annual tax on the gains. Generally, no distributions are allowed before the year the child turns 18. After that, the account follows the traditional IRA rules.
What goes in
Employers can put in up to $2,500 per year for an employee's child, and that amount is excluded from the employee's income. For the business, it is a benefit expense. Contributions have been allowed since July 4, 2026. Total contributions from parents, relatives, and employers are capped at $5,000 a year per child, indexed after 2027. An employer's up to $2,500 counts toward that cap. You open the account by filing Form 4547, online through your IRS account, with your tax return, or by mail. The child needs a Social Security number and must be under 18. U.S.-citizen children born from 2025 through 2028 can also get a one-time $1,000 federal pilot deposit. The account is a traditional IRA for the child, and family contributions aren't deductible.
If you own the business
An S-Corp or partnership owner can fund contributions for employees' children as a benefit, not a bonus. Worth pricing out if you are competing for staff in LA. Stack it. The annual gift tax exclusion and a 529 still do more heavy lifting for tuition. Run payroll and ownership facts past your CPA first. Family employment rules trip people up.
Trump account vs 529
A 529 wins on education: tax-free qualified withdrawals and high funding room. California gives no state income tax deduction for 529 contributions, so the federal tax-free growth is the main benefit here. A Trump account is more flexible on what the money eventually pays for. Most families I see should max the 529 for tuition and treat the Trump account as a small, long-horizon add-on.
The honest read
This is a modest account with a long lock-up. Useful, not transformative. Set it up because it fits your plan, not because of the name on it.
If you have kids and a closely held business, a short conversation is usually enough to see whether this belongs in your 2026 plan. Book a consultation.