Quick Read
Dave Ramsey dismissed Trump Accounts as a branding exercise and told a caller to keep using her 529 plans for college savings.
529 withdrawals for education are completely tax-free, while Trump Account gains count as taxable income, costing a family roughly $5,400 more in taxes.
Parents should hit 15% retirement contributions before funding any college account, since children can borrow for school but parents cannot borrow for retirement.
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A mom in Baby Step 5 (save for your children’s college fund) called The Ramsey Show with a question many parents are asking after the recent Trump Account launch. She and her husband already had 529 College Savings Plans open for their two daughters, ages 10 and 20, each holding about $1,500. Her question was: “We were debating whether to get an ESA or do the Trump Accounts, not the $1,000, but the regular investing. And I wanted to know your thoughts on which one we should get.” They clarified they wanted to know where they should be putting regular contributions, not whether or not they should open an account and accept the free $1,000.
Dave Ramsey’s answer was blunt. “I would just keep using your 529s.“ On the newer option, he added: “The Trump Accounts are all right, but largely it’s a Trump thump-my-chest thing… It’s not like it’s something really substantially earth-shatteringly new, other than it’s got a big T on it for him.”
A 529 savings plan offers specific advantages over a Trump Account when the money is used for education. However, Trump Accounts are still a valuable initiative that certainly can earn a place in a family’s broader financial toolkit.
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Why the 529 Savings Plan Still Beat Trump Accounts Specifically for College Savings
Ramsey and co-host George Kamel are right. The reason comes down to three levers: tax treatment, contribution room, and control. Kamel put the tax point plainly: “The Trump Accounts are going to be taxable income. The 529, if used for college, is completely tax-free and it stays in your control. As far as the financial benefits, the 529 wins every time.”
