A 529 plan is still the go-to tool for education savings. Contributions grow tax-deferred, and withdrawals are generally tax-free when used for qualified education expenses like college tuition, fees, books, and some K–12 costs. Most plans offer a menu of investment portfolios and allow you to change the beneficiary if one child does not use all the funds, which can be helpful for families with multiple kids. Minnesota also offers a state income tax deduction or credit for certain 529 contributions, adding a local tax benefit for some households.
Trump Account: long-term wealth starter
Trump Accounts are a newer, broad-purpose investment vehicle for children. Eligible kids born between 2025 and 2028 may receive a one-time $1,000 federal seed contribution if a parent or guardian makes the required election, and families can typically add up to $5,000 per year in after-tax contributions. Investments during childhood are generally limited to diversified stock index funds, with the goal of building long-term market exposure rather than specifically targeting education costs. Withdrawals are usually taxable, and the account is not restricted to education, making it more of a general wealth-building tool than a tuition strategy.
How might Minnesota families use both?
Your decision largely depends on the purpose of the dollars. If the primary goal is paying for college, trade school, or other qualified education expenses, a 529 plan often provides the stronger tax advantages and planning flexibility. When a child qualifies for the $1,000 federal seed money, opening a Trump Account can be an attractive complement—capturing the government contribution while using the 529 as the main education savings vehicle. Many families may ultimately blend the two: prioritizing 529 contributions for known education goals and using a Trump Account as an additional track for long-term, flexible savings for the next generation.
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