A Trump Account looks like simple arithmetic — a seed deposit, a contribution cap, a growth rate. The problem is that its withdrawal treatment does not resemble the other child-savings vehicle most people already know, a 529 plan, and a quick by-hand estimate tends to borrow that plan's rules by habit.
| Step | Common mistake by hand | What this calculator does |
|---|---|---|
| Withdrawal taxation | Assumes the whole balance is tax-free for a qualified use, generalizing from a 529 plan. | Applies the IRA-style pro-rata rule: only individual contributions are basis and come out tax-free; the seed, employer money, and all growth are taxed as ordinary income. |
| Which dollars come out first | Assumes you can withdraw your own tax-free contributions first, leaving taxable money in the account. | Applies the same tax-free/taxable ratio to every withdrawal, exactly as the pro-rata rule requires. |
| The $2,500 employer sub-cap | Treats it as $2,500 of room on top of the $5,000 total, for $7,500 combined. | Applies the employer's $2,500 sub-cap INSIDE the shared $5,000 annual limit, and shows the room left for everyone else. |
| Early access | Assumes at least the family's own contributions can be withdrawn before 18 if needed. | Applies the statutory rule directly: no distribution of any kind before age 18, regardless of who contributed it. |
| Is anything I enter uploaded anywhere? | N/A | No. The calculator runs entirely in your browser; nothing is sent to a server. |
Assuming a Trump Account works like a 529 plan, where the whole balance comes out tax-free for a qualified use. It does not -- only money an individual contributed is basis and comes out tax-free; the $1,000 seed deposit, any employer contribution, and every dollar of investment growth are taxed as ordinary income on withdrawal, no matter what the money is used for.
Assuming you can choose to withdraw your own tax-free contributions first and leave the taxable money sitting in the account. The IRA pro-rata rule does not allow that -- every withdrawal is part tax-free and part taxable, in the same ratio as your basis is to the total account value, every time, until the account is empty.
Treating the $2,500 employer contribution limit as separate from the $5,000 total. It is not additional room -- an employer's $2,500 counts INSIDE the shared $5,000 annual cap, so it leaves only $2,500 for everyone else that year, not $5,000.
Assuming the account works like a custodial brokerage account that a parent can tap early if needed. No distribution of any kind -- not even of money the family contributed -- is permitted before the account owner turns 18, and a hand estimate often assumes at least the family's own contributions could be pulled out sooner.
No. Neither this calculator nor a by-hand worksheet built from this page knows your full return -- other deductions, credits, or state tax treatment, which most states have not yet ruled on for a Trump Account. Both apply the same published federal seed-deposit rule, contribution caps, and pro-rata withdrawal formula to the numbers you enter; verify against the IRS's own guidance or a qualified tax professional before relying on either.