| Who should have one |
Lifelong savings vehicle for adults and children, no income limit |
Lifelong savings account for disability costs |
Savings accounts for children born between 1/1/2025 and 12/31/2028 |
| Purpose |
Education (K-12, college, grad school); professional development; student loans; retirement; funds are transferable among family |
Saving for individuals with disabilities without losing SSI, Medicaid, and other public benefits |
Long-term wealth building and eventual retirement |
| Are contributions tax-deductible? |
Yes, contributions are deductible from most state income taxes |
Yes, contributions are deductible from most state income taxes |
No |
| Grows tax-free? |
Yes |
Yes |
Yes |
| Tax-free withdrawals for qualified expenses? |
Yes |
Yes |
No; withdrawals are taxed as ordinary income (like a Traditional IRA) |
| Annual Contribution Limit |
$20,000 per account for single contributors; $40,000 for married; ability to superfund up to 5 years |
$20,000 from all sources combined (additional amounts for employed beneficiaries under the ABLE to Work Act) |
$5,000/year cumulative max
from all individual/employer sources
|
| Government Seed Money? |
State-dependent |
No |
Yes.
One-time $1,000
federal pilot program contribution for children born between Jan 1, 2025 and Dec 31, 2028
|
| Who Controls the Money? |
The Adult Account Owner (parent/guardian) keeps control indefinitely |
The individual with the disability (or their designated authorized representative) |
Fully owned by the child. The parent serves as custodian only until age 18, when control legally shifts to the child |
| Withdrawal Rules & Penalties |
Non-qualified withdrawals face income tax + a 10% penalty on earnings only |
Non-qualified withdrawals face income tax + a 10% penalty on earnings only |
Locked during childhood. At 18, the Trump Account converts to a Traditional IRA, which faces ordinary income tax + 10% penalty before age 59½ unless an exception applies |
| FAFSA / Financial Aid Impact |
None-to-low. Treated as a parent asset (assessed at max 5.64% in the Student Aid Index) |
None. Completely excluded from FAFSA calculations |
High. Treated as a student asset (assessed up to 20%), and future withdrawals count as student income |
