Saving for a child’s future is no longer a one-account decision. Families may now consider 529 education plans, ABLE accounts and the new Trump Account program. Each offers tax advantages, but each serves a different purpose.
For families raising a child with a disability, the choice is especially important because account ownership and withdrawals can affect SSI, Medicaid and other means-tested benefits.
The right answer may be one account, or a combination of several.
1. 529 Plans: Best for Education
A 529 plan is generally the natural starting point when the primary goal is to save for education.
Earnings grow tax-deferred, and withdrawals used for qualified education expenses are generally federally tax-free. Depending on the plan and applicable rules, qualified expenses can include college and vocational education, apprenticeships, certain K–12 expenses, educational therapies and other qualifying costs.
One of the biggest advantages of a 529 is control. The account owner generally controls when funds are withdrawn and may be able to change the beneficiary to another qualifying family member.
A 529 may also offer additional flexibility through certain rollovers, including a limited opportunity to move funds to a Roth IRA for the same beneficiary if specific requirements are met.
Important: A 529 does not receive the same public-benefits treatment as an ABLE account. For a child receiving or expected to receive SSI or Medicaid, ownership and withdrawals, then next two accounts should be considered and coordinated with the child’s other government benefits & assistance.
2. 529A or ABLE Accounts: Designed for Disability-Related Expenses
An ABLE account, also known as a 529A account, is specifically designed for an eligible individual with a disability. Beginning in 2026, the disability generally must have begun before age 46, subject to the other eligibility requirements.
ABLE accounts can pay for a broad range of qualified disability expenses, including:
• Housing and transportation
• Education and employment support
• Health and wellness
• Assistive technology
• Personal support services
• Legal and financial services
• Oversight and monitoring
• Funeral and burial expenses
This flexibility is one of the major advantages of an ABLE account. Unlike a 529, it is not limited primarily to education.
Even more importantly, ABLE accounts receive favorable treatment under many means-tested federal benefit programs. Special SSI rules apply, including a general $100,000 resource disregard for SSI purposes.
However, ABLE accounts require careful administration. Housing withdrawals, contribution limits and record keeping can affect benefits. In addition, states may have claims against certain remaining ABLE funds after the beneficiary’s death for Medicaid benefits paid after the account was established.
3. Trump Accounts: A New Long-Term Savings Tool
Trump Accounts are a new type of tax-advantaged account designed for children and generally intended for long-term investing.
Eligible children may have contributions made to the account, subject to federal rules and annual limits. A qualifying child may also be eligible for the new $1,000 federal pilot contribution.
The important distinction is that this is not a general-purpose childhood savings account. Ordinary withdrawals are generally restricted before age 18. After that, the account generally follows traditional IRA rules.
For families who can afford to set money aside for the long term, a Trump Account may be a useful supplement to a 529 or other savings strategy.
For a child with a disability, there is an additional planning opportunity: under certain circumstances, the entire Trump Account balance may be transferred to the child’s ABLE account during the calendar year the child turns 17. Because this is a narrow planning window, families should consider the decision well in advance.
So, Which Account Is Right?
There is no universal answer.
For a child without a disability:
• Education is the priority: Consider a 529 first.
• Long-term investing is the priority: A Trump Account may be a useful supplement.
• Both are important: A family may use both accounts for different purposes.
For a child with a disability:
• Preserving SSI or Medicaid is important: An ABLE account should generally be evaluated first.
• Long-term savings are desired: A Trump Account may provide another option but one needs to also have a well-thought out plan as the child approaches age 17 on how to deal with the conversion of this account at age 18 so SSI and Medicaid benefits are not jeopardized
• Significant gifts or inheritances are anticipated: A third-party special needs trust may be an important part of the overall plan.
The Bigger Picture: How These Accounts May Work Together
Each tool serves a different purpose. The best plan coordinates them rather than asking one account to do everything.
Final Takeaway
The right account depends on the child’s needs, disability status, family goals, expected expenses and potential reliance on public benefits.
For families of a child with a disability, these decisions should be considered as part of the child’s broader special needs and estate plan, rather than in isolation.
Before opening an account, contributing funds or moving money between accounts, families should consult an estate planning attorney, tax advisor and benefits professional to confirm the current federal and state rules and understand the potential impact on public benefits.
