A mom in Baby Step 5 (save for your children’s college fund) called The Ramsey Show with a question many parents are wrestling with 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 to 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.”
Why the 529 Savings Plan Wins Specifically for College Savings
Ramsey and co-host George Kamel have a strong case. The advantage comes down to three levers: tax treatment, contribution room, and investment 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.”
There is also a structural constraint that Kamel’s point only hints at. During a child’s “growth period” (birth through age 17), Trump Account funds must be invested in low-cost U.S. equity index funds tracking the S&P 500 or a similar broad domestic index, with expense ratios capped at 0.10%. Parents cannot choose individual stocks, bonds, international funds, or most actively managed options. A 529 plan, by contrast, typically offers a full menu of mutual funds that the account owner can switch when performance lags.
Consider a parent putting $300 a month into a 529 for 15 years, with the account growing to roughly $90,000 and about $36,000 of that in investment gains. Pulling those funds out for tuition, room and board, or books produces zero federal tax on the gains. Run the same dollars through a taxable brokerage account, and those gains get hit with long-term capital gains rates when sold. For a family in the 15% capital gains bracket, that is roughly $5,400 handed to the IRS on the same investment performance.
On contribution room, Kamel drew the second line: “The 529 has way higher contribution limits. There’s really no practical limit compared to a Trump Account’s $5,000 a year. And the ESA is $2,000 a year.” That comparison holds up. The IRS sets no annual cap on 529 contributions, though contributions above $19,000 per donor per beneficiary in 2026 require gift tax reporting. Trump Accounts are capped at $5,000 per child per year from all contributors combined, and Coverdell ESAs remain capped at $2,000 per beneficiary regardless of who contributes. Always verify your specific limits with a tax professional before making large deposits.
Ramsey also addressed the concern that a 529 traps you in underperforming funds: “The proper 529, the ones we like and recommend, will allow you to select the mutual fund to put in the 529, and if it’s underperforming, you could deselect it and select a different one. And just like you could do with a Roth IRA or something like that, same exact process.” That fund flexibility is something Trump Accounts simply cannot match during the growth years.
The 529 Only Makes Sense After Parents Fund Their Own Retirement
Kamel was direct that parents must put their own financial security first: “Parents need to be investing 15% into their own retirements first. Then save for college next, because that’s coming up a whole lot sooner than your kid’s retirement.” The sequencing matters because retirement savings enjoy tax advantages and, in most cases, decades of compounding runway that college savings simply cannot match.
Where Trump Accounts Still Fit
None of this means Trump Accounts are without merit. Enrollment has reached more than 7 million children as of late July 2026, with Treasury Secretary Scott Bessent calling it the most successful government program launch in history. The $1,000 federal seed deposit, available to children born between January 1, 2025, and December 31, 2028, is genuinely new money for families who claim it. And for parents who have already maxed their retirement contributions and their 529, a Trump Account adds another tax-deferred vehicle with a long growth runway before distributions begin at 18. For the specific question this caller asked, though, Ramsey’s answer was straightforward: the account you already have, funded consistently, beats chasing the shiny new option.
The Bottom Line
For parents saving specifically for college, the 529 Savings Plan offers the strongest combination of tax-free growth, high contribution limits, and broad investment control. Trump Accounts and ESAs have a place in a family’s broader financial picture, but Ramsey’s advice is clear: fund your own retirement first, then keep contributing to the college account you already have.
Editor’s note: This article was updated to reflect the Trump Account enrollment figure of more than 7 million children as reported by the U.S. Treasury in late July 2026, up from the 6 million cited at the program’s July 4 launch. Context on Trump Account investment restrictions (limited to low-cost U.S. equity index funds during the growth period) and the 2026 529 gift tax exclusion threshold of $19,000 per donor were also added.
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