Meet the New Grandbaby… and the New Financial Planning Questions
Remember those old Kodak carousel slide shows?
You know the ones. A family gathering would suddenly turn into an hour-long viewing session of vacation photos, complete with the hum of the projector, the clicking slides, and everyone politely pretending to be fascinated by pictures of the Grand Canyon.
Today, we’ve traded carousel projectors for smartphones. And while vacation photos still make the rounds, many of us have moved on to something even more irresistible: grandbaby pictures.
As Dave Simon humorously admits, he’s officially joined the club. With the arrival of his first granddaughter, Annabelle (“Belle” for short), he’s now one of those grandparents who can’t help but show off every adorable photo and video.
But beneath the proud-grandparent teasing is an important financial planning question:
How can parents, grandparents, and even great-grandparents help create a stronger financial future for the next generation?
That brings us to two powerful tools that every family should understand:
- 529 College Savings Plans
- Trump Accounts (new as of July 2025)
While both can help build wealth for children, they serve very different purposes. Understanding how each works can help families create a more complete education and retirement strategy for their children and grandchildren.
529 Plans: One of the Most Powerful Education Savings Tools Available
What Is a 529 College Savings Plan?
A 529 plan is a tax-advantaged investment account designed primarily to help families save for education expenses.
For many financial advisors, retirement planners, and wealth management professionals, 529 plans remain one of the most valuable tools available for multigenerational planning.
The good news? Nearly anyone can contribute.
Parents, grandparents, relatives, family friends, or even generous neighbors can help fund a child’s educational future.
The account is owned and managed by an adult, while the child serves as the beneficiary.
529 Plan Contribution Limits in 2026
Under current gift tax rules, individuals can contribute up to the annual gift tax exclusion amount without triggering gift tax reporting requirements.
As Dave notes, the 2026 annual gift exclusion is currently $19,000 per person, per beneficiary.
That means multiple family members can contribute meaningful amounts toward a child’s future education expenses while remaining within federal gifting guidelines.
Families considering larger contributions should discuss potential gift tax implications with a qualified financial advisor or tax professional.
The Biggest Advantage: Tax-Free Growth and Tax-Free Withdrawals
One reason 529 plans remain so popular among parents and grandparents is their powerful tax treatment.
Similar to a Roth IRA:
- Investments grow tax-deferred
- Qualified withdrawals are tax-free
- Earnings are never taxed when used appropriately
For families planning ahead for rising college costs, this tax-free growth can make a significant long-term difference.
Qualified Education Expenses Include More Than Just College
Many people still think 529 plans are only for college tuition.
That’s no longer the case.
Qualified expenses can include:
- College tuition
- Room and board
- Books
- Computers
- School supplies
- Certain educational fees
In addition, recent rule changes expanded flexibility by allowing funds to be used for K–12 private education expenses, subject to annual limits.
This gives families more options when creating comprehensive education funding strategies.
What Happens If the Child Doesn’t Use All the Money?
This is one of the most common questions financial advisors hear about 529 plans.
Fortunately, modern 529 rules are much more flexible than many people realize.
Option 1: Transfer the Funds to Another Family Member
Unused funds can typically be transferred to another qualifying family member without taxes or penalties.
Potential beneficiaries may include:
- Siblings
- Cousins
- Nieces
- Nephews
- Other eligible relatives
For families with multiple children, this flexibility can be incredibly valuable.
Option 2: Roll Unused Funds Into a Roth IRA
One of the most significant recent enhancements to 529 plans is the ability to transfer unused funds into the beneficiary’s Roth IRA.
Currently, up to $35,000 may be rolled from a 529 plan into a Roth IRA, subject to annual Roth contribution limits and other eligibility rules.
This creates an outstanding backup plan.
If a child receives scholarships, chooses a less expensive college, or doesn’t use the full balance, those funds may still help jump-start retirement savings decades earlier than many people begin investing.
That’s a powerful financial planning opportunity.
Option 3: Future Home Purchase Flexibility May Be Coming
Dave highlights a legislative proposal that could eventually allow unused 529 assets to be used toward a first-time home purchase without penalties.
Although not currently available, the concept has received bipartisan interest because of the growing housing affordability challenges facing younger generations.
If enacted, this could make 529 plans even more versatile.
Option 4: Leave the Money for Future Generations
Here’s the strategy many families overlook.
A 529 plan doesn’t have an expiration date.
If Belle doesn’t use all her education savings, she could someday transfer the remaining balance to her own child.
In other words, a 529 plan can become a true multigenerational wealth-building vehicle.
That’s one reason many affluent families view 529 plans as a long-term family legacy planning tool rather than simply a college savings account.
New Trump Accounts: A Different Kind of Investment Opportunity
What Is a Trump Account?
One of the newest developments in family financial planning is the introduction of Trump Accounts, which became available beginning July 2025.
While there has been significant discussion surrounding these accounts, many people misunderstand their intended purpose.
Unlike a 529 plan, a Trump Account is not primarily designed for education savings.
Instead, it functions more as a long-term retirement-building vehicle for children.
Who Is Eligible?
Any child under age 18 may have a Trump Account established on their behalf.
However, families should understand the distinction regarding eligibility for government seed funding.
According to Dave’s explanation, children born between:
- January 1, 2025
- December 31, 2028
may qualify for the initial government-funded contribution provisions associated with the program.
Contribution Limits
The structure is relatively straightforward:
- Initial seed contribution may apply for eligible children
- Up to $5,000 annually can be contributed
- Certain employers may contribute an additional $2,500 annually
- Contributions stop at age 18
At that point, the account effectively transitions into a traditional IRA framework.
Why Trump Accounts Are Better for Retirement Than Education
The key distinction is access.
A 529 plan is designed to fund education expenses.
A Trump Account is designed for retirement.
Because the account ultimately functions similarly to a traditional IRA, distributions generally aren’t intended until retirement age.
Withdrawals are typically subject to the traditional IRA rules governing retirement distributions.
In other words:
529 Plan Goal
Education funding
Trump Account Goal
Long-term retirement savings
That’s why Dave views the two accounts as complementary rather than competitive.
The Smart Strategy: Use Both When Possible
For families with the resources to save, the most effective approach may not be choosing one account over the other.
It may be using both.
A 529 plan helps prepare for:
- Private school
- College tuition
- Educational expenses
A Trump Account helps prepare for:
- Long-term retirement security
- Decades of compound growth
- Future financial independence
Together, they create a more complete financial foundation for the next generation.
As Dave puts it, he hopes to see Belle use her 529 funds someday. Whether he’s around to see her access retirement assets decades later is another story. But that doesn’t change the desire to help provide every possible financial advantage.
That’s exactly how many grandparents feel when approaching legacy planning.
Final Thoughts: A Gift Future Generations May Never Forget
Whether you’re a parent welcoming your first child, a grandparent celebrating a new grandbaby, or even a proud great-grandparent, today’s planning decisions can have a lasting impact.
The 529 plan remains one of the most effective education savings strategies available, offering tax-free growth, flexible beneficiary changes, and even Roth IRA rollover opportunities.
Meanwhile, the new Trump Account introduces another way to help children begin building retirement wealth decades before most people ever think about investing.
The bottom line?
These accounts aren’t rivals—they’re teammates.
When used strategically, they can help support both education goals and lifelong financial security.
Want to Learn Which Strategy Makes the Most Sense for Your Family?
Every family’s situation is different. Before opening a 529 plan, a Trump Account, or both, consider speaking with a qualified financial advisor who can help evaluate your goals, tax situation, and long-term legacy plans.
Your future child, grandchild, or great-grandchild may someday be incredibly grateful that you started planning today.
