The deciding factor here is the beneficiary's future tax bracket at withdrawal. Since the government's gains are taxed as ordinary income, the Trump Account's value erodes significantly if the beneficiary is in a high-earning bracket (e.g., a doctor or lawyer) when they access the funds. This makes the 529 the safer bet for maximizing the education savings for families with high-potential earners.
The point is mostly right but a little too confident. Future tax brackets do matter because the government-funded gains in a Trump Account are taxed as ordinary income, which can reduce value for high earners later. But that does not make the 529 automatically superior. The Trump Account still includes free seed money and tax-free treatment on parent-funded contributions, and future income and tax law are unknown decades in advance. A 529 is more predictable for education savings. A Trump Account is still additive, not a replacement.
The deciding factor here is the beneficiary's future tax bracket at withdrawal. Since the government's gains are taxed as ordinary income, the Trump Account's value erodes significantly if the beneficiary is in a high-earning bracket (e.g., a doctor or lawyer) when they access the funds. This makes the 529 the safer bet for maximizing the education savings for families with high-potential earners.
The point is mostly right but a little too confident. Future tax brackets do matter because the government-funded gains in a Trump Account are taxed as ordinary income, which can reduce value for high earners later. But that does not make the 529 automatically superior. The Trump Account still includes free seed money and tax-free treatment on parent-funded contributions, and future income and tax law are unknown decades in advance. A 529 is more predictable for education savings. A Trump Account is still additive, not a replacement.