530A terms, plainly defined

530A account ("Trump Account")

A tax-advantaged custodial investment account for minors created by the One Big Beautiful Bill Act of 2025 (IRC §530A). Money is invested in a low-cost U.S. index fund and grows tax-deferred; the child takes ownership at 18.

Federal seed

The one-time $1,000 contribution the federal government makes to a 530A for U.S.-citizen children born January 1, 2025 through December 31, 2028 who have a Social Security number.

Contribution cap

The $5,000-per-child-per-year limit on 530A contributions from all sources combined, expected to be indexed to inflation after 2027 (exact mechanics pending IRS guidance). Employer contributions count within it.

Basis

The total of after-tax contributions made to the account. Basis comes out tax-free at withdrawal; everything above it (the federal seed, employer money, and growth) is taxed as income when withdrawn.

Custodial account

An account an adult manages on behalf of a minor. The child is the legal owner; control transfers to them at the age set by law — 18 for a 530A.

Index fund

A fund that passively tracks a market index (like the S&P 500) instead of paying managers to pick stocks. 530A money must by law sit in low-cost funds tracking an index of primarily U.S. companies.

Expense ratio

The annual fee a fund charges, as a percentage of your balance. The default 530A-eligible funds charge about 0.03%/yr — $3 per year on a $10,000 balance.

Traditional-IRA treatment

What happens to a 530A at 18: it behaves like a Traditional IRA. Penalty-free withdrawals begin at 59½, with IRA-style exceptions before that, and earnings are taxed as income when withdrawn.

Roth conversion

Moving money from Traditional-IRA-like treatment into a Roth IRA, paying income tax now on the non-basis amount so that later growth and withdrawals are tax-free. An option for 530A owners after 18 — often attractive in a low-income year.

Kiddie tax

The rule that taxes a child’s investment income above a threshold at rates designed to stop income-shifting. It applies yearly to UTMA/UGMA custodial accounts — one reason tax-deferred accounts like the 530A can compound faster.

Nominal vs. real dollars

Nominal dollars are face values in the future; real dollars are adjusted for inflation into today’s purchasing power. This site defaults to real dollars so a projection for 2090 means something today.

Monte Carlo simulation

Running thousands of randomized market paths to show a range of outcomes instead of a single line. This site runs seeded simulations — the same inputs always reproduce the same percentile bands.

Variance drain

Why a bumpy sequence of returns averaging 7% grows less than a steady 7% every year: volatility drags on compounding. It is why the Monte-Carlo median sits below the smooth deterministic projection.

Percentile bands

The 10th/25th/50th/75th/90th percentile outcomes across simulated market paths. The 50th (median) is the middle outcome; the 10th–90th band shows the plausible range, not a guarantee.

Qualified class (pending)

The precise definition of investments eligible inside a 530A. Final details are expected in Treasury regulations (originally anticipated March 2026; still pending as of our last review); this site flags the item as unverified until then.

See the terms in action: the FAQ answers the common questions, the methodology shows exactly how the math works, and the Advanced Model lets you change every assumption yourself.