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, indexed to inflation after 2027. 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out tax-free at withdrawal; everything above it (the federal seed, employer money, and growth) is taxed as income when withdrawn.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 Penalty-free withdrawals begin at 59½, with IRA-style exceptions before that, and earnings are taxed as income when withdrawn.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 (anticipated March 2026); 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.