530A TRUMP Accounts and How are they Divided in a Divorce

What Is a Trump Account?

530A accounts, commonly known as Trump accounts, are a new type of tax-advantaged savings and investment account introduced under the One Big Beautiful Bill Act (passed in 2025). These accounts function as a special form of traditional individual retirement account (IRA) but are designed specifically for children under age 18.

Trump Accounts provide children with a head start on long-term savings and investing; the funds are owned by the child with parents or guardians functioning as custodians of the accounts until the child emancipates at age 18. These accounts have only been available for a few months; with contributions not possible until July 2026 onward in most cases. Parents can open these accounts by making an election on IRS Form 4547 or via a website: trumpaccounts.gov.

‍

How Trump Accounts Grow

These types of investments grow without current taxes on earnings (dividends, capital gains, etc.), similar to a traditional IRA. This allows compounding over many years—potentially decades—for greater long-term value. Once the child turns 18, the account transitions to standard traditional IRA rules. A child can continue growing it tax-deferred, make contributions (if they have earned income), or withdraw funds (taxed as ordinary income; some penalty-free uses like first-time home purchase may apply under IRA rules). More traditional 529 accounts are limited to K-12 tuition and have less flexibility relative to spending options.

‍

Are Trump Accounts Subject to Division in a Michigan Divorce?

Michigan follows equitable distribution rules for marital property: not necessarily a strict 50/50 split, but a fair division of property based on various factors. 530A plans are generally treated as marital assets like IRAs, if contributions were made during the marriage using marital funds (e.g., income earned by either spouse while married).

The law in Michigan as set forth in Sparks v Sparks, 440 Mich 141, 485 NW2d 893 (1992), sets forth the relevant factors a family court will consider in any property division are:

• Length of the marriage;
• Contributions of each spouse to the marital estate;
• Ages of the parties;
• Health of the parties;
• Life status of the parties, i.e. employed, retired, disabled;
• Necessities and circumstances of the parties;
• Earning ability of the parties;
• Past relations of the parties;
• Interruption of the personal career or education of either party; and
• General principles of equity.

This means the 530A account is subject to division as part of the overall property settlement in a divorce, similar to other assets like bank accounts, retirement funds, or real estate.

‍

Who Owns the Account?

The child is the beneficiary, but the account is legally owned and controlled by the account owner (usually one parent), not the child. This ownership aspect is key because 530A plans typically allow only one owner, and the owner has significant control (e.g., changing beneficiaries or taking distributions, subject to tax rules). So, what are the options to divide 530A accounts when going through the divorce process?

‍

Options for Dividing a Trump Account in Divorce

Parents and courts frequently use these approaches (often negotiated in a settlement agreement to avoid court decisions):

Keep the Account Intact but Add Protections.

One parent remains the owner (often the custodial parent, as recommended by some experts for financial aid reasons). Such an agreement normally contains safeguards in the Judgment of Divorce, such as:

• Requiring both parents' written consent for withdrawals, beneficiary changes, or ownership transfers.
• Mandating that funds be used only for the child's qualified education expenses.
• Allowing the non-custodian parent to receive account statements.
• Prohibiting changes to benefit other children (e.g., future stepchildren). This preserves tax advantages and the original intent.

Splitting the Account.

Divide the balance into two (or more) separate 529 accounts, often proportionally (e.g., 50/50 or based on contributions/other factors). The original owner transfers a portion via rollover to a new 529 account owned by the other parent (same or different beneficiary/child). Both parents then control their own account and can continue contributing. Many state 529 plans allow this per divorce decree instructions. This gives both parents control and incentive to contribute further.

Freeze or Restrict the Account.

Agree to "freeze" the account: no new contributions, but existing funds grow and can only be used for the child's education. This prevents misuse while keeping tax benefits intact in the event of a divorce.

Stipulate Future Use and Contributions.

In the divorce agreement, instruct your lawyer to:

• Specify how/when funds will be used (e.g., for college costs before other parental obligations).
• Require ongoing contributions from one or both parents (potentially tied to child support).
• Address ownership changes (e.g., transfer to the child at a certain age or upon college completion).

Other Options.

• Liquidate and divide proceeds (triggers taxes/penalties thus, this option is usually avoided).
• Offset by assigning other marital assets to balance value so that one spouse maintains control over this asset.
• One parent opens a new 530A for the child (your children can have multiple plans).

In sum, the division of 530A accounts has similar considerations to other custodial accounts in the event of a divorce and special consideration would be taken into account on how to fairly divide them and manage them even after entry of a Judgment of Divorce.

‍

We Can Help

If you are facing the prospect of divorce and have tax deferred assets like 530A accounts in your portfolio, contact our office to discuss your legal options. We offer a free in-person legal consultation.

‍

Post #317

Trump Accounts | divorce | property division | Sparks v Sparks

‍