Which Savings Options are Right for Your Family?
When you’re planning for your child’s future, choosing the right savings path can feel overwhelming. New options continually become available, including the recently introduced Trump Account, alongside well-established education savings tools like 529 plans.
While both accounts can help families build savings over time, they’re designed for different purposes and offer unique tax advantages. Understanding how they work can help you decide which option best fits your family’s goals.
What Is a 529 Plan?
A 529 plan is specifically designed to help families save for education. Contributions grow tax-free, and withdrawals remain tax-free when used for qualified education expenses.
Florida offers two complementary 529 options that give families flexibility based on how they want to save.
Florida Prepaid 529 Plan
The Florida Prepaid 529 Plan allows families to lock in the cost of future college tuition and dormitory housing at today’s prices.
Highlights include:
- Protected by the State of Florida
- 100% of your plan value is protected
- Fixed monthly payments starting as low as $29 per month
- Purchase coverage in one-year increments
- Full refund if student plans change
- Benefits can be used at eligible public, private, trade and technical schools nationwide
One unique advantage is protection from rising tuition costs. Even if tuition increases over time, your purchased plan benefits keep their value. If your family later moves out of Florida, your child can still return to attend a Florida public college or university using their Florida Prepaid Plan and qualify for in-state tuition.
Florida Investment 529 Plan
The Florida Investment 529 Plan offers a flexible, investment-based approach for families who want their savings to grow over time.
Benefits include:
- Earnings grow tax-free
- Tax-free withdrawals for education expenses
- Multiple investment options based on your goals and risk tolerance
- Funds may be used nationwide for qualified education expenses, including tuition, fees, books, room and board
- Up to $20,000 per year may be used for K-12 tuition
- Eligible unused funds may be rolled into the beneficiary’s Roth IRA after 15 years, subject to IRS requirements and lifetime limits
What Is a Trump Account?
Trump Accounts, available beginning July 4, 2026, are long-term investment accounts for children under age 18. Trump Accounts are a type of individual retirement account (IRA), and they are designed to encourage saving for a child’s future, but they are not education savings accounts.
Some key features include:
- Annual contributions are capped at $5,000 per child.
- Investments grow tax-deferred, meaning you don’t pay taxes on earnings while the money remains in the account.
- All earnings are taxed as ordinary income when withdrawn, regardless of how the money is ultimately used.
- Eligible children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 federal seed contribution, subject to program requirements.
| Feature | Trump Account | Florida 529 Plans |
|---|---|---|
| Primary purpose | Long-term; retirement savings | Education savings |
| Tax treatment while saving | Tax-deferred growth | Tax-free growth |
| Tax treatment at withdrawal | Earnings are taxed as ordinary income regardless of how funds are used | Qualified education withdrawals are tax-free |
| Education-specific benefits | No | Yes |
| Contribution limit | $5,000 annually | No annual limit; maximum account balance $500k, subject to state plan rules* |
| Investment options | U.S. Stock index funds only | Wide variety of investment options (Investment Plan) or prepaid tuition and dormitory coverage (Prepaid Plan) |
| Protection from tuition inflation | No | Yes, with the Florida Prepaid Plan |
| Can be used nationwide | Yes | Yes |
| FAFSA Impact | Yes | Minimal |
* The aggregate maximum account balance for all Florida 529 plans for the same student is $500,000.
Which Account Makes Sense for Education Savings?
If your goal is helping pay for education, 529 plans remain the most tax-efficient and education-focused way to save. Florida families have the flexibility to choose a Prepaid 529 Plan, an Investment 529 Plan, or combine both to achieve the smartest savings strategy.
Since 1988, Florida Prepaid’s goal has been to help make saving for college affordable and attainable for all Florida families. Build your perfect college savings strategy in minutes!
