Question 1

Do I have to choose just one? Can I open both a Custodial Account and a 529 Account?

Accepted Answer

Yes, you can open both accounts. Many parents use a 529 Account for tax-advantaged education savings and a Custodial Account as their child’s first investing account for more flexible, long-term goals. With a Custodial Account, you can withdraw funds for anything that benefits your child—excluding expenses considered parental obligations, like food and shelter —until account ownership transfers to them (as early as 18, but this varies by state). Once the account is theirs, they have full control and can use the money for anything.

Question 2

Is there a fee?

Accepted Answer

We charge a low 0.25% advisory fee for both our Custodial Account and our 529 Account, regardless of account size. 529 Accounts also include a state administration fee, and Nevada residents may be eligible for discounts. The weighted average cost of the ETFs in our recommended portfolios ranges from 0.04% to 0.14%, depending on your level of risk and tax profile.

Question 3

Will Wealthfront always harvest up to $1,350 of gains each year?

Accepted Answer

The amount of gains harvested each year depends on factors such as available gains in the account, dividends and applicable state tax limits. In a small number of states (PA, MO, HI, IN), Wealthfront may harvest less than $1,350 to help avoid creating additional state tax filing requirements. You can also opt out or customize your custodial account’s Tax-Gain Harvesting settings to your preferred level based on your child’s particular situation.

Question 4

What’s the difference between a Custodial Account and a 530A Trump Account?

Accepted Answer

530A Trump Accounts and Custodial Accounts both let you invest for your child, but they’re designed for different purposes and have different tax treatments.

A Trump Account is designed to give your child an early start on retirement savings. Investments are typically limited to broad U.S. index funds. Additionally, funds in a Trump Account are typically locked up until the child turns 18. Afterward, account ownership transfers to your child and it gets treated like a traditional IRA. This means investment earnings can grow tax deferred, but most early withdrawals (before age 59.5) are subject to taxation and penalties, unless being used for an exception, like a first home.

A Custodial Account offers more flexibility when investing for your child. You can withdraw funds for (practically) anything that benefits your child until account ownership transfers to them (as early as 18, but this varies by state). While Custodial Accounts aren’t tax-advantaged accounts, children can take advantage of 0% federal taxes on up to $1,350 of unearned income each year, and a 0% federal tax rate on up to an additional $1,350 of long-term capital gains and qualified dividends, depending on their income. Wealthfront’s Custodial Account automatically looks for opportunities to take advantage of these tax benefits by increasing your child’s cost basis over time, to help reduce the taxes they owe in the future (when they eventually sell). Once ownership transfers, your child has full control of the account and can use the money for anything—or continue investing.

You can see a more detailed breakdown on our blog.

Question 5

Can I transfer over an external 529 Account or Custodial Account into Wealthfront?

Accepted Answer

Yes! You can transfer, or “roll over,” savings from another 529 Account into a Wealthfront 529 Account, or from another Custodial Account into a Wealthfront Custodial Account. Your investments may be rebalanced after the transfer to align with your portfolio which may result in taxable gains or losses.

Question 6

What expenses can I use a 529 Account for exactly?

Accepted Answer

Qualified higher education expenses include tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance, room and board during any academic period in which the beneficiary is enrolled at least half-time, and certain expenses for students with special needs. Keep in mind that you will need to report 529 account spending to the IRS, so keeping a detailed record is important.

Additionally, 529 plans also qualify for up to $10,000 per year for K-12 education, as well as computers, software or internet access and related services, if used primarily by the beneficiary during any of the years they are enrolled at an eligible educational institution. You can learn more about the specifics of eligible expenses on IRS Publication 970.

Question 7

What state backs your 529 Account?

Accepted Answer

Wealthfront offers a 529 plan (also known as a qualified tuition plan) in partnership with the state of Nevada. If you live in Nevada we’ll manage your first $25,000 for free! If you don’t live in Nevada, you can still open a Wealthfront 529 account regardless of where you live. Because 529 tax benefits vary by state, it’s worth exploring whether your state offers additional tax advantages for contributing to a state-administered 529 plan.

Question 8

What do I need to know about gift taxes when contributing to a Custodial Account or a 529 Account?

Accepted Answer

Any Wealthfront client can open and contribute to a Custodial Account or 529 Account for any eligible minor in the US. Contributions to both Custodial Accounts and 529 Accounts are legally considered “gifts” to the child and are subject to federal gift tax rules. However, families can contribute up to the annual gift tax limit each year without owing a gift tax. These limits, shown below, are per child per year.

2026 federal gift tax exclusions:
• $19,000 per child for individuals
• $38,000 per child for married couples
• Additionally, parents may choose to superfund a 529 Account and contribute up to 5 years when they open the account—$95,000 per parent or $190,000 for married couples

Question 9

Does a 529 Account or a Custodial Account impact my child’s financial aid?

Accepted Answer

Yes, but it depends on your household income and some other factors. Typically, a 529 Account has less impact on financial aid since these funds remain in parental control. A Custodial Account may impact your child’s ability to qualify for financial aid since these assets legally belong to your child for future use.

	Custodial Account	529 Account	530A Trump Account
Use it for	Their first investing account—or to help with their first car, a down payment or nest egg	Saving for college and K-12 education expenses	Saving for a child’s retirement, with a $1,000 government contribution for eligible children born between 2025–2028
Tax treatment	Pay no federal taxes on up to $1,350 in unearned income (e.g. investment gains) each year. An additional $1,350 in long-term gains and qualified dividends may also qualify for a 0% federal tax rate if your child has little or no other income	Tax-free growth on withdrawals when used for qualified educational expenses; state tax benefits may also apply	Tax-deferred growth; taxes apply when funds are withdrawn
Contributions	No annual contribution limits although regular gift tax limits apply	Lifetime contribution limit varies by state	Up to $5,000 per year
Ownership rules	Transfers to child as early as 18 (age varies by state)	Parent stays in control	Transfers to a traditional IRA in child’s name at age 18
	Open a Custodial Account	Open a 529 Account	Wealthfront does not currently offer Trump Accounts. The information shown is included to help you compare account options and how they may be used together, based on your goals.

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