Roth IRA, HSA, and Trump Accounts for Maryland Teachers
Three Accounts That Can Help Maryland Teachers Build Family Wealth Beyond the Pension
You spend your career building financial security for your students' futures. Building your own family's financial foundation often gets treated as secondary, something to address after the school year, after the grading, after the holidays. The pension will be there. The 403(b) contributions are automatic. That feels like enough.
For most Maryland teachers, it is not enough, and the gap is not a personal failure. It is a structural reality. The pension replaces a portion of your income. It does not cover your children's long-term financial future or your own healthcare costs in retirement.
That is where a handful of underused accounts can make a meaningful difference, and two of them are genuinely new territory worth understanding now.
Why Diversifying Beyond the 403(b) Makes Sense
Your 403(b) and your Maryland Teachers' Pension are both pre-tax, income-based vehicles. When you retire, most of your income will be taxable. That concentration is a tax risk, not just a savings strategy gap.
Adding accounts with different tax treatments, different timing rules, and different beneficiaries gives your family more flexibility across different life stages and different income years. The three accounts below are worth understanding in that context.
Account 1: The Roth IRA
What It Is
A Roth IRA is an individual retirement account funded with after-tax dollars. You contribute money you have already paid taxes on, and in exchange, the growth and qualified withdrawals in retirement are tax-free.
Why It Matters for Teachers
Most teachers retire into a meaningful pension plus Social Security income. That income is taxable. A Roth IRA sitting alongside those sources gives you a tax-free bucket to draw from when you need to manage your tax bracket in retirement or cover a large expense without triggering additional taxable income.
Roth IRAs have no required minimum distributions for the original account owner, which means the money can continue to grow tax-free for as long as you choose not to withdraw it. That is a material advantage over the 403(b) and traditional IRA, both of which require distributions beginning at age 73.
Key Numbers for 2026
The contribution limit for 2026 is $7,500, or $8,600 for those age 50 and older. To make a full contribution as a single filer, your modified adjusted gross income must be below $153,000. For joint filers, the threshold is below $242,000.
One Caveat for Higher-Earning Teachers
If your income exceeds those limits, a strategy called the backdoor Roth IRA may allow you to access the same tax-free growth by contributing to a traditional IRA first and then converting. This involves additional steps and tax considerations, and is worth reviewing with an advisor before executing.
Account 2: The Health Savings Account (HSA)
What It Is
An HSA is a tax-advantaged savings account available to individuals enrolled in a qualifying high-deductible health plan (HDHP). It is designed for healthcare expenses but functions as one of the most flexible long-term savings tools available.
The Triple Tax Advantage
HSAs offer a triple tax benefit: contributions reduce your taxable income, growth of the account is tax-deferred, and distributions for qualified medical expenses are tax-free. No other commonly available account type combines all three.
An HSA is owned by the individual, so you never forfeit an unused balance or lose it if you change employers. That portability matters particularly for educators who may change districts, reduce hours, or retire earlier than expected.
Why Healthcare Planning Is Urgent for Teachers
Most Maryland teachers retire before Medicare eligibility at age 65. That gap, which can run several years, requires funded healthcare coverage. An HSA built up over a working career can help bridge that period without drawing down retirement accounts or triggering taxable income unnecessarily.
After age 65, withdrawals for non-medical expenses are taxed as ordinary income, functioning similarly to a traditional IRA. Before that point, non-medical withdrawals carry a 20% penalty in addition to ordinary income tax.
Key Numbers for 2026
For 2026, the maximum HSA contribution for individual coverage is $4,400, and $8,750 for family coverage. Those age 55 or older can contribute an additional $1,000.
The primary limitation: you must be enrolled in an HDHP to contribute. If your school district's health plan is a traditional low-deductible plan, you are not eligible to contribute to an HSA while enrolled in it.
Account 3: The Trump Account (New in 2025)
What It Is
Trump Accounts are a newly created tax-advantaged savings vehicle for minors, established as part of legislation signed in 2025. When the beneficiary turns 18, the account automatically becomes a standard IRA, at which point normal IRA withdrawal and penalty rules apply.
How It Works
Families can contribute up to $5,000 annually beginning July 4, 2026. Minors do not need earned income to receive contributions, and Trump Account contributions do not affect traditional IRA or Roth IRA limits for the contributor.
Children born in the United States between January 1, 2025 and December 31, 2028 may qualify for an initial $1,000 federal deposit, but families must specifically elect the contribution using Form 4547 or the online tool at trumpaccounts.gov.
Whoever files Form 4547 becomes the responsible party and controls investment decisions and account management until the child's 18th birthday.
Why Teachers Should Pay Attention
For Maryland educators with young children, this account creates a long runway. A child born in 2025 has 18 years before the account converts to an IRA and decades of compound growth potential from that point. The $1,000 federal seed contribution for eligible children, combined with consistent annual contributions, could build a meaningful foundation for a child who has never held a job.
Employers may also contribute up to $2,500 per employee toward the Trump Accounts of an employee's dependents, tax-free. Amounts above $2,500 are treated as taxable income. It is worth confirming whether your school district intends to offer this benefit.
One important planning note: contributions from someone other than the beneficiary are expected to be treated as gifts for tax purposes. Contributions above the annual gift tax exclusion ($19,000 in 2026) may require filing Form 709. Confirm the details with a tax professional before making large contributions.
How These Three Accounts Work Together
Each account fills a different role in a family financial plan.
| Account Type | Best For | Tax Structure | Key Limit (2026) |
|---|---|---|---|
| Roth IRA | Your tax-free retirement income | After-tax in, tax-free out | $7,500 ($8,600 age 50+) |
| HSA | Healthcare costs, now and in retirement | Pre-tax in, tax-free out for medical | $4,400 individual / $8,750 family |
| Trump Account | Your child's long-term savings | Tax-deferred; converts to IRA at 18 | $5,000 per child |
Where to Start
None of these accounts replaces the foundational planning work: confirming your pension projection, reviewing your 403(b) allocation, and understanding how Social Security now fits into your retirement picture after the WEP and GPO repeal. But layering one or more of these accounts onto that foundation can meaningfully expand your family's flexibility.
Review your current health plan enrollment to assess HSA eligibility. If you have a child born in 2025 or later, look into opening a Trump Account before the federal seed deposit window closes. If your income is within the Roth IRA eligibility range, consider opening or increasing contributions before the 2026 tax year closes.
A complimentary consultation with Paladin Advisor Group can help you assess which accounts make sense given your income, health plan, family structure, and existing savings. Our financial planning approach is built around coordinating these decisions rather than treating each account in isolation.
Frequently Asked Questions
Can Maryland teachers contribute to a Roth IRA if they also have a pension and 403(b)?
Yes. Roth IRA eligibility is based on your earned income level, not on whether you participate in other retirement plans. As long as your modified adjusted gross income falls within the IRS limits and you have earned income, you can contribute to a Roth IRA alongside your pension and 403(b).
What is the difference between an HSA and a flexible spending account (FSA)?
Both offer tax advantages for healthcare expenses, but they work differently. An FSA is typically use-it-or-lose-it each year. An HSA balance rolls over indefinitely, is owned by you rather than your employer, and can be invested for long-term growth. To contribute to an HSA, you must be enrolled in a qualifying high-deductible health plan.
Who is eligible for the $1,000 federal seed deposit in a Trump Account?
Children born in the United States between January 1, 2025 and December 31, 2028 may be eligible. Families must elect the contribution by filing IRS Form 4547 or using the online tool at trumpaccounts.gov. The deposit does not happen automatically.
Can grandparents or other relatives contribute to a Trump Account?
Yes. Trump Accounts can receive contributions from sources other than the child's parents. Those contributions are expected to be treated as gifts for tax purposes and may require filing a gift tax return if they exceed the annual exclusion amount. Consult a tax professional if you are considering large contributions from multiple family members.
Does opening a Trump Account affect Roth IRA contribution limits?
No. According to CLA's guidance on Trump Accounts, Trump Account contributions do not affect traditional IRA or Roth IRA limits for the contributor.
When does it make sense to prioritize an HSA over increasing 403(b) contributions?
This depends on your current health expenses, your time horizon, and your tax situation. If you are healthy, have a financial cushion for out-of-pocket costs, and are enrolled in a qualifying high-deductible plan, maximizing HSA contributions can offer a tax advantage that exceeds what you get from additional 403(b) contributions. A fiduciary advisor can help you model the trade-off based on your specific numbers.
What happens to a Trump Account if the child never uses it for retirement?
At age 18, the account converts to a standard traditional IRA. The account owner can then manage it as they would any IRA, subject to standard IRA rules for contributions, distributions, and required minimum distributions beginning at age 73.
PlanMember Securities Corporation and Paladin Advisor Group are not associated with or endorsed by The Social Security Administration or any other government agency. This information is a general overview of certain rules related to Social Security and the ideas presented are not individualized for your particular situation. This information is based on current law which can be changed at any time.
This content is developed from sources believed to be providing accurate information. It is not intended to provide specific tax, legal and/or investment advice or recommendations for any individual. It is suggested that you consult with your tax, legal and/or financial services professional regarding your individual situation. This material was developed and produced by Paladin Advisor Group to provide information on a topic that may be of interest.
