Birth Gift of Stocks, Parents Can Contribute!
Author: Jin Shi Data
On Monday, Trump hosted a roundtable at the White House to promote a key provision in the Republican comprehensive domestic policy bill—providing a $1,000 investment account for every newborn in America.
According to a pilot program passed by the House of Representatives, the government will establish these accounts for all U.S. citizen children born between January 2025 and January 2029, calling them “Trump Accounts.”
The government-funded $1,000 will be deposited into an index fund linked to the entire stock market, managed by the child's legal guardian.
Each child's account will start with $1,000, and guardians or other private entities can contribute up to an additional $5,000 per year throughout the child's lifetime. These funds will be invested in an index fund that tracks the U.S. stock market.
Beneficiaries can withdraw 50% of the balance starting at age 18. From age 25, beneficiaries can withdraw the entire balance for qualified uses, including small business loans and higher education, and by age 30, beneficiaries can have full control over the entire balance for any purpose. These Trump savings accounts require post-tax contributions and are taxed at long-term capital gains or ordinary federal income rates upon withdrawal, which differs from the tax-free qualified withdrawals of 529 college savings accounts and Roth IRAs.
White House Press Secretary Karoline Leavitt stated, “The passage of the Beautiful Act will significantly change the lives of working-class and middle-class families across America, as it provides the largest tax cuts in history, increases the child tax credit, and creates an incredible new ‘Trump Account’ program, which will set young Americans on the right financial path.”
During Monday's event, House Speaker Mike Johnson emphasized the economic benefits of the “Trump Accounts,” including increased take-home pay for ordinary families and reduced red tape for small businesses.
The event took place in the White House State Dining Room, attended by executives from Dell, Uber, Altimeter Capital, ARM Corp, Salesforce, ServiceNow, Robinhood, and Goldman Sachs.
CEOs are expected to commit to investing billions of dollars into their employees' children’s “Trump Accounts.”
Michael Dell, CEO of Dell Technologies, attended the roundtable on Monday and said, “Establishing investment accounts for every child will provide substantial financial support for their education, home ownership, and starting a family. Dell Technologies will proudly match dollar-for-dollar government seed investments into these accounts for all children of Dell team members.”
He also stated, “This bold initiative included in the Reconciliation Bill, moving towards a fully owned society, will bring profound benefits to the nation.”
As the roundtable convened, the Trump administration was intensifying efforts to ensure the Senate passes the president's domestic policy package before July 4.
NBC News was the first to report on the event.
According to the latest data from the National Center for Health Statistics, there are 3.6 million births in 2023, and under the current government-funded $1,000 starting amount, the “Trump Accounts” will cost taxpayers $3.6 billion.
However, Trump claimed on Monday that the government funding would be “absolutely cost-free” for taxpayers, as it would be offset by measures from the Beautiful Act, including a 3.5% remittance tax on funds sent abroad.
Ann Reilley, CEO of Alpha Financial Advisors, told Yahoo Finance that “Trump Accounts” are “not very appealing” to parents or other guardians, adding, “It seems the Trump administration is complicating things for no reason.”
Financial experts are skeptical about whether the program is the best place for parents to save funds beyond the $1,000 free gift for their children, as the tax benefits of the program are relatively limited.
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