Latest news with #MAGAAccounts
NDTV
07-07-2025
- Business
- NDTV
Trump Accounts Explained: Who's Eligible, How Much And When Can One Withdraw
US President Donald Trump has unveiled a new proposal to create $1,000 investment accounts for children born in America between 2025 and 2028. The "Trump Accounts" or "MAGA Accounts", as they are called, aim to provide long-term financial support to future generations. The program is a part of the " One Big Beautiful Bill," which also includes a broad tax-cut package and government spending. The bill has already passed the House of Representatives with the Trump Accounts provision included, but now faces resistance in the Senate. What are Trump's accounts? Every baby born in the US between January 1, 2025 and December 31, 2028, will be seeded with a one-time $1,000 contribution from the government into an investment account. Parents and families can also contribute up to $5,000 annually to each account. Where will the funds go? The funds will be invested in a US stock index and grow over time with the market. These funds can later be used by children for education, vocational studies or buying a home. When can you withdraw the amount? Account holders will be allowed to make partial withdrawals when they turn 18, access the full amount at age 25, but only for specific purposes, such as paying for higher education or taking a loan to start a small business and gain full access to the funds at age 30 to use it for any purpose. Who controls the account until the child reaches 18? Parents or the child's legal guardians manage the account until the child reaches 18 and becomes eligible to use the funds. Who is eligible to open Trump's account? To open an account, the child's guardian or parent must have a Social Security number and be authorised to work in the US. Why do financial experts voice concerns over the new bill? Unlike Section 529 of the Internal Revenue Code, a tax-advantaged savings plan, Trump Accounts offer no tax deductions for contributions, and earnings are taxed as ordinary income. Financial adviser Amy Spalding said she continues to recommend 529 plans to clients, citing their greater flexibility, broader investment choices, and superior tax advantages. What would be the cost of the program? Considering that about 3.6 million babies are born in the US every year and each will get $1,000 under the scheme, the cost of the program is expected to be around $3 billion per year, according to Time Magazine.
Bloomberg
13-06-2025
- Business
- Bloomberg
How ‘Trump Accounts' With $1,000 Savings for Babies Would Work
The multi-trillion dollar tax and spending bill moving through Congress includes an unusual provision: the creation of a new savings vehicle dubbed 'Trump accounts' that would be seeded with $1,000 for each American baby born in the next few years. The funds were originally known as ' MAGA Accounts ' but renamed in the legislation narrowly approved by the House of Representatives in May. Under the bill, now under consideration by the Senate, the accounts would be invested in US equities and locked up until the child turns 18. They're meant to defray the costs of higher education, training programs, small business loans or first-time home purchases.
The Hill
12-06-2025
- Business
- The Hill
What a $1,000 baby bond buys, and why one and done isn't enough
A new federal proposal included in the administration's 'one, big, beautiful' bill would provide a one-time deposit of $1,000 to every child born between 2025 and 2028 through Trump Accounts — previously known as the Money Account for Growth and Advancement, or MAGA Accounts. While the name has changed, the underlying proposal remains the same. It's a welcome sign that lawmakers on both sides of the aisle continue to recognize the value of starting early when it comes to building financial security. There's longstanding bipartisan support for investing in children from birth. Back in 2006, then-Sen. Jeff Sessions (R-Ala.) introduced a Portable Lifelong Universal Savings Account — a PLUS Account — modeled after the federal thrift savings plan, with an initial $1,000 deposit and a $5,000 annual contribution limit. More recently, Sen. Cory Booker (D-N.J.) reintroduced the American Opportunity Accounts Act, commonly known as baby bonds, which would seed $1,000 into an account for every child born after Dec. 31, 2023. The most recent Trump Account draws from a proposal by Sen. Ted Cruz (R-Texas) and would invest that $1,000 in an index fund. It's been nearly two decades since that first proposal, and Congress is still circling the same starting number. Imagine how much stronger families could be today if, instead of restarting the conversation, we had built on it. There's broad recognition that raising a family has never been more expensive and that the rising cost of essentials is contributing to declining birth rates. Recent estimates show that families spend between $15,000 to $21,000 in a child's first year alone, covering diapers, formula, baby gear, and child care. These aren't optional extras, they're baseline costs of parenthood. Baby food and formula costs rose 8.7 percent from January 2023 to January 2024, outpacing overall inflation. Diapers remain a major strain on household budgets, with 1 in 3 struggling to afford them even before the pandemic, and 1 in 4 now reporting they've had to miss work or school due to diaper needs. Child care is another overwhelming expense. In nearly every state, the cost of full-time infant care exceeds $14,000 a year, which is more than 10 percent of median household income. KPMG estimates that the cost of daycare and preschool has surged by 263 percent since 1990. On top of that, tariffs could raise prices on cribs, car seats and strollers by as much as 128 percent, according to S&P Global. These are basic safety items, not luxury goods, and they're increasingly out of reach. None of these costs can be meaningfully addressed by a one-time Trump Account, or by baby bonds or PLUS Accounts alone, but they shape the reality into which these proposals are introduced. Families grappling with steep costs today are far less likely to contribute to long-term savings accounts, even with a $1,000 head start. That's why policies like the Trump Account must be viewed not as stand-alone solutions, but as part of a comprehensive strategy to help families meet today's demands while planning for tomorrow's opportunities. The Trump Account would represent a step forward in how the government invests in family and long-term financial stability. It shares a key idea with prior proposals: the earlier the investment, the greater the return. There are, however, important differences in design. Baby bonds were proposed as government-funded accounts invested in a bond with an anticipated 3 percent annual return, receiving ongoing contributions, especially for children from households with limited financial resources, and these distinctions are a constructive differentiator. The Trump Account, by comparison, offers a one-time government deposit to be invested in an index fund, which has the potential for a higher rate of annual return, and because it is tied to the stock market, also carries additional risk. As a one-time deposit, it is not yet a full solution because it lacks the consistent annual investment to make its potential a meaningful tool for financial growth for children who are born into families without wealth. This ongoing investment matters. With inflation driving up prices and wages failing to keep pace, families need more than symbolic gestures. They need tools that build over time and bridge the gap between short-term help and long-term financial security. This is not just about individual families. It's about national economic potential. The Institute for Women's Policy Research estimates that if women participated in the workforce at the same rate as men, it could add $4.3 trillion to the U.S. economy this year. But that participation depends on the affordability of child care, baby essentials and family stability, areas where rising costs continue to hold parents back. The Trump Account reflects growing awareness that financial opportunity begins at birth. But if we're serious about building economic resilience, we must ensure that early investments are designed to grow and to last. Ongoing investment, like in the baby bonds and PLUS Account proposals, offers a path forward that is practical, scalable and rooted in research. If we want to give every child a real chance at economic mobility, it's not just about when and where we invest. It's about how we follow through. Marisa Calderon is the president and CEO of Prosperity Now.
CNBC
11-06-2025
- Business
- CNBC
The pros and cons of a $1,000 baby bonus in 'Trump Accounts,' according to experts
President Donald Trump's proposal for a new savings account for children with a one-time deposit of $1,000 from the federal government just got an important stamp of approval. At the "Invest America" roundtable at the White House this week, several top CEOs, including Michael Dell and Goldman Sachs chief David Solomon, expressed support for "Trump Accounts," which are part of the landmark Republican-backed "big beautiful bill" moving through Congress. The executives committed to contributing to the accounts of their employees' children, and, in Dell's case, matching the government's seed money "dollar for dollar." Still, policy experts and financial advisors question whether the provision is the most effective way to save on behalf of your child. Under the House measure, Trump Accounts — previously known as "Money Accounts for Growth and Advancement" or "MAGA Accounts" — can later be used for education expenses or credentials, the down payment on a first home or as capital to start a small business. Earnings grow tax-deferred, and qualified withdrawals are taxed at the long-term capital-gains rate. More from Personal Finance:Trump's 'big beautiful' bill could curb low-income tax creditWhat a 'revenge tax' in Trump's spending bill means for investorsWhat's happening with unemployed Americans — in 5 charts Trump's massive tax and spending bill still faces a battle in the Senate, but if it passes as drafted, parents and others will be able to contribute up to $5,000 a year to a child's Trump Account. The balance would be invested in a diversified fund that tracks a U.S.-stock index. Sen. Ted Cruz, R-Texas, who spearheaded the effort, told CNBC in May that the accounts give children "the ability to accumulate wealth, which is transformational." "This will afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning," the White House also said in a statement Monday. Some experts say the biggest benefit of Trump Accounts is the seed money for all children born between Jan. 1, 2025, and Jan. 1, 2029, funded by the Department of the Treasury. There are no income requirements. To be eligible, the child must be a U.S. citizen and both parents must have Social Security numbers. Although some states, including Connecticut and Colorado, already offer a type of "baby bonds" program for parents, Trump Accounts — along with a bigger child tax credit proposed in the budget bill and potential employer-sponsored matching funds — "could certainly help a lot of families at a lot of different income levels," Sam Taube, NerdWallet's lead investing writer, recently told CNBC. Invested in a broad equity index fund for 20 years, a $1,000 government grant for newborns could grow to an average $8,000, according to a March report from the Milken Institute. "If the policy also permitted a tax-deductible match by employers of the children's parents, such initial matches would double an account's value," researchers wrote. Depositing $1,000 into an account "is a good idea, but with a critically important caveat," said Mark Higgins, senior vice president at Index Fund Advisors and author of "Investing in U.S. Financial History: Understanding the Past to Forecast the Future." With Trump Accounts, "the costs are the key," he said: "If it keeps adding to the deficit, it is not sustainable." (By some accounts, the program could cost more than $3 billion a year.) "The biggest challenge for this country right now is that we have lived beyond our means," he said. "Over the last 230 years, Congress has passed countless programs like this, which provide short-term benefits that are almost invariably dwarfed by the long-term costs." Universal savings accounts, which allow for more flexibility, would be a better proposal than the House provision, said Adam Michel, director of tax policy studies at the Cato Institute, a public policy think tank. Universal savings accounts have had bipartisan support going back as far as the Clinton administration, and without the initial deposit, would come a much lower cost. They have also been successfully implemented in other countries, including Canada and the United Kingdom, according to the Tax Foundation. Further, Trump Accounts are "overly restricted and needlessly complex," Michel said. "A simpler system is a better way to get people to save." With a universal savings account, individuals could contribute up to $10,000 of after-tax income a year and withdraw the funds tax-free at any time for any purpose, according to Michel. "It's the flexibility that entices people," he said. "Maybe you want to use that money to start or expand a business or buy a house or an investment property — let people choose what's best for their lives." Another alternative is a tapping 529 college savings plan, which nearly every state offers. These 529 plans have much higher contribution limits, earnings grow on a tax-advantaged basis, and when a child withdraws the money, it is tax-free if the funds are used for qualified education expenses. This year, individuals can gift up to $19,000 to a 529, or up to $38,000 if you're married and file taxes jointly, per child without those contributions counting toward your lifetime gift tax exemption. Although there are more limitations on what 529 funds can be applied to compared to Trump Accounts, restrictions have loosened in recent years to include continuing education classes, apprenticeship programs and student loan payments. "For most parents, like myself with teens, the 529 college savings plan is superior if you're focused on paying for higher education because of the federal tax-free growth," Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California, recently told CNBC. "Also, now, the 529 is becoming more flexible with its' ability to have unused funds rolled into a Roth IRA in the future for retirement," said Sun, a member of CNBC's Financial Advisor Council. As of 2024, families can roll over unused 529 funds to the account beneficiary's Roth individual retirement account, without triggering income taxes or penalties, so long as they meet certain requirements.
News18
11-06-2025
- Business
- News18
One Big Beautiful Bill: Why Is Donald Trump Pushing Cash For American Babies?
Last Updated: President Trump proposed "Trump Accounts" under his tax cut bill, offering $1,000 tax-exempt investment accounts for babies born between 2025-2028. In a significant move aimed at enhancing the lives of American babies, US President Donald Trump has proposed a new initiative under his tax cut bill which he calls 'One Big Beautiful Bill". President Trump talked about a provision in his tax and spending bill that proposes opening investment accounts for every American baby born during his current presidential term. Referred to as 'Trump Accounts", the new tax-exempt investment accounts will benefit American babies belonging to families of all income levels. Trump Accounts: One-Time Contribution Of $1,000 The new plan is a part of the broader tax reform package, and it aims to provide a one-time contribution of $1,000 from the federal government to a tax-deferred account for each American baby born between January 1, 2025, and December 31, 2028. These accounts will be designed to track the overall stock market and will be managed by the child's guardians until the child turns 18. The program also has the provision for parents to contribute up to $5,000 annually to the account, with contributions being tax-free. When Can Child Avail Funds? Earlier on Monday, the US president explained the benefits of the program during a roundtable, noting that the funds will be invested in mutual or index funds tied to the stock market's performance, offering the potential for growth over time. The money would only be available when the child turns 18 and could be used for a down payment on a home, education, or starting a small business. However, the money would be subject to higher taxes if used for other purposes. When the child turns 30, the full balance of the account would be available for withdrawal. This initiative focuses on helping young Americans build wealth and secure their financial future, though the long-term impact remains uncertain. The plan, initially called 'MAGA Accounts," has drawn mixed reactions, but it represents a significant shift in how the federal government might support future generations. Estimated Budget For Proposed Plan As per estimates, US witnesses about 3.6 million births each year so the cost could exceed $3 billion annually, the Washington Post reported. So far, no cost estimates have been released for the program by the Republicans. First Published: June 11, 2025, 09:58 IST
