Latest news with #Section529
NDTV
5 days ago
- 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.
Yahoo
25-03-2025
- Business
- Yahoo
Budget panel endorses transfers to cover aid to University System
Mar. 25—House budget writers continued to make significant moves to balance its state budget plan Tuesday, using $20 million a year from the UNIQUE College Investing Plan to replace state aid to higher education and giving cities and towns $11 million less in state aid by capping what communities receive from the state's Room and Meals Tax. Other cuts included doing away with the state's Tobacco Prevention Program, the Human Rights Commission that considers civil rights complaints, and the Board of Land and Tax Appeals (BTLA) that hears disputes over property values. The three divisions of the House Finance Committee held marathon sessions Tuesday in hopes of getting through most of their recommendations. They all will likely meet Friday to complete their work so the full committee can craft final recommendations next week. Fidelity Investments manages the UNIQUE College Investing Plan, which allows families to create tax-free Section 529 college savings plans for their children. New Hampshire receives a "commission" from Fidelity that Gov. Kelly Ayotte in her budget said would yield the state $21.5 million in each of the next two years. Finance Committee Chairman Ken Weyler, R-Kingston, said using that money as state aid to the University System of New Hampshire would reduce the amount of tax and fee revenue needed to support the four-year college system. Weyler said the Legislature did such a transfer to balance its budget more than a decade ago. Rooms, meals and tobacco Under state law, cities and towns are to receive 35% of the state's tax on meals and hotel room rentals. Rep. Dan McGuire, R-Epsom, proposed and his subcommittee endorsed capping those grants at $137 million a year. This would mean they'll get $11 million less than forecasted over the next two years from this 8.5% tax. Eliminating the tobacco prevention program would save the state about $700,000 a year. Patricia Tilley, associate commissioner of the Department of Health and Human Services, said while cigarette smoking rates are down, vaping is on the rise, especially among young people. A House working group voted, 5-4, to reject a proposal to raise the cigarette tax from $1.78 to $2.20 and devote all of that increase to boost rates paid to health care providers in the Medicaid program. New Hampshire hasn't raised the cigarette tax since 2008. It's the lowest by far in New England. Maine has a $2.20 tax but its Democratic governor supports a state budget plan that would raise it to $3 a pack plus its sales tax that would bring total taxes to $3.30, Stringham said. Human rights, tax appeals Last month, budget writers received a harshly critical performance audit on the Human Rights Commission that highlighted a huge backlog of cases that take years to process. McGuire proposed to give the courts $2.6 million, creating two superior court judges, one to be in charge of human rights matters and the other to work on tax issues that the Board of Land and Tax Appeals now handles. Even with those judges, the proposed House budget still would direct judicial administrators to find $7.9 million in cuts to the spending plan Ayotte had put forward. klandrigan@
