President Donald Trump unveiled a proposed investment account program for newborn children named after him as part of his Big, Beautiful Bill. The President officially announced the “Trump savings accounts” during the Invest America roundtable alongside Dell CEO Michael Dell, Goldman Sachs CEO David Solomon and Uber CEO Dara Khosrowshahi, Knewz.com has learned.
$1,000 Investment Accounts for Newborns
According to reports, the proposal calls for the Treasury Department to fund $1,000 in investment accounts for children born in the United States between January 1, 2025, and January 1, 2029. Newborn babies born in the U.S. will automatically be enrolled in the program. Reports have further mentioned that the accounts were originally named “MAGA accounts,” a nod to Trump’s “Make America Great Again” slogan, with the acronym standing for “money account for growth and advancement.” However, in a last-minute amendment, House Republicans decided to put the president’s name on the accounts. Supporters of the proposal believe that the accounts are a way to get children into saving and investing early in life while helping them save for future goals like college or a home.
Account Contributions
According to reports, parents and other account custodians can contribute an additional $5,000 annually in post-tax contributions to the accounts. The money will then be invested in index funds tracking the broader U.S. stock market and will grow tax-free until it is withdrawn. However, once the investment is cashed out, the returns will be taxed as long-term capital gains, unlike the tax-free qualified disbursements from 529 higher education and Roth IRA retirement accounts.
When Can a Beneficiary Withdraw?
The beneficiary of a Trump Savings Account will be able to withdraw up to 50% of the balance starting at the age of 18. That person will then have access to the full balance beginning at age 25, but they can only use it for a list of “qualified purposes, like small business loans and higher education. At the age of 30, the beneficiary will gain full access to the balance, and they will be free to use the money as they please, reports have mentioned.
Trump Savings Accounts Could Cost Taxpayers $3.6 Billion
In its current form of a government-funded $1,000 starting balance, the Trump Savings Accounts could cost taxpayers around $3.6 billion, based on the 3.6 million births in 2023. However, President Trump claimed that the government contributions will come at absolutely no cost to taxpayers because it will be carved out of his Big, Beautiful Bill. White House Press Secretary Karoline Leavitt said in a statement that Trump’s flagship spending bill will “literally change the lives of working, middle class families across America by delivering the largest tax cuts in history, increasing the child tax credit, and by creating this incredible new ‘Trump Account’ program, which will put the lives of young Americans on the right financial path!” The proposal is being backed by Dell Technologies CEO Michael Dell, who vowed to match the government’s seed money “dollar for dollar” for new children of the company’s employees. Uber CEO Dara Khosrowshahi and Goldman Sachs chief David Solomon also expressed support for the savings account plan.
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Author: Samyarup Chowdhury
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