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Tax Deferred Investments

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economy1 month ago•7 min saved

Trump Accounts for Kids Launches With $250 Gift for Early Sign-Ups

The Trump administration has launched Trump Accounts, federally backed tax-deferred savings accounts for U.S. children under 18 under the Working Families Tax Cuts Act. Parents register via an IRS account and submit Form 4547 to elect their child. Families can contribute up to $5,000 per year, and the accounts will function like traditional IRAs once the child reaches adulthood. The Dell family will gift $250 to the first 25 million qualifying children, and children born between 2025 and 2028 are eligible for a one-time $1,000 Treasury deposit. The program is supported by philanthropists and companies (including BlackRock, Chipotle, MasterCard, Block, Robinhood, and Chime), with Trump urging more corporate funding for the future of savers and investors.

via Business Insider|

#child-savings-accounts #dell-family-gift #economy

economy1 month ago•7 min saved

Trump Accounts for Kids Launch With $1,000 Seed—But Rules Are Complicated

Trump Accounts, a new IRA-style, tax-deferred savings vehicle for children, went live July 4 with over 6 million opened and about 1.4 million set to receive the $1,000 newborn seed. Accounts belong to the child but are custodied by an adult until age 18; eligibility requires US citizenship and a valid SSN, with one account per child. Contributions from individuals are after-tax, while government and some employer contributions are pre-tax but withdrawals are taxed; annual individual contributions cap at $5,000 per account (employer cap at $2,500 per employee) and government/nonprofit contributions don’t count toward that limit. Investments must be low-cost index funds (default SPYM on Robinhood; four other funds to follow). Withdrawals before 18 are generally taxed as ordinary income, with penalties avoided for qualified expenses like higher education, first home, birth/adoption costs, emergencies, and some medical needs. Form 4547 is used to open the account and claim the $1,000 pilot; the program has drawn scrutiny over equity and potential effects on federal benefits, with guidance on Pell Grants or SSI still evolving.

via CNN|

#childrens-savings #economy #federal-pilot-contribution