"Trump Accounts" that provide IRA style accounts for children, go live.

 

CNN/Getty.

The "Trump Accounts" effort has gone live, giving parents the chance to create Investment Retirement Accounts for their children. CNN. The accounts are available for all children under the age of 18. However, the government has decided to give $1000 for infants born between January 1st 2025 and December 31st 2028. In addition to the government money, parents, relatives and friends can contribute to the accounts, along with employers. Private citizens have also given money to the fund to allow even more seed money to certain low or mid income families. Charitable and Government contributions are unlimited, but only $5000 a year can be contributed by others. Returns for the accounts will depend on how the stock market does. Once the child becomes 18, the accounts are treated as IRA accounts, with the appropriate penalties and taxes. However, if the holder of the account uses the money for college, buying a home, birthing or adopting a child, emergency expenses and even medical bills. If no contributions are made beyond the $1000 in government an infant could expect to see $3000 to $5500 depending on the stock market. 

My Comment:

I don't often use CNN as a source, but this was a good summary of how the Trump accounts work. Credit where credit is due. It's a good resource and if you want to know more about how to sign up for these accounts you should take a look. 

I think that these accounts are a good idea and you would have to be crazy to not do this if you have an infant born during the eligibility period. Even if the only money you contribute is the government issued $1000, you would give that child at least a little seed money to start their lives off. I know I would have been happy to have $3000 to $5500 to my name when I graduated high school. 

And there's a good chance that even if you don't contribute any money, you could get more money from the rich donors that are contributing to the fund. If you make too much money you might not get any from the philanthropists, but chances are you would get some money out of it. And any money you would get for your kids would be totally free. 

Plus, you and your friends and family could contribute as well. Employers could as well as an easy benefit they could offer, though I don't know how any contributions have been set up yet. If you were somehow able to max out the contributions at $5000 a year, your kid could end up with as much as $230,000, assuming a 10% return. That might be optimistic but that much money would pay for college or set up a real path to wealth for a child if they just keep that money in their IRA.

Do these accounts make sense for any other kids? Possibly. There are other kids IRA accounts they could use that could avoid some of the penalties or get higher returns. But I think the possibility of the rich donors giving a boost to these accounts is an obvious advantage if you aren't wealthy. If you are wealthy, the other options might be better, but the best solution might be a combination of both. 

I do fear that there are going to be a lot of liberal parents that aren't going to take advantage of these accounts. Part of me thinks this is funny because it's a stupid reason to not take free money. But I do wish that these folks could decide to do what is best for their kids and ignore the fact that President Trump likes to name things after himself.