{"id":15726,"date":"2025-05-26T04:38:18","date_gmt":"2025-05-26T04:38:18","guid":{"rendered":"https:\/\/finderica.com\/?p=15726"},"modified":"2025-05-26T04:38:18","modified_gmt":"2025-05-26T04:38:18","slug":"tax-bill-maga-baby-bonus-now-called-trump-accounts-who-is-eligible","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=15726","title":{"rendered":"Tax bill MAGA baby bonus now called Trump Accounts: who is eligible"},"content":{"rendered":"
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In a vote early Thursday, House members approved President\u00a0Donald Trump’s “big, beautiful” tax bill, including a new savings account for children with a one-time deposit of $1,000 from the federal government.<\/p>\n

Under the proposal, “Trump Accounts” \u2014 previously known as “Money Accounts for Growth and Advancement” or “MAGA Accounts” \u2014 can later be used for education expenses or credentials, the down payment on a first home or as capital to start a small business.\u00a0\u00a0<\/p>\n

The final version of the bill that House Republicans passed Thursday could still face pushback in the\u00a0Senate.<\/p>\n

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If the bill passes as drafted, parents will be able to contribute up to $5,000 a year and the balance will be invested in a diversified fund that tracks a U.S.-stock index.<\/p>\n

Sen. Ted Cruz, R-Texas, who spearheaded the effort, said the accounts give children “the miracle of the compound growth, the ability to accumulate wealth, which is transformational.”<\/p>\n<\/div>\n

<\/a>How Trump Accounts work<\/h2>\n
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Not unlike a 529 college savings plan,\u00a0the Trump Account has a tax incentive to getting a jump start on saving. Earnings grow tax-deferred, and qualified withdrawals are taxed at the long-term capital-gains rate.<\/p>\n

“This isn’t all that different from the tax treatment you would get from a typical brokerage account,” said Sam Taube, Banking Herald’s lead investing writer.<\/p>\n

Other similar options already exist. Custodial brokerage accounts \u2014 often called a UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gift to Minors Act) account \u2014 also allow parents to transfer bank deposits, stocks, bonds and mutual funds to minors. But in that case, investment income, including dividends and interest, could be subject to a “kiddie tax” charged to the parents at their rate.<\/p>\n

With 529 accounts, alternatively, earnings grow on a tax-advantaged basis, and when a child withdraws the money, it is tax-free if the funds are used for\u00a0qualified education expenses<\/a>,\u00a0such as\u00a0tuition, fees, books, and room and board.<\/p>\n<\/div>\n

<\/a>Trump Accounts vs. 529 plans<\/h2>\n
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“We continue to believe that 529 plans provide tremendous benefits as a tax-advantaged savings vehicle for American families, with a proven nearly 30-year track record,” said Chris McGee, chair of the College Savings Foundation, a nonprofit that provides public policy support for 529 plans.<\/p>\n

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,\u00a0apprenticeship programs\u00a0and\u00a0student loan payments.<\/p>\n

Plus, 529 accounts have much higher contribution limits. This year, individuals can gift up to $19,000, 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.<\/p>\n<\/div>\n

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“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,” said\u00a0Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California.<\/p>\n

“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\u00a0CNBC’s Financial Advisor Council.\u00a0<\/p>\n

As of 2024, families can roll over unused\u00a0529\u00a0funds to the account beneficiary’s\u00a0Roth individual retirement account, without triggering income taxes or penalties, so long as they meet certain requirements.<\/p>\n<\/div>\n

<\/a>Who is eligible for a Trump Account<\/h2>\n
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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\u00a0Department of the Treasury<\/a>. There are no income requirements and everyone is eligible, as long as the child is a U.S. citizen, and both parents have Social Security numbers.<\/p>\n

Although some states, including Connecticut\u00a0and Colorado, already offer a type of “baby bonds” program for parents, the Trump Accounts \u2014 along with a bigger\u00a0child tax credit proposed in the budget bill \u2014 “could certainly help a lot of families at a lot of different income levels,” said Banking Herald’s Taube.<\/p>\n

Further, these accounts are not mutually exclusive from other tax-advantaged accounts, like 529 plans, he added, “so parents could take advantage of both.”<\/p>\n

Still, for parents weighing their options for early investment vehicles, “my recommendation would be, if you’re focused on college savings, talk to an advisor and start with the 529 plan first,” Sun said.\u00a0<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n

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In a vote early Thursday, House members approved President\u00a0Donald Trump’s “big, beautiful” tax bill, including a new savings account for children with a one-time deposit of $1,000 from the federal government. Under the proposal, “Trump Accounts” \u2014 previously known as “Money Accounts for Growth and Advancement” or “MAGA Accounts” \u2014 can later be used for<\/p>\n","protected":false},"author":1,"featured_media":15727,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[397,1980,856,202,6041,1060,6261,97,563],"class_list":{"0":"post-15726","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-accounts","9":"tag-baby","10":"tag-bill","11":"tag-bonus","12":"tag-called","13":"tag-eligible","14":"tag-maga","15":"tag-tax","16":"tag-trump"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/15726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15726"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/15726\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/15727"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15726"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}