Here's a summary:
Trump Accounts:
· OBBB created a new savings account for children called Trump Accounts.
· Children born between 2025 and 2028 are eligible for a $1k deposit made by the federal government into these accounts
regardless of the parent’s income.· The accounts can be opened for any child under age 18 and up to $5k can be contributed annually.
· Accounts must be invested in low-cost stock index funds tracking a major index like the S&P 500.
·
Employers are eligible to contribute $2,500 of the $5,000. Contributions are made with after-tax dollars.
· Funds cannot be withdrawn prior to a child’s 18th birthday.
· Contrary to prior understanding of the bill, the account does not have to be withdrawn by the child’s age 31.
· Earnings on withdrawals are taxed at capital gains rates for qualified expenses.
· Earning on withdrawals not used for qualified expenses are taxed at ordinary income plus a 10% penalty if the withdrawals are made before age 59 ½.
· Qualified expenses include higher education costs, small business start-up costs, or costs from a disability, domestic abuse or natural disaster. There is also a $10,000 exception for a new home purchase and $5,000 exception for the birth of a child.
People who are too poor to have kids won't be contributing to these accounts. It''s just another gimme for well off Breeders. It's not like $5000/year is going to pay for anyone's college these days.