What are MAGA Accounts?
The Trump Administration has proposed accounts with a $1,000 grant courtesy of the Federal Government. The administration believes the accounts will allow newborn children “the chance to experience the miracle of compounded growth and set them on a course for prosperity[1]”.
Who is Eligible?
The $1,000 grant is offered to children born after Dec. 31, 2024, and before Jan 1, 2029. To take part, they must be U.S. citizens with a valid social security number. The $1,000 grant is a one-time payment not annual. Relatives of the children can contribute a total sum of $5,000 annually. Once the child turns 18, funds will become available to the child. Employers can also contribute up to $2,500 into an account of an employee’s dependent child without adding to the employee’s taxable income. Distributions follow traditional IRA rules and are taxed as ordinary income, plus any applicable early-withdrawal penalty
What Investment Options are Available?
Money in the MAGA account must be invested in investment vehicles such as mutual funds or ETFs that tracks an index such as the S&P500[2]. The investment vehicles must be comprised of equities primarily based in the United States. Selected funds cannot have annual fees totaling more than .1%
How Do I Apply?
The method to which the Federal government will open these accounts has yet to be fully discussed and more information will come out.
