White House Press Secretary Karoline Leavitt. Credit: YouTube channel called White House via Wikimedia Commons; .
President Donald Trump's Money Account for Growth and Advancement (MAGA) savings accounts for new parents survived the "Big, Beautiful Bill" that just passed in the House this morning.
The bill includes a proposal by Senator Ted Cruz (R-TX) that would establish the MAGA accounts contribution pilot program for every child born between January 1, 2025 and January 1, 2029. "Put simply, President Trump's one big, beautiful bill will be a boon for working-class America," White House press secretary Karoline Leavitt said this week. "This one big, beautiful bill is also pro-family. It will increase the child tax credit to $2,500 per child, establish an optional savings account for newborn babies with a $1,000 credit added and strengthen paid family leave.” That money will then accumulate interest and value through investments over time.
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“This is a very pro-family piece of legislation. Not only does it increase the child tax credit, but it also includes MAGA baby savings accounts for children that are born before Jan. 1, 2024, under eight years old, U.S. citizens, and have at least one parent with a valid Social Security number," Leavitt said. "And when this tax provision becomes law, the child will, if the parents seek to do this, will be set up, with a savings account."
Originally called a MAGA account, the saving initiative is now been rebranded as a "Trump account," which “will trigger fundamental and transformative changes for the financial security and personal freedoms of American citizens for generations,” said Cruz. “Every child in America will have private investment accounts that will compound over their lives, enhancing the prosperity and economic participation of the vast majority of Americans.”
"Essentially, it's a 401(k) for a newborn baby," said Leavitt. "A child's relatives, their parents can contribute up to $5,000 [adjusted for inflation] per year of after-tax dollars annually to that account.” The account investments can be placed in a broad, low-cost fund that tracks the S&P 500, growing tax-deferred until the individual reaches age 18. Distributions after age 18 would be taxed at the capital gains rate.
Related: GOP House tax bill includes a ‘401(k) for kids,’ giving newborns $1,000
“And then later in the baby's life at age 25, savings account holders can withdraw up to the full balance of the account,” said Leavitt. “Upon reaching 30, the account holders can access the full balance of the account for any purpose desired. So it's a great initiative for new parents, new mothers who want to set up the savings account for their children."
“The Trump Accounts would seed $1,000 for every American baby born starting in 2026,” the bill states.
The "Big, Beautiful" bill now heads to the Senate for a vote.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
