"For each account, annual contributions would be capped at $5,000, an amount that would be adjusted for inflation. The idea is for parents, relatives and even the employers of caregivers to pitch in money over time. The federal government, as well as state, local or tribal governments, could also contribute and aren't subject to the cap. The accounts would be locked up until the child turns 18."
"At that point, Trump accounts essentially become individual retirement accounts, which can be used penalty-free for certain expenses such as higher education or first-time home purchases. Only one account is allowed per person. The US Treasury will issue regulations requiring the funds be invested in mutual or exchange-traded index funds (ETFs) that "primarily" hold US stocks. Funds must charge low fees and not use leverage, according to the law signed in July."
Federal policy will create Trump accounts seeded with $1,000 for every American baby born in the next few years. Michael and Susan Dell pledged a $6.25 billion gift to seed accounts for millions of older children. Annual contributions to each account are capped at $5,000, indexed for inflation, while government contributions are exempt from the cap. Accounts remain locked until age 18, then convert into individual retirement accounts usable penalty-free for higher education or first-home purchases. Only one account per person is permitted. Treasury rules require low-fee mutual funds or ETFs that primarily hold US stocks and prohibit leverage. Lawmakers reduced flexibility and tax benefits; 529 plans retain stronger tax advantages.
Read at Fortune
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