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Trump Accounts launch for U.S. newborns
The federal government officially opened registration for a new program giving $1,000 to qualifying babies. FOX 10's Andrew Christensen has more on the "Trump Accounts."
PHOENIX - The next generation could be a lot better off financially than the current one, with the federal government officially launching "Trump Accounts" on July 6.
Big picture view:
Trump Accounts is a new program that gives $1,000 to qualifying babies.
Think of this as a retirement account for babies. If a child is a U.S. citizen born between January 2025 and the end of 2028, parents can go online, fill out a form, and the government will deposit $1,000. Parents can also contribute up to $5,000 per year to the account.
Older kids do not get that initial seed money, but parents can still open an account to invest for them.
President Donald Trump says money has already been deposited into more than 500,000 accounts.
Local perspective:
Some parents in Arizona are already saving for their kids.
"I just save $50 a month aside for her for emergencies," one parent said.
Other parents have investment accounts set up for their futures.
"An account that goes directly to them," Susie Urbano said. "It's under my name, but it's like a trust."
Expert Weighs In:
Darcy Bergen, the managing partner for Bergen Financial Group, noted that the system shares similarities with other long-term investment options.
"An IRA would be similar," Bergen said. "You put money in and then it grows tax deferred and then when you take money out it's taxable."
Bergen says when the child turns 18, they can use the money for qualified expenses, like education or a first home.
"You do any of those, there's no penalties, there's just taxes on the profit," Bergen said.
Even if a parent never adds another dime, the website for Trump Accounts projects that initial $1,000 will grow. They estimate it would turn into $6,000 by age 18, $15,000 by age 27, and nearly a quarter of a million dollars by age 55.
"It's designed for families that maybe don't have that extra money to save for retirement, but it does teach them about compound interest," Bergen said.
What you can do:
On the Trump Account app, parents can track their child's balance. Parents could also see how much their kid would earn in the future with more investments.
Nonprofits, local governments, and corporations can also add up to $2,500 tax-free into accounts.
The Source: Information in this report was gathered from parents, Susie Urbano, Darcy Bergen, Bergen Financial Group, and from the website of Trump Accounts.