Actively teaching young people how to manage money from an early age is much like the power of compound interest—the knowledge builds upon itself. Young people armed with this education can build strong financial foundations and avoid crippling mistakes. They can be active participants in building their own financial success as they contribute to the economic growth of Idaho and the nation.
Trump Accounts
In just over a week, on July 4, families can start contributing to Trump Accounts, established as part of the Working Families Tax Cuts. The idea behind Trump Accounts was simple: give every American child a head start by creating long-term savings accounts that allow for private ownership, multiple funding pathways, and direct investment spanning the economy.
These tax-advantaged savings accounts will not only help the next generation build wealth beginning at birth but provide early exposure to financial markets and money management, creating a culture of savings. All Americans under age 18 with a valid Social Security number are eligible for a Trump Account. U.S. children born between 2025 and 2028 are also eligible for a $1,000 government contribution to their account.
How Trump Accounts Work
The account operates as a traditional individual retirement arrangement (IRA) with some special rules. Parents or guardians elect to create the accounts for their children when they file their taxes or on the Trump Accounts website. Eligible accounts receive an initial contribution from the U.S. Department of the Treasury, plus any applicable philanthropic donations.
The $1,000 government contribution and contributions from state, local, or tribal governments and 501(c)(3) organizations do not count against the $5,000 annual limit on contributions from families, friends, and employers. The money will be invested in low-cost index funds that typically grow year after year. When the child turns 18, they can continue saving for retirement or make withdrawals from the account under traditional IRA rules.
The potential long-term growth of these accounts is significant. According to projections from the Treasury Department, if the maximum contribution is made each year through age 17, the account could grow to between $191,500 and $676,400, depending on investment performance. The account could grow to potentially $1.9 million by the age of 28 if fully funded and left untouched.
Original reporting: Idaho Education News — read the source article.
