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I don’t know why President Trump and the Republicans aren’t shouting from the rooftops about Trump Accounts, which could turn working-class minority kids into millionaires. And it will teach a whole generation of youngsters about jobs, businesses, markets, and capitalism. Children born between January 1, 2025, and December 31, 2028, will receive a one-time $1,000 federal contribution, regardless of family income.
As reported by John Carney, there is no means testing, no phase outs, and no income caps. Families can contribute up to $5,000 annually. Employers can add up to $2,500 per year. And with various rates of return assumptions, if left untouched until retirement at 65, it could come to over $1 million.
The money grows tax-deferred. It’s invested in index funds, tracking mainly U.S. stocks. Distributions are locked in until age 18, when account holders can access money for home purchases, business formation, or education. But the key point is the mathematics of compound in interest over a long period of time can make these accounts transformative.
The Committee to Unleash Prosperity notes that the Trump Accounts will create a nation of owners and will democratize stock ownership. At a median return of 10.3 percent per year, these kids could be millionaires by age 30. Now, much of these estimates depend on how much supplemental money is put into the account, but corporate America has been stepping up, places like JPMorgan Chase, Bank of America, Intel, Charles Schwab, and Coinbase. And people like Michael Dell and Ray Dalio have made big early commitments.
Popstar Nicki Minaj says she will deposit money into her young fans’ accounts. Trump Accounts may wind up being one of President Trump’s greatest legacies. It will transform welfare into wealth. And hopefully will persuade the next young generation of the merits of free market capitalism.
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