STEVE INSKEEP, HOST:
Some other news now. The country's first federally backed investment accounts for children are now open.
MICHEL MARTIN, HOST:
Congress created what are called Trump Accounts as part of last year's tax and spending law. As of July 4, parents can open one by filling out a tax form or by signing up on trumpaccounts.gov.
INSKEEP: Each account comes with a perk that parents can opt into, a $1,000 deposit for eligible kids. It's available to any child who's a U.S. citizen with a Social Security number born during President Trump's second term, from 2025 to 2028.
MARTIN: Friends and family, employers, nonprofits and state welfare agencies can also contribute to kids. New York Times personal finance economist Ron Lieber spoke with NPR's All Things Considered in February.
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RON LIEBER: You would indeed be foolish not to opt in if you've got a kid who is eligible for the $1,000 or some other amount of money that a philanthropist or an employer might toss into the account. Look, it's free money. Anybody who's eligible should go get.
INSKEEP: Kids can withdraw that money once they turn 18, at which point the initial $1,000 deposit should've grown. Financial planner Michael Reynolds with Indiana's Elevation Financial, ran the numbers for NPR.
MICHAEL REYNOLDS: You fast-forward 18 years, at an 8% rate of return, that's going to give you just shy of $4,000.
MARTIN: Just keep in mind, beneficiaries have to pay income tax on that growth. And most contributions are, for now, capped at $5,000 a year.
INSKEEP: By comparison, traditional college savings accounts, known as 529 plans, do not tax any qualified education expenses. And they have no hard limit on annual contributions.
MARTIN: As Ashley Dickson with Next Bloom Wealth in Missouri told NPR, parents can open both.
ASHLEY DICKSON: It's not a, I have to contribute to one or the other. It's taking the amount that you can afford and maximizing it based on what the knowns are today, with the flexibility of changing tomorrow, a couple of years from now.
INSKEEP: Some financial advisers say it's worth considering a Trump Account if only to get that $1,000 credit for a newborn. But it's up to parents whether they continue putting money into the account because there may be better options depending on your goals and how much money you have to put in.
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