It's never been done in America before. A law was passed last summer to give every eligible new-born child a new investment account seeded with a thousand dollars by the federal government (Invest America).
Children are eligible who are U.S. citizens, have a Social Security number, and are born from January 1, 2025, to December 31, 2028.
More contributions to the account can be made by almost anyone, up to $5000 per year. The money can be invested in ETF's (exchange-traded funds) and mutual funds.
It's for the child's future. No withdrawals by anyone can be made. At age 18, the child/beneficiary will convert the account to an IRA, subject to IRA rules for withdrawal. He or she can use it for anything, not just for education.
No eligible American child will reach young adulthood penniless under this program. As Michael Dell put it, "Everyone starts with something." Neither parents nor anyone else can get their hands on the money. The child can watch the account grow and learn how to invest.
This could be a wonderful thing.
from Schwab
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