Proposal for MAGA accounts with limited benefits and complex rules receives negative feedback from experts.

From Yahoo Finance.: 2025-05-20 18:02:00

A proposal in the Republican party’s bill could give every newborn American a MAGA account with $1,000. Despite the catchy name, financial advisers warn that the benefits are limited and come with complex rules. Contributions are capped at $5,000 annually, and withdrawals are taxed as long-term capital gains.

Parents can open MAGA accounts for children under 8, but only newborns receive the $1,000. Contributions are limited to $5,000 per year, growing tax-free until withdrawn. Investment returns are taxed as long-term capital gains if used for approved purposes like education, job training, starting a business, or home down payment.

The MAGA account, costing the government $17 billion over 10 years, is designed to hook kids on investing and capitalist values. However, restrictions may limit its value, making it a less attractive option compared to other tax-free savings accounts. Critics argue it’s the sixth or seventh best savings option available.

Read more: Trump’s new MAGA accounts are getting a thumbs down from financial experts