Parents could be getting a financial boost thanks to a new savings proposal that’s making waves in Washington, and it could mean $1,000 straight into an account for your child.
But like all good things, there’s a catch: it’s only for a limited group, and the clock is ticking.
The plan is part of a Republican-driven tax and spending bill currently making its way through Congress. The proposed savings initiative is called MAGA, not the slogan, but short for Money Account for Growth and Advancement, and it’s all about helping kids build wealth from birth. The bill just cleared the House Ways and Means Committee, and now it’s headed to the full House for a vote. If it passes, families with children born in the U.S. between January 1, 2025, and December 31, 2028, could receive a one-time $1,000 deposit from the federal government.
This isn’t just a regular handout, it’s a structured savings plan with long-term goals. That $1,000 would be deposited into a special investment account managed by the family. The money would stay locked up until the child turns 18. The idea is that with the power of compounding, these accounts could grow into tens of thousands of dollars by the time the kid hits adulthood.
And that’s not all. Parents would also be able to contribute up to $5,000 a year into these accounts on their own. The contributions are meant to be invested in a low-cost U.S. stock market index fund, so families who play the long game could really maximize the value. The accounts would be tax-deferred, meaning the money grows tax-free over the years. When the child turns 18, they can start accessing the funds for specific life events, like going to college, buying a home, or launching a business. If used for those purposes, the money would be taxed as capital gains, which is usually much lower than regular income tax.
But if the money is pulled out early for non-approved uses, there’s a cost. The withdrawal would be hit with regular income tax plus a 10% penalty. And if the account just sits there untouched, it fully unlocks at age 31, no questions asked.
Eligibility is tight. The child must be a U.S. citizen at birth, and the parent claiming the child, along with their spouse, if married, must have a valid Social Security Number. So while the program sounds generous, not everyone will qualify.
Senator Ted Cruz has been a major voice behind the plan, saying it’s modeled after his earlier Invest America Act. He credited the idea to Altimeter Capital CEO Brad Gerstner, who first pitched it with the goal of creating long-term financial literacy and opportunity for kids. “Every child in America will have private investment accounts that will compound over their lives,” Cruz said, calling it a serious step toward wealth-building for the next generation.
Gerstner echoed that in an interview with CNBC, calling it a way to give all American kids a financial foundation. “It’s a tiny amount of money to get every child in America in the game,” he said.
Former President Donald Trump has thrown his support behind it too. He called the proposal “GREAT” on Truth Social and said he’d help push it forward when he returns from a trip to the Middle East. It’s all part of what he’s calling a “big, beautiful bill” that aims to expand on the tax cuts he rolled out back in 2017.
But not everyone’s sold on the idea. Critics are warning that the $1,000 might come with more strings than benefits. Will McBride, chief economist at the Tax Foundation, said the fine print could turn into a nightmare for some families. “It’s $1,000, less all the cost of figuring out how the thing works and taking on the risk of making a mistake and the IRS coming after you, and there’s a 10% penalty,” he said.
Others argue the payout is just too small to make a real difference. Patrick Brown of the Ethics and Public Policy Center said the plan might sound nice on paper but doesn’t really help parents dealing with daily financial stress. “That’s not the same as a tax code focused on improving the daily lives of American parents,” he said.
There are also concerns that the MAGA accounts could backfire in other ways. Darrick Hamilton, a key voice behind the Democrats’ “baby bond” plan, warned that these accounts could inflate asset prices and worsen inequality. The fear is that wealthier families who can afford to contribute thousands more each year will benefit most, leaving lower-income families behind despite the initial $1,000 deposit.
Despite the debate, the proposal is moving fast. House Speaker Mike Johnson is pushing for a full vote before Memorial Day, and supporters are hopeful it’ll pass. If it does, it’ll mark one of the biggest child-focused investment programs ever launched in the U.S.
So if you’re planning to have a baby anytime between 2025 and 2028, this is one program to watch closely. That $1,000 may not seem like much at first, but with smart investing, it could set your child up with a financial head start by the time they hit adulthood. Just make sure you know the rules, the risks, and the long-term benefits, because this isn’t free money. It’s seed money, and what grows from it is going to depend a lot on what families choose to do with it.
