Here’s How Retirees Can Take Advantage of Trump’s Big Beautiful Bill To Help Their Grandchildren

Core Points - The One Big Beautiful Bill Act (OBBBA) introduces "Trump Accounts," a new tax-deferred account for minors, with a $1,000 seed contribution from the federal government for eligible children born between 2025 to 2028 [1] - Beneficiaries can withdraw funds at age 18 for higher education, small business startups, or home down payments [2][4] - Contributions can total up to $5,000 per year per child, with employers able to contribute an additional $2,500 [2] Contributions and Investments - Contributions can be made by parents, relatives, and employers, with a combined limit of $5,000 annually [2] - Account managers can invest in mutual funds or ETFs tracking qualified indices like the S&P 500, with fund fees capped at 0.1% of the balance [3] - Contributions are not tax-deductible, but the basis of contributions is not taxed upon withdrawal by the beneficiary [3][5] Withdrawals and Uses - Withdrawals are generally not allowed until the beneficiary turns 18, with penalty-free uses including education, business startup, and home down payments [4][7] - The account operates similarly to a traditional IRA, with a 10% penalty for early withdrawals before age 59.5 [5] - Specific uses for withdrawals include college tuition, small business expenses, home down payments (up to $10,000), disaster recovery (up to $22,000), and expenses related to childbirth or adoption (up to $5,000) [7] Attractiveness of Trump Accounts - The $1,000 government seed capital and potential employer matching contributions enhance the appeal of these accounts despite the tax on contributions [8]