Korean Media: Newborns Receive $1,000... "American Dream" Startup Capital

[Investing in Children of the United States] Starting from Next Year, the U.S. Will Establish "Trump Accounts"

On the 2nd, Michael Dell, founder and CEO of American computer manufacturer "Dell Technologies," and his wife announced that they would donate $6.25 billion (approximately 92 trillion South Korean won) to 25 million children in the U.S. This donation will be used for the "Trump Accounts" project being promoted by President Donald Trump. The Trump Account is a program where the U.S. government provides a $1,000 (approximately 1.5 million South Korean won) account for each newborn in the U.S., serving as startup capital for their future dreams. On that day, the White House invited the Dells for a donation announcement ceremony, stating, "This will be the first step of the American Dream."

The Trump Account project is included in the "Big and Beautiful Act" passed by the U.S. Congress in the summer. All U.S. citizens, regardless of income level, can have an account opened for their children, with the government depositing $1,000 as start-up capital. This money will be invested in funds tracking the S&P 500 and other U.S. stock indices to gain long-term compound interest. The fund will be operated by financial institutions designated by the Treasury, with fees limited to below 0.1%. Account holders can withdraw the money when they turn 18, and tax collection will be deferred before withdrawal.

Parents, relatives, and friends can add funds to the child's account, with an annual total limit of $5,000. Employers of parents can also contribute up to $2,500 per year, but the total amount cannot exceed $5,000. Based on the initial government support of $1,000, if parents and companies consistently save $5,000 annually for 18 years, the account holder will have accumulated $100,000 (approximately 150 million South Korean won) in principal at age 18. This money can be used for college tuition, independent living, or marriage funds. With the added yield, the amount will be quite significant. According to the White House, "If this money is not touched, it can grow to $1.9 million (approximately 28 billion South Korean won) by the age of 28."

Although there are gift taxes, the U.S. gift tax exemption is high, so this money basically does not require taxation. In the U.S., the annual tax-free gift amount per person is $19,000 (approximately 2.8 billion South Korean won). Parents, relatives, and friends can all give gifts, so for the child, two people giving gifts can enjoy double exemptions, and three people can enjoy triple exemptions. The U.S. government has prepared a budget for newborns born between January 1, 2025, and December 31, 2028, and plans to open accounts on July 4, 2026, the 250th anniversary of American independence.

In June, President Donald Trump said, "This was an idea proposed by Michael Dell himself to me." The Dells' donation will be used to provide $250 to children under the age of 10 who are not government-supported beneficiaries, born before January 1, 2025, but only for children in areas with an average family income below $150,000.

Michael Dell, CEO of Dell, is among the top ten richest people in the world. Forbes estimates his wealth to be approximately $149 billion. In 1999, he and his wife Susan established a foundation dedicated to charitable causes related to education, healthcare, and finance. This donation is the largest single donation in the foundation's history. Dell stated, "We firmly believe that the smartest investment is investing in children," "We are confident that if all children can dream of a future worth saving for, they will achieve far greater achievements than the account itself." He told CNBC, "Children having such an account will greatly increase their chances of graduating from high school and university, buying a house, or starting a business, and reduce the likelihood of going to prison."

Trump said, "This is one of the largest private donations in American history," "This gift will be given to children who were not born into particularly wealthy families, hoping that they will become very rich in the future." He also said, "In the coming months, hundreds of major companies will announce plans to donate to this account."

Previous cases of government support for newborns include the UK's "Child Trust Fund" (CTF) from 2005-2011, which provided vouchers or cash (up to £500 for low-income families). However, due to insufficient funding, it later transformed into a comprehensive asset account called "Junior ISA" offering tax-free benefits. Additionally, similar accounts exist in Canada, Singapore, etc., where parents save for their children, and the government also injects corresponding funds.

Source: Chosun Ilbo

Original: toutiao.com/article/1850551655408768/

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