New GOP Tax Proposal Includes ‘401(k) for Kids’ Plan to Jumpstart Investment at Birth

A new tax proposal unveiled by House Republicans includes a provision that could create long-term investment accounts for every newborn American, a plan being dubbed a “401(k) for kids.” The initiative, formally named Money Accounts for Growth and Advancement — or “MAGA” accounts — would launch as a pilot program seeded with a $1,000 government contribution for every baby born with a Social Security number between 2024 and 2028.

The concept is designed to give children a head start in building financial assets through a tax-advantaged investment account. Parents, extended family, and even employers would be allowed to contribute up to $5,000 annually to these accounts. Funds would be invested in diversified equity portfolios, such as those tracking major indexes like the S&P 500, with the goal of enabling substantial long-term growth.

Supporters of the plan say the initiative mirrors the mechanics of workplace retirement accounts. Like 401(k)s, these child investment accounts would allow for contributions, employer matches, and tax-advantaged growth. Once account holders reach age 18, the funds could be used for education, homeownership, or starting a business.

Modeling the potential impact, backers of the proposal estimate that a child receiving the $1,000 federal seed and max annual contributions could have roughly $170,000 by age 18 — and over $700,000 by age 35, assuming a 7% average annual return.

A critical component of the plan’s envisioned success lies in encouraging employers to get involved, contributing to the accounts of their employees’ children. According to early reports, several major corporations have expressed interest in supporting the initiative, viewing it as a valuable employee benefit and a way to support generational wealth-building.

While the proposal shares similarities with previously introduced “Baby Bonds” legislation — which would also establish savings accounts at birth — supporters argue that this version differs in philosophy and structure. Unlike Baby Bonds, which restrict investment to federally managed accounts and are framed around wealth redistribution, the MAGA account proposal is built around private market participation, long-term capital growth, and voluntary contributions from families and employers.

Though the MAGA accounts provision originated in a Senate office, it found its way into the latest House tax package as part of a broader legislative push aimed at stimulating economic participation and encouraging early financial education. Supporters say the measure aligns with the larger goal of giving every American child a stake in the nation’s economic future.

The proposal is still in its early stages and will face further debate as the full tax bill moves through Congress. If passed, it would mark a significant shift in how policymakers approach youth financial empowerment — using investment as a tool not just for retirement, but for life readiness from the very beginning.

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