US 401Kids Saving Act: Young people today may find it hard to get rich because they have to deal with high home prices and large student loan amounts.
Now, a new bill in Congress wants to make it possible for people to start making money from the time they are born.
The 401Kids Savings Act is the name of the bill that is being pushed by Democratic Sens. Under the suggested law, a 401Kids account would be made for every child under the age of 18. The state treasurers and 529 college savings plans would be in charge of these funds.
All kids from low- and middle-income families would be able to use the US 401Kids Savings Act, and the accounts would be set up with direct government help for those families. More and more lawmakers and allies are in favor of the $500 per child under the new bill.
The account will help people build up their assets and give families and children financial security. The money in the accounts could be used to start a business, pay for college, buy a house, or save for retirement.
What is the US 401(k) Savings Act?
Families with children ages 0 to 17 can get up to $2,500 through the 401Kids program. Low- to moderate-income families will get government deposits every year until their child turns 18. Families with an adjusted gross income of less than $75,000 (or $150,000 if they are married) get $500 a year for each child.
🚨BIG NEWS🚨
Today I’m introducing the 401Kids Savings Act, a new bill that will help younger Americans build wealth and a path toward the American Dream.
Let’s take a look 🧵 pic.twitter.com/MfID8OKuPM
— Senator Bob Casey (@SenBobCasey) January 31, 2024
Children who live in families that are qualified for the earned income tax credit (EITC) get extra help, up to $250 a year, even if the EITC is not claimed. People who qualify for the EITC may also get a $1-for-1 savings return on their own payments, up to $250 per year.
The kids can’t use the money until they are 18. It can be used for school, training, buying a house, or starting a business. You can also move the money to a Roth IRA or an ABLE account for disabled children. Based on the plan, a single parent with an AGI of $40,000 could save more than $53,000 by the time their baby child turns 18.
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Who Can Get the US 401Kids Savings Act?
The bill says that state treasurers would be able to set up the accounts as part of state 529 college savings plans. Also, any child in the state where they live who is younger than 18 would immediately get a 401Kids Savings Account. Children in that state would get a bank account from the U.S. Treasury if the state didn’t want to use that power.
- Individuals and families making less than $75,000 a year can use the Savings Act.
- The formal partners who are filing the tax return together must have less than $150,000 in income in order to get the payment.
- The kids can’t be more than 18 years old.
- Sharing the papers that prove permanent status is needed.
- For foreigners who have been in the country for more than 10 years, they will also need to show proof of their job background, where they live, and how long they’ve been in the country.
At the state and city levels, both kid savings accounts and baby bond programs are being tested. Baby bonds are a direct attack on racial wealth gaps. Depending on how they are set up and organized, child savings accounts can also help reach that goal.
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