Today we are jumping into something that is brand new. This is the first year it's ever been possible. It was announced last year, but it's completely new to the tax law world, to the investment world. I'm expecting it'll be something here in the long term that we'll be talking about and strategizing about. So these are the Trump accounts. These are the Trump accounts where... Well, actually, we're going to dive into some of the details, but it's basically an investment account for kids either newborns or kids. I'll give you some examples of who qualifies here in a second and how that money can grow in certain ways, some part of it tax-free, part of it not tax-free. We'll explain that, too. How the kids can pull that money out when they turn 18, similar to a retirement account, or they can keep it into those accounts into the future. First, we'll talk about who qualifies for it, like what type of kids, when they're born, etc. Who qualifies to put the money into the accounts? We'll talk about the specific amounts. Who qualifies, like the recipient or the beneficiary of it? Who can be funding these accounts and pros and cons, why someone might want to even do that?
Then lastly, we'll talk about, as we mostly do, we're going to talk about some strategies and how you could strategize specifically with these accounts. Number one, who qualifies? If a kid was born, there's two main groups of kids. If a kid was born, January January first, 2025 or later, so we're in 2026 now, so even looking back to January first, 2025, that specific child, if they have a birth date after that until at least through now, and through December 31st, 2028, so it's a four-year window, they will qualify for $1,000, we'll call it seed money or $1,000 of contribution from the government. This is from the federal government, and they will qualify for that. We'll talk about specific ways of filing for that and how to qualify or how to actually get the funds and get control of those accounts. But just think of that. So kid born after January first, 2025, they will qualify for the $1,000 limit. There's another qualification, and that is for kids up to 10 years old or kids 10 and under, if they were born before October January first, 2025, you may have heard there's another, it's a $250 amount.
They will qualify for a different contribution. This is a little crazy. The government is working with the big corporations. I guess that's not a surprise. But this is specifically from a billionaire, the Dell family. They're contributing $250 per kid up to kids that are 10 years old in certain zip codes. For them to get their charitable deduction, they have to identify specific areas and specific kids that would qualify, but they'll get a $250 contribution. That's not from the government. That's from a charitable organization sponsored by the Dell family. We're expecting there's going to be more of things like that, but I'd say if you're going to focus on one thing, just focus on the overview of what these accounts mean and how they can be used. I would just focus for now on the government seed money on the $1,000. If you're a new parent, you have a child born in any time in 2025 or through 2028, if you're planning, make sure you apply for these accounts and get the money for your kids. The application process, I'll go over in a little detail, but really, you're just going to trumpaccounts. Gov, and there's a tax form.
It's a basic tax form. You don't have to file it with your regular income taxes, but it's just you're filling out your information because you're in control for the minor child, and you put the minor child as a beneficiary, you fill the information, and the accounts are not actually being funded with the money, and you're not going to have access to these accounts to see what they're invested in and see the growth until July fifth, 2026. Three parts of this podcast episode. The first part was who's eligible? We talked about that. Kids born January first, 2025 through '28. Or kids For kids that are under 10, they'll qualify for that, the charitable contribution from the Dell family. Now the type of people or we'll say the categories of contributions for money that can go in. There's another big part of this. There's the seed money part, but then there's money that can go in every single year. I've got four categories of contributing people or contributing entities that can put money into these accounts. First one was the government. We talked about the $1,000 seed money for the new kids. There's corporations that can get tax deductions.
We'll call them corporate charitable donations. That's the Dell family. There's corporations that can corporations that can pick a category of kids and front the money, give them the money, and they get a deduction for it. This is where some of the strategy is going to start playing in. There are corporations that can pay into these for their employees. Business gets the deduction. Employees, they're getting free money. It's a raise of sorts, but they're not paying payroll tax on it. They can do up to $2,500 per employee. Then the last one are family contributions. You as a parent, or if you're a grandparent, you want to fund your grandkids's accounts, you can do up to $5,000 in the family contributions. $5,000 into any of the kids' accounts. It can come from any source. An aunt, an uncle, multiple grandparents, multiple parents can all fund the one kid's account, and it's a $5,000 limit at the beneficiary level. If you're a grandparent, you got 30 grandkids, you could put $5,000 into each and every one of your grandkids' accounts. You do not get... I'm going to talk about some strategy here in a second. If you did that, there's no tax benefit to you.
It's amazing. You're giving money. You're basically putting money into an investment account for your grandkids. That's amazing. But you're not getting a tax benefit for that. You're not getting a charitable donation for that. You're not a corporation doing a charitable donation to a big group of kids. You're not discriminating and only giving it to your specific kids. It's like the Dell Corporation is giving it to like, I don't know, 10 million kids or something. It's a lot of people. That was the second part. Talked about Where's the money coming from? It's coming from the government. It's coming from corporations that are doing charitable donations. They get a deduction for that. It's coming from companies paying it for putting money into the accounts for it's our own employees, or it's coming from the families, the parents and the grandparents and family, or the kids themselves can put the money in into those accounts up to $5,000 each year. Here's where to understand where the strategy, so this last Last part, we'll talk about strategy. But to understand where we might even need to start to strategize, you have to understand the nature of these accounts and what happens to them, how they're taxed.
If you put, and there's different examples of each, so it gets a little complex, and that's actually one of the reasons why this will be one of the topics in the Wealth Game Alliance calls, because there's a lot of strategy and a lot of specific things you'd want to do depending on how the money goes in, which account it is. There are some specific steps I'd recommend to take to actually get these deductions. But let's say, let's start with the government, like the giver. At the giver level, we'll say we'll just walk through an example of what happens when you turn 18 or your kids turn 18. Say the $1,000 that goes in from the government. It's not taxable when the money goes in. It's tax-free. The money came from the government, so it didn't come from you, so there is no basis. That becomes important because that's how you the tax on the withdrawals. So $1,000 goes in and say at age 20. So 20 years later, that $1,000, and let's just say there's no other money that went into the account, $1,000 goes in when they're born. 20 years later, they're now 20, and there's $10,000 in the account.
And they're like, You know what? I want to go buy a car. I want a down payment for a house. And they pull the $10,000 out of the account when they're 20. That $20,000 is taxable as ordinary income. It's not tax-free income. It's taxable. That can go into a whole another of timing of distribution. And there's some strategies around that. But just the nature of it, it's taxable when it comes out. And that's the government money. Same with if you got money or money that you didn't put in, money that came from your employer or money that came from the Dell Corporation, that does not create basis either. That chunk of money, it went in, it grows, say all contributions all in. Now it grew to $40,000 when your kid is $20,000. If they pull all that out, that's all taxable. But here's where there's some of the strategy, where some of the strategy starts. If you put your own money in, so remember, it's a $5,000 limit. If your grandparent put money in, if your parents put money in, you put money in, and say it grew to $20,000, let's say $10,000 of that.
