Kids' Future Funds: Big Names Step Up, But Will It Be Enough?

The government is rallying big names to back a new savings plan for kids. The idea is to help families build a financial cushion for their children's future. The plan lets people set aside up to $5,000 a year for each child. The money grows in index funds and can be used for college, buying a home, or other big expenses when the child turns 18.

Wealthy Folks and Companies On Board

Some wealthy folks and companies are already on board:

• Michael Dell, the founder of Dell Technologies, has promised $6.25 billion to give $250 to millions of kids.
• Ray Dalio, a hedge fund manager, is chipping in $75 million for children in his home state of Connecticut.
• Companies like Visa, Mastercard, and Uber are also getting involved, matching the government's $1,000 seed money for employees' kids.

The Catch

But there's a catch. The tax breaks aren't as sweet as other savings plans out there:

• Money taken out of these accounts is taxable.
• Contributions are too—unless you put in up to $2,500 through your job.

Government Push for State Involvement

The government is pushing states to get involved too. Almost two dozen states are looking into adding their own money to the accounts. The goal is to get more families investing in their kids' futures. But will it work? Only time will tell.

Launch and Political Implications

The plan is set to launch in July, just before the midterm elections. Republicans are hoping it will show voters they're serious about making life more affordable. But with tax breaks that aren't as generous as other options, will families really jump on board? And will the big names stepping up be enough to make a difference?