A new plan has been proposed to establish a stock market portfolio for every child in America, with Microsoft, Uber, Dell, and Zillow being the companies that have caught their attention.

• Brad Gerstner, CEO of Altimeter Capital, has communicated with Satya Nadella, Dara Khosrowshahi, and Michael Dell, among other corporate leaders, regarding funding stock market portfolios for the children of employees.
• The plan supported by the tech investor involves creating government-funded $1,000 investment accounts for children, with corporate America providing matching funds.
• Experts predict that the concept could be as successful as 401(k) matching contributions, and Zillow CEO Rich Barton considers it a "no-brainer" for his company.

If Brad Gerstner succeeds, corporate America may match government-funded investment accounts for children, which could greatly benefit both companies and their employees.

Gerstner has been collaborating with lawmakers to advocate for the "Invest America" program, which would provide a $1,000 investment account for every child born in the U.S. Although it is still early in the process, Gerstner hopes to have the legislation passed before the next presidential election. Additionally, he is working with corporate America to encourage businesses to offer matching funds to help employees save more.

Gerstner, founder and CEO of Altimeter Capital, stated in an email that the vision is straightforward: corporations should contribute a $1,000 Invest America match to the Invest America accounts of their employees' children. He added that he has spoken with numerous companies, including Zillow, Dell, and Uber, and the response has been overwhelmingly positive.

Historically, companies have not prioritized the financial well-being of their employees' children. However, there is a growing trend of companies offering enhanced benefits to attract and retain talent, which may include support for employees' children's financial needs.

In 2022, 96% of companies that offered a 401(k) plan made planned contributions to workers' retirement savings, according to a survey by the Plan Sponsor Council of America. Gerstner stated that he anticipates corporate matching to Invest America accounts being widespread.

Barton, co-founder and CEO of , stated that it is a "no-brainer" for his company to fully support and match Gerstner's proposed program. In an email, he said that a 401(k)-style investment account from birth is a great way to address the growing divide around financial literacy and wealth. He added that it is a small investment that can help parents achieve more peace of mind.

No representatives from the companies cited by Satya Nadella, Michael Dell, and Dara Khosrowshahi in a recent CNBC interview responded to email requests for comment.

Passing federal legislation in Washington, D.C., is difficult, but a matching program could be a solution. Here's how it could work and how companies could benefit if Invest America succeeds.

Why companies would fund another employer match

As companies expand rapidly, there is an increasing demand to provide competitive benefits that address unconventional areas and extend the typical age range of coverage, according to Trish Costello, CEO of Portfolia, a platform for women-focused venture investing.

Companies are now offering menopause assistance as part of their new benefits package, which is expected by employees. This trend is expected to continue, and it extends to benefits that positively impact children. According to Costello, once a few companies start providing these benefits, there will be a rapid expansion into this area.

Parents are concerned not only about their own financial well-being but also about their children's ability to afford things like school, housing, and retirement, said Lynne Vincent, associate professor of Management at Syracuse University's Whitman School of Management. One way companies could demonstrate their support for employees and their families is by offering investment accounts for their children.

Having companies as part of the solution makes us feel better about our work and the future, according to Costello.

How corporations could benefit from a tax perspective

Companies that participate in a matching program can experience both tangible and intangible benefits, according to Jeffrey Sharp, executive vice president at HUB International. The government may offer tax incentives to companies that operate similarly to how 401(k) contributions are handled, said Sharp, who works for a global insurance broker that provides employee benefits and other products and services.

If a person starts with $1,000 at birth and their portfolio grows at an annualized rate of 7%, they could expect a balance of about $107,000 by age 67, according to CNBC Make It's compounding interest calculator. With a company match, a $2,000 investment could grow to around $215,000 under the same conditions. The outcome could be even more advantageous if parents contribute additional funds.

A matching program could create a brand bump, especially for early adopters, and there are other potential benefits, such as employees being less likely to leave a company they feel cares about them and their family.

Vincent stated that they would feel a sense of loyalty, obligation, and commitment to the organization because it had shown loyalty to them.

According to Joseph Doerrer, vice president of wealth planning at Mezzasalma Advisors, employees who are both happier and more financially stable tend to be better workers.

Criticism of the Invest America plan

Gerstner's plan to offer 401(k) matching for employees' investments has received criticism. Some argue that there are already ways for parents to invest on behalf of their children, such as custodial brokerage accounts and 529 accounts, which are not taken out of payroll like a 401(k). Additionally, while a match on an investment account can be a selling point to attract talent, it may not be a definitive factor for companies. According to Robert Kelley, distinguished service professor of management at Carnegie Mellon's Tepper School of Business, a match on an investment account is not necessarily a slam dunk for companies.

Instead of offering this specific benefit, companies may opt to increase their 401(k) match to benefit more employees.

Kelley stated that while offering pet insurance that not all employees can use is one thing, paying for it is another. Although companies already pay for benefits such as free back-up day care, scholarship programs, and student loan repayment that not employees can take advantage of, it would certainly be a consideration should the program come to fruition.

It may be more challenging to obtain government support for the idea than to secure company participation in a matching program. However, there are still several details that need to be addressed, such as whether the accounts will be transferable and how parents can be discouraged or prevented from accessing their children's funds. Additionally, rules may need to be established regarding the use of funds and the timing of their withdrawal.

The American Opportunity Accounts Act, introduced by Massachusetts Democratic Congresswoman Ayanna Pressley and New Jersey Senator Cory Booker in February, proposes creating a federally-funded savings account for every American child.

Although it may take years to implement the investment account system proposed by Gerstner, Sharp emphasized that it is essential to begin working on it immediately.