WASHINGTON — At least six million American kids will gain a stock portfolio next month when “Trump Accounts” are launched — and tens of millions more are able to sign up.
The accounts will serve as an early-age 401 (k), granting children born during President Trump’s second term $1,000 in seed money, with parents or their employers able to make additional tax-free contributions of up to $5,000 per year into the accounts.
Experts tell The Post that children – especially those eligible for the $1,000 contribution – should sign up as soon as possible to take advantage of the free money.
“If someone is giving you $1,000 for free, grab it!” said Derek Reisfield, co-Founder of MarketWatch, who noted that kids are not automatically enrolled.
Even if no additional money is added, the investment rate on the initial $1,000 can provide a nice rate of return – to the tune of several thousand dollars.
The initiative seeks to level the playing field for lower-income children by giving them a lump of cash to withdraw when they turn 18 to pay for college, make a down payment on a home, or use as seed money to launch a business.
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All of America’s roughly 73 million legal residents under age 18 are eligible — though the benefits are greatest for those born during the 47th president’s four-year term.
“We’re going to create a generation of shareholders,” Treasury Secretary Scott Bessent said Thursday — ahead of the Fourth of July launch of the accounts.
Financial experts say it would be foolish for anyone to miss out on the opportunity.
BIGGEST DON’T ON WITHDRAWING FUNDS
A child has access to the account when they turn 18. But any money withdrawn is subject to taxes and some may be hit with a 10% fee.
If a child is paying for college or buying a first home, there is no penalty.
But if the money is withdrawn for non-approved expenses – such as emergencies, credit card payments – then there is a 10% fee in addition to the regular income tax.
Consider converting the Trump savings account once the child turns 18.
“The smart thing to do I believe is to do a ROTH IRA conversion after the child turns 18,” Reisfield said. “You might want to do this over a couple of years to manage the tax hit and keep your marginal tax rate low. This will be especially advantageous for people with older kids who can only contribute for a couple of years and the taxable component of the conversion will be quite low.”
BIGGEST DO ON SAVING
Anil Melwani, a CPA licensed in New York and Florida, advises parents to sign up for the free $1,000 if their child is eligible.
“There’s no reason not to take it,” he said, pointing out that even if a parent took the $1,000 and added nothing else to the account in 18 years, it could be at least $10,000 or $20,000.
“Free money is free money,” he said.
Also, seek out other ways to build the funds. Several individuals or entities can contribute to the account.
Check with your employer, which is eligible for contributions, which are tax-free for the employee but will be taxed income for the child when he or she turns 18.
Family and friends can contribute money, but it’s not tax-deductible.
“It can be for graduations, birthdays, bar mitzvahs, and confirmations,” economist Michael Szanto pointed out. “As long as the contributions are affordable and reasonable, they can really contribute to growing the future wealth of a child.”
States, non-profits and businesses can make group-wide contributions, such as to all children born in a certain year or children living in a specific state.
“As long as the contributions are affordable and reasonable, they can really contribute to growing the future wealth of a child,” Szanto noted. “Donations to the Trump accounts of children are likely to be a very popular employee benefit in the future.”
Family and employer contributions combined may not exceed $5,000 a year for a single account. Contributions from governments and nonprofits will not be counted toward that limit. In 2027, there could be a cost-of-living adjustment to that amount.
WHAT ARE TRUMP ACCOUNTS?
Trump Accounts are IRA-style savings accounts for eligible children that work like traditional IRAs in that the money is invested and grows. The funds cannot be accessed until the child is 18.
Contributions from parents or their employers are taxed either before contribution or upon withdrawal — though Trump has described them as tax-free and it’s possible future legislation would make the change.
The idea was popularized by self-made computer billionaire Michael Dell and passed Congress last year with only Republican votes in the One Big Beautiful Bill – along with Trump’s raft of populist promises to slash taxes on tips, overtime, Social Security benefits and domestic car-loan interest.
Dell and his wife Susan are offering $6.25 billion in extra seed money — or about $250 per account — to the roughly 25 million American children under the age of 10 who were born before 2025 and therefore aren’t eligible for the $1,000 in federal funds.
Other high-profile figures are chipping in, with the feds allowing unique contribution formulations to open the spigots — with rapper Nicki Minaj offering up to $300,000 for her fans’ accounts.
WHO’S ELIGIBLE – PARTICULARLY FOR THAT FREE $1,000
Any child who is under the age of 18 at the end of 2026 can open an account.
But only children born during Trump’s term in office – from January 1, 2025 and December 31, 2028 – receive a one-time $1,000 contribution from the government.
Children must also be an American citizen and have a Social Security number. An authorized adult – as in a parent or guardian – must open the account.
There can only be one account per child.
HOW TO OPEN AN ACCOUNT
Parents or a guardian can fill out a Form 4547 with the IRS to open the account. The form is available on TrumpAccounts.gov or on the IRS website.
There is also a Trump Accounts app that can be downloaded and an account can be started that way.
HOW WILL THE MONEY BE INVESTED
The money will be invested in index funds or exchange-traded funds that contain a majority of stock in US companies.