Trump Accounts: What Long Islanders need to know ahead of Saturday's rollout

WASHINGTON — A growing number of families are signing up their children for Trump Accounts — opting into the investment accounts for minors established under last year’s massive tax-and-spend bill passed by congressional Republicans.

The program has been promoted by President Donald Trump and administration officials as a way parents can invest money for their children's future, noting the money can be used for educational expenses and for future milestones like purchasing a home or starting a business. 

The U.S. Treasury Department reports more than 6 million children have been signed up for the accounts since the start of the year, with the federal government contributing $1,000 in seed money starting Saturday for children born between Jan. 1, 2025, and Dec. 31, 2028.

Financial advisers also say the accounts are a wealth-building tool for American families. 

"On a basic building wealth scenario this is a great start, it’s a gift that we can build around," said Kevin Jackson, executive director of LRG Wealth Advisors, a New York-based financial firm with clients throughout the metropolitan area.

Here’s what to know about the program:

What are Trump Accounts?

The investment accounts allow families to save money for their children’s higher education expenses, first home costs or business startup costs, according to the Treasury Department’s guidelines.

Children born between Jan. 1, 2025, and Dec. 31, 2028, will be eligible to receive $1,000 in seed money from the federal government for their account. Families whose children are born before those dates can also open accounts, but they won’t receive the seed money. All enrollees will need a Social Security number.

"The program is available for any child under the age of 18," said Craig Petrella, a certified public accountant based in Massapequa. 

Money in the accounts will be invested in "broad U.S. equity index funds," according to the Treasury Department, and minors will not be able to access the funds until they are 18. 

"Withdrawals may be subject to restrictions and would be taxed at ordinary income rates," Petrella said.

How do you open a Trump Account?

Parents can enroll in the program by filing an IRS Form 4547 with their tax returns or by registering on the federal website trumpaccounts.gov.

The Treasury Department said families who have enrolled in the program will receive email notification on how to activate their accounts Saturday. Independence Day also marks the day other eligible contributors, including family members or employers, can deposit contributions into the account.

How much can you contribute?

Families can contribute up to $5,000 annually to the accounts, but may be eligible for additional funding through matching programs through their employers or through philanthropic donations.

The family contributions are not tax-deductible, but any earnings generated from the accounts can appreciate in value tax-free, Jackson said.

A number of philanthropies have pledged to donate additional funds to accounts in particular ZIP codes and several corporations have pledged to donate to their employees with accounts. Those contributions would not count against the $5,000 max, according to the Treasury Department’s guidelines.

Jackson said parents interested in saving for their children’s college tuition should also still consider 529 savings plans, which allow the account holders to withdraw money tax-free for their education expenses once they hit the age of 18.

"I'm a big proponent of having multiple options, especially if you have the means to do so," Jackson said. "So if you're able to max out a 529 and then you still have additional funds that you can put away, the Trump Account is a good place to do that as well." 

How will the money be invested?

For now, money deposited into the accounts will be invested in a low-cost, exchange-traded fund that tracks the S&P 500 index called State Street SPDR Portfolio S&P 500 ETF, but families will eventually have the option to invest in four additional ETFs managed by the financial firms Blackrock, Vanguard and State Street, the Treasury Department said Thursday. 

The overall Trump Accounts program will be administered by the global financial services firm BNY, which was selected by the Treasury Department in April to oversee the program and help develop its corresponding app with financial services firm Robinhood. 

Is this a backdoor for privatizing Social Security?

Congressional Democrats have questioned the intent of the accounts after Treasury Secretary Scott Bessent, in an interview last July with the conservative outlet Breitbart News said, "In a way, it is a backdoor for privatizing Social Security."

Some Republicans have floated the idea of privatizing the decades-old program, arguing that Americans should have more flexibility to privately invest their earnings for retirement.

Democrats who oppose privatization of Social Security said the remarks suggested the accounts would be used in the future as a way to replace the Social Security program, but Bessent in a follow-up interview with CNBC said the accounts will serve as a "supplement to Social Security, not a replacement."

By Laura Figueroa Hernandez

laura.figueroa@newsday.com@Laura_Figueroa

Laura Figueroa Hernandez is the White House correspondent and previously covered New York City politics and government. She joined Newsday in 2012 after covering state and local politics for The Miami Herald.