Frequently asked questions
Plain-English answers, each with its source and verification date. Anything the rules haven't settled is marked TBD — we'd rather say "not yet known" than guess.
A tax-advantaged savings account for children under IRC §530A, created by 2025 federal legislation. Contributions grow in low-cost index funds until the child turns 18, when the account converts to traditional-IRA rules. Think of it as an 18-year head start on retirement savings — with a $1,000 government seed for eligible newborns.
Source: U.S. Treasury / IRS guidance on §530A. Verified Oct 10, 2026.
U.S.-citizen children born Jan 1, 2025 – Dec 31, 2028 with a valid Social Security number. A parent or guardian elects the one-time $1,000 pilot deposit (via IRS Form 4547) once the account is established.
Source: Treasury/IRS program guidance. Verified Oct 10, 2026.
$5,000 per year, combined — that cap covers family, friends, and everyone else together, not $5,000 each. Employers have a $2,500/year sub-limit per employee's child. The $5,000 cap is scheduled for inflation adjustment after 2027.
Source: Treasury/IRS program guidance. Verified Oct 10, 2026.
During the growth years (before 18), the account may only hold low-cost diversified index funds tracking a broad market index. Under the proposed rules, fund fees are capped at 0.10%. No stock-picking, no crypto, no withdrawals.
Source: Proposed Treasury/IRS rules. Verified Oct 10, 2026.
No. Withdrawals are not allowed during the growth phase — that's the tradeoff for the tax advantages. In the calendar year the child turns 18, the account converts to traditional-IRA rules, and standard IRA withdrawal rules (including the 10% early-withdrawal penalty before 59½, with exceptions) apply.
Source: Treasury/IRS program guidance. Verified Oct 10, 2026.
Accounts are held by participating trustees. Under current guidance, Robinhood is the initial trustee for new accounts, with BNY Mellon as the Treasury's financial agent. More institutions are expected to participate later — unconfirmed. See the steps →
Source: Treasury announcements; press reporting. Verified Oct 10, 2026.
TBD The broad strokes under current guidance: growth is tax-deferred, and after the age-18 conversion, traditional-IRA tax rules apply to withdrawals. But the final tax treatment is not settled — the IRS rules are still proposed. Don't make tax decisions off this page; check current IRS guidance or a tax professional.
Source: Proposed IRS rules (not final). Verified Oct 10, 2026.
TBD Not yet determined. How the account is treated in federal student-aid calculations is one of the biggest open questions. We'll update this answer the day it's resolved.
Status: unresolved in current guidance. Verified Oct 10, 2026.
Private philanthropy, not a federal benefit. Michael & Susan Dell pledged $250 per child for roughly 25 million children (announced December 2025), aimed mainly at children born before 2025 in income-qualifying ZIP codes. The official ZIP-code criteria have not been published yet.
Source: Dell family announcement; press reporting. Verified Oct 10, 2026.
The program itself is real — it's federal law. But scammers are already impersonating it. Red flags: "activation fees," requests for bank passwords, or "claim in 24 hours or lose it" urgency. Real enrollment happens only through official government channels — never pay to claim the $1,000.
General consumer-protection guidance. Verified Oct 10, 2026.