On July 4, 2026, the IRS rolled out the new 530A accounts for U.S. citizens under the age of 18.
One way to think of these new accounts is as an Individual Retirement Account (IRA) for a child before they begin earning income. Current IRA rules require taxpayers to have earned income to contribute. Most kids under 18 don’t have earned income, so they can’t contribute to a traditional or Roth IRA. That means they miss out on years of compounding, but now the government is providing a kick start.
How It Works
Introduced as part of the large tax bill passed in summer 2025, these are tax-advantaged investment accounts with some interesting opportunities for families. When a child is born to a U.S. citizen between 2025 and 2028, the parents file Form 4547 or enroll with the app.
The Treasury will deposit $1,000 in a 530A account and invest the funds in a diversified U.S. stock index fund.
Parents, grandparents, aunts, uncles, and friends can all make up to $5,000 per year in after-tax contributions to the eligible child’s account.
How 530A Accounts Compare With Other Family Investment Tools
| 529 Plan | Coverdell ESA | 530A Account | Traditional IRA | |
|---|---|---|---|---|
Best for | College or school costs | Smaller, flexible education savings | Long-term savings, like retirement | Retirement savings for working individuals |
Who can have one | Anyone, no age limit | Child under 18 | Child under 18 | Anyone with earned income |
When funds can be used | Anytime, for school expenses | Anytime, for school expenses | Not until age 18 | Not until 59 1/2 without penalty |
Yearly contribution limit | No federal cap | $2,000 | $5,000 combined, all contributors | $7,500 in 2026, requires earned income |
Free government money | No | No | Yes, $1,000 for children born 2025-2028 | No |
Early or wrong-purpose use | Taxes plus penalty on earnings | Taxes plus penalty on earnings | Not applicable | Taxes plus 10 percent penalty, some exceptions |
At age 18 | Keeps working the same way | Must be used or rolled over | Converts to a retirement account | Not applicable, minors generally cannot open one |
One More Advantage to Watch
Another advantage of these 530A accounts is that an employer can contribute up to $2,500 to an employee’s child account. More guidance is coming about this opportunity, so stay tuned for updates from our team and your employer.
Whether you’re opening one of these accounts or just keeping it on your radar, we’re glad to help you think it through.
Please reach out to your Customer Advocate or contact us if you have any questions.
