Overview
- Draft regulations set procedures to open the child accounts, require an election via IRS Form 4547, and target first federal seed deposits in July with contributions expected after July 4, 2026.
- The proposal makes the filer the account’s responsible party during the child’s minority and outlines a priority order for authorization—legal guardian, parent, adult sibling, then grandparent—when applicable.
- Children born from Jan. 1, 2025, through Dec. 31, 2028, are eligible for a $1,000 Treasury deposit, while other minors may open accounts without the seed contribution.
- Rules highlighted in coverage include after-tax contributions up to $5,000 a year, potential employer contributions up to $2,500, limited investment menus tied to U.S. stock index funds, no withdrawals before 18, and ordinary income taxes on post-18 withdrawals with early-withdrawal penalties for nonqualified uses.
- Financial advisers—including Dave Ramsey—urge families to claim the $1,000 if eligible but often favor 529 plans, custodial accounts, or custodial Roth IRAs for ongoing saving, citing flexibility, taxes, and early Treasury administration risks.