Overview
- The IRS and Treasury issued guidance and Form 4547 for opening the new child investment accounts at Treasury-selected institutions, with an online portal expected in mid-2026.
- Congress created the accounts in 2025 with a one-time $1,000 federal pilot deposit for children born 2025–2028, subject to an election by a parent or guardian.
- Michael and Susan Dell pledged $6.25 billion to add $250 to roughly 25 million children’s accounts in lower-income ZIP codes, expanding the program’s coverage.
- Anyone can contribute up to $5,000 per year starting July 4, 2026, and employer contributions up to $2,500 are excluded from an employee’s taxable income.
- Investments are limited to low-cost U.S. equity index funds or ETFs with fees capped near 0.1%, no distributions are allowed before age 18, and post‑18 withdrawals above basis are taxable and can face a 10% penalty, with critics warning the opt‑in setup and small dollar amounts may limit impact as DOL ERISA guidance and custodian selections remain pending.