Overview

• The Treasury Department and IRS are finalizing regulatory guidance on eligibility, enrollment procedures, investment rules and tax treatment ahead of the accounts’ July 2026 rollout.
• Authorized by the $5 trillion One Big Beautiful Bill Act, the program will automatically open custodial IRAs seeded with $1,000 for every U.S. citizen born between January 1, 2025 and December 31, 2028.
• These accounts allow after-tax contributions up to $5,000 per year until a child turns 18, with employers permitted to add up to $2,500 annually subject to nondiscrimination plan requirements.
• Funds for beneficiaries under age 18 must be invested in a broad U.S. stock index fund with annual expenses capped at 0.1 percent, and withdrawals are prohibited until the beneficiary reaches age 18.
• After age 18, distributions follow traditional IRA rules—with ordinary income taxation on gains and a 10 percent early withdrawal penalty before age 59½—leading experts to question their value compared with 529 plans and Roth IRAs.