The U.S. Treasury Department has automatically enrolled over 60 million American children in newly established savings accounts known as 530A accounts, which function similarly to starter individual retirement accounts (IRAs). The move, announced Thursday, marks a shift from the earlier system that required parents to actively open accounts for their children.
Introduced in July 2025 through federal legislation, these tax-deferred accounts allow parents, guardians, relatives, employers, philanthropists, and charitable organizations to contribute up to $5,000 annually on behalf of a child. Contributions grow tax-free within a low-cost stock index fund. Automatic enrollment aims to expand participation, particularly among low-income families, who had previously opened accounts at significantly lower rates. According to a nonprofit survey from September, only about 5 percent of eligible children in low-income households had accounts before this initiative.
Under the new system, any child under 18 with a Social Security number is eligible, provided they do not turn 18 before the end of the calendar year. The Treasury, or a designated trustee, will manage each account until a parent or guardian claims it. To assume control, adults must verify their identity, confirm their relationship to the child, and accept the account terms through a dedicated mobile application.
Several philanthropists and organizations have already committed substantial funding to these accounts. Michael Dell and his wife, Susan, pledged $250 deposits for up to 25 million children born between 2016 and 2024 living in ZIP codes where median household income is below $150,000. To date, only about 1.2 million eligible children have received these funds, but automatic enrollment will increase the reach of these contributions. Hedge fund manager Ray Dalio has committed $75 million for children in select Connecticut communities. Additional donors and companies are expected to follow.
Experts caution that while these accounts offer a valuable opportunity to collect external contributions, not all families should prioritize contributing their own funds. Since these accounts are designed as retirement savings vehicles, some financial advisors recommend focusing first on savings goals such as emergency funds, debt reduction, and college tuition, which can be better addressed through more flexible accounts.
The Treasury plans to continue periodic automatic enrollments and is coordinating with the Social Security Administration to enroll newborns when parents apply for Social Security numbers. Parents and guardians who prefer to enroll children themselves may do so through the mobile app, website, or IRS Form 4547, although the latter requires additional steps to activate the account.
Currently, there is no option to opt out of automatic enrollment, and once an account is claimed it cannot be closed. The Treasury and IRS have solicited public feedback on potential procedures to allow permanent account closure in the future.
The program is projected to cost taxpayers over $15 billion through 2034, mostly due to government seed deposits of $1,000 for children born from 2025 to 2028. Operational expenses related to managing millions of accounts remain unclear.
Unclaimed accounts will remain open indefinitely, allowing parents, guardians, or the children themselves—once they reach adulthood—to access the funds at any time.