Child Savings Accounts: Financial Support from Birth
This act establishes special savings accounts for children, called American Opportunity Accounts (AO accounts). The government will make an initial deposit and annual contributions to these accounts, based on family income. These funds are intended to help young people cover education costs, home purchases, or other future investments, and their existence will not affect eligibility for other federal benefits.
Key points
Every child born after December 31, 2023, will receive an initial deposit of $1,000 into their AO account.
Annual contributions to AO accounts will be made until the child turns 18, with the amount depending on household income – lower incomes receive higher contributions (up to $2,000 annually).
Funds from an AO account can be withdrawn after age 18 for educational purposes, home ownership, or after age 59.5 for any purpose. Other future investments may be allowed under future regulations.
Funds in AO accounts will not be considered when determining eligibility for other federal benefits, including student financial aid.
Contributions to and distributions from AO accounts are exempt from income tax.
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