Child Savings Accounts: Overview and Analysis. CRS Report R48554, Version 2
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| Title: | Child Savings Accounts: Overview and Analysis. CRS Report R48554, Version 2 |
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| Language: | English |
| Authors: | Brendan McDermott, Library of Congress, Congressional Research Service (CRS) |
| Source: | Congressional Research Service. 2025. |
| Availability: | Congressional Research Service. Web site: https://crsreports.congress.gov/ |
| Peer Reviewed: | N |
| Page Count: | 30 |
| Publication Date: | 2025 |
| Intended Audience: | Policymakers |
| Document Type: | Reports - Descriptive |
| Education Level: | Higher Education Postsecondary Education |
| Descriptors: | Money Management, Children, Banking, Parent Child Relationship, Taxes, Federal Legislation, Incentives, Program Descriptions, Program Effectiveness, Parent Student Relationship, Paying for College, Family Income, Caregiver Child Relationship |
| Abstract: | Congress has expressed interest in encouraging households to save more of their own income for future large purchases for children and young adults, such as for higher education. Child savings accounts are one tool that various levels of government, as well as some nonprofit groups, have used to encourage household saving. Many states have established qualified tuition plans--known as "529 plans" in reference to the section of the Internal Revenue Code that governs their tax treatment--that function as a form of child savings account. Savers (usually parents or guardians) contribute to these plans on behalf of a designated child beneficiary using after-tax dollars, but any income such accounts generate is not subject to the federal income tax provided the beneficiary uses withdrawals for qualified expenses. Most child savings account programs in the United States today structure the accounts they provide as a form of 529 account. Congress is considering creating an additional such federal program as part of reconciliation legislation for FY2025. Child savings account programs establish accounts wherein children ("beneficiaries") and their families can save money for future large purchases. Federal lawmakers have also proposed child savings account programs that beneficiaries could use for expenses other than higher education, such as purchasing a first home or starting a business. This report provides an overview of child savings account programs and their interaction with the federal tax and benefit system, as well as analysis of their theoretical and observed impacts on student and family outcomes. It ends with brief descriptions of a nonexhaustive list of child savings account programs in the United States. |
| Abstractor: | ERIC |
| Entry Date: | 2026 |
| Accession Number: | ED678594 |
| Database: | ERIC |
| Abstract: | Congress has expressed interest in encouraging households to save more of their own income for future large purchases for children and young adults, such as for higher education. Child savings accounts are one tool that various levels of government, as well as some nonprofit groups, have used to encourage household saving. Many states have established qualified tuition plans--known as "529 plans" in reference to the section of the Internal Revenue Code that governs their tax treatment--that function as a form of child savings account. Savers (usually parents or guardians) contribute to these plans on behalf of a designated child beneficiary using after-tax dollars, but any income such accounts generate is not subject to the federal income tax provided the beneficiary uses withdrawals for qualified expenses. Most child savings account programs in the United States today structure the accounts they provide as a form of 529 account. Congress is considering creating an additional such federal program as part of reconciliation legislation for FY2025. Child savings account programs establish accounts wherein children ("beneficiaries") and their families can save money for future large purchases. Federal lawmakers have also proposed child savings account programs that beneficiaries could use for expenses other than higher education, such as purchasing a first home or starting a business. This report provides an overview of child savings account programs and their interaction with the federal tax and benefit system, as well as analysis of their theoretical and observed impacts on student and family outcomes. It ends with brief descriptions of a nonexhaustive list of child savings account programs in the United States. |
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