Need to Knows About Section 530A Child Savings Accounts

I recently attended a webinar about a new way to save money for children: Section 530A (of the IRS tax code) accounts, which became available in July 2026 as a result of the 2025 OBBBA tax law. Below are some key facts to know about 530A accounts:

Government Seed Money- For children born from 1/1/25 through 12/31/28, the U.S. government will provide $1,000 in funding as a pilot project. Eligible individuals must be U.S. citizens and have a valid Social Security number issued before they apply. Also, thanks to philanthropists, children born from 2016 to 2024 can receive a $250 seed if they qualify by their residence’s median income.

 

Enrollment Process- Information about 530A accounts can be found at https://trumpaccounts.gov. To enroll, a new IRS Form 4547 must be filed with the IRS, along with a current year tax return. Another option is to use an online portal for which a mobile app is now available. Accounts may be opened by a parent, legal guardian, adult sibling, or grandparent. No income caps on them apply.

 

Retirement Focus- 530A accounts are a type of individual retirement account (IRA) that allows children to start saving for retirement much earlier than was previously possible, thereby providing a tremendous head start on a child’s lifetime wealth accumulation. Unlike traditional and Roth IRAs, however, earned income is not required. Obviously, most babies do not have jobs.

 

Additional Deposits- Beyond the seed money, up to $5,000 per year can be contributed to 530A accounts that grow tax-free until a child reaches age 18. The $5,000 limit will rise with inflation starting in 2028. Deposits can be made by parents, family members, and/or charitable organizations. A child’s parent’s employer can also contribute up to $2,500 (of the $5,000) as an employee benefit.

 

530A Account Investments- Account funds are automatically invested in a low-cost index fund where fees and expenses cannot exceed 0.1% of the investment balance. Initial trustees are BNY partnered with Robinhood. Withdrawals are typically not permitted during the growth phase before December 31 of the year before an eligible child turns 18.

 

Distribution Options- There are four options for beneficiaries at age 18: 1. Take distributions from the account (e.g., for college), 2. Keep the account open and invested, 3. Roll the account over to a Traditional IRA, and 4. Convert the traditional IRA to a Roth IRA. Standard IRA tax rules apply, meaning investment gains and money from the government or donors is taxed as ordinary income.

 

Income Tax Rules- IRA distributions before age 59.5 are subject to a 10% penalty unless an exception applies. Common exceptions are education expenses and a first-time home purchase. When a 530A account is converted from a rollover IRA to a Roth IRA, the beneficiary/owner must pay taxes on pre-tax contributions and earnings. Taxes will likely be low in a young adult’s tax bracket.

 

Account Purpose- Before opening a 530A account, designate a purpose for this money. Is it savings for college or retirement? For college savings, also consider 529 plans where qualified distributions are tax-free and up to $35,000 can rollover to a Roth IRA. If it’s retirement, 530A accounts have a powerful edge with almost two decades of extra savings and compound interest growth. The website for 530A accounts states that an account with an initial $1,000 and no further deposits could be worth $243,000 by age 55 based on historical S&P index averages. With $5,000 annual contributions added, the account could be worth $13 million!

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

 

Need to Knows About Fraud

I recently attended a seminar and a webinar about consumer scams and risk reduction strategies to avoid becoming a victim. Below are eight key take-aways:

Fraud Statistics- Approximately three million fraud reports were filed with the Federal Trade Commission in 2025 with reported losses of $15.9 billion. The five top fraud categories were imposters, online shopping, internet services, business and job opportunities, and investments.

 

Government Impersonation Scams- These are imposter scams where scam artists pretend to be from government agencies like Social Security and the IRS. They often demand payment with gift cards or wire transfers and threaten to cut off benefits. Other scammers request personal information that the government already has to “verify” an account. If contacted, hang up or delete immediately.

 

Account Monitoring- It is wise to monitor financial accounts regularly to ensure that there are no errors or irregularities that might indicate identity theft. Use two-factor authentication (2FA), such as biometric data or a texted code, to further strengthen account security.

 

Checking Account Fraud- Paper checks contain a bank account routing number and account number that can be misused if mail is stolen or gets into the wrong hands. Experts advise receiving money, paying bills, or sending money using secure digital payments such online bill-pay platforms and peer-to-peer apps. Always store checkbooks in a secure place (e.g., locked desk drawer).

 

Tech Support Scams- These typically start with pop-up windows that claim that a computer has a virus. The pop-ups contain a “tech support number” and instruct victims to call it. Next, scam artists ask for remote access to the computer to “fix” a problem that does not really exist. They then request payment and personal information for their “service” and have access to sensitive personal data.

 

Scam Prevention Tips- Personal decision rules can help prevent scam opportunities. Examples include letting “potential spam” calls go to voice mail, never letting your credit card out of your sight, never clicking on links from unknown sources, and never sending money to someone that you have not met in person, which is a key part of “romance scams.”

 

Red Flags- A common red flag of scams is being contacted out of the blue and pressured to act fast because an “opportunity” is a limited time offer. Poor grammar and spelling, the use of words like “guaranteed” and “risk-free,” and being asked to pay in an unusual way (e.g., Bitcoin ATMs) are other scam indicators. Common scam targets are older adults and youth and young adults.

 

Tech Tune-Ups-Experts recommend using strong passwords (e.g., JZv5Cmjt! vs. password2468), locking a smart phone when it is not in use, not keeping sensitive personal and financial data on a smart phone, keeping anti-virus software and security updates current on a computer, and not using unsecured public Wifi hotspots (e.g., at airports).

 This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

CCRC “Nitty-Gritty” Need to Knows

 

In a post last year, I wrote about a class that I taught for the first time about continuing care retirement communities or CCRCs. I recently taught the class again. Below are some additional things to consider about CCRCs:

CCRC Definition- A CCRC, also known as a life care or life plan community, is a senior living community that provides independent living, assisted living, memory care, and skilled nursing care on one campus as residents’ needs change. There are approximately 2,000 CCRCs in the U.S.

 

Elitist Concerns- CCRCs are expensive! Entrance fees are often $400,000 or more, especially when a “second person fee” is charged for a couple. Industry experts estimate that only about 10% to 20% of older adults have the financial resources to comfortably afford a traditional CCRC.

 

Early Planning- Experts advise moving to a CCRC before you need to. Once you have illnesses, limited mobilities, and special medical needs, it will be difficult to move and you possibly may not be accepted. In addition, many CCRCs have waiting lists that are five to ten years long to get in.

 

Widowhood Scenario- Spouses in a couple should consider what they will need as singles when the first spouse passes away. CCRCs can provide peace of mind as a source of future long-term care instead of relying on children, which adds a burden to their lives (time and money).

 

Downsizing Challenges- Selling a home and moving to a (generally) smaller CCRC unit can be emotionally, mentally, and physically taxing. It generally takes longer than people think, even when everything goes smoothly. People need to allow adequate time for selling and packing their “stuff.”

 

Pre-Move Measurements- There are online programs (and some CCRCs even have downsizing consultants) to help with laying out rooms and positioning possessions. Don’t pay to move things that won’t fit. Also, remember that CCRC residents typically live there for the remainder of their life.

 

Nitty Gritty Questions- Visit with staff and residents of a CCRC and ask questions about things that are not typically found in the slick brochures that CCRCs provide:

 

§   Is the CCRC profit or non-profit? Is there a “parent” company?

§  What is the CCRC’s bond rating? Ask to see their latest financial statements.

§  What facilities, activities, and amenities are provided?

§  Can you move between housing types (e.g., a cottage to an apartment after a spouse passes)?

§  How much of the entrance fee is pre-paid long-term care expenses for a tax deduction?

§  Is there a residents’ council? If so, how active is it?

§  Is there a resident’s handbook (ask to see it before buy-in)

§  If you move to a higher level of care, how is the transfer made, including moving possessions?

§  What is the average job tenure of CCRC employees?

§  What are the CCRC’s policies on parking and pets?

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Medicare Need to Knows

 

I recently attended a face-to-face class and a webinar about Medicare. Below are ten key take-aways:

Medicare Description- Medicare is a federal government health insurance program primarily for Americans (U.S. citizens and legal permanent residents) age 65+ and certain younger individuals with a qualifying disability (end-stage renal disease and ALS).

 

Medicare Administration- Medicare is administered by the Centers for Medicare & Medicaid Services (CMS), which is an agency within the U.S. Department of Health and Human Services.

 

Medicare vs. Medicaid- Medicare is a national program that is primarily age-based. Medicaid is a federal/state partnership that varies by state and is need-based (i.e., income and asset limits).

 

Medicare Parts A and B- Both parts are collectively known as “Original Medicare.” Part A covers inpatient hospital care and Part B pays for doctors’ services and outpatient care.

 

Medicare Part C- Commonly known as Medicare Advantage, Part C an all-in-one private insurance alternative to government-run Original Medicare. Coverage is coordinated by a private insurance company approved by the federal government rather than by the government itself. Some Part C plans include dental coverage. Open enrollment period every year is a time to shop around.

 

Medicare Coverage Split- According to KFF, 55% of Medicare beneficiaries are enrolled in Part C and the remaining 45% retain Original Medicare. Most people in the latter group buy Medicare supplement insurance (Medigap) to cover Medicare deductibles and coinsurance.

 

Medicare Part D- This is insurance program that helps cover the cost of outpatient prescription drugs. It can be added to Original Medicare or Medigap insurance or it can be part of a Medicare Advantage plan that bundles prescription drug coverage with medical benefits.

 

Medicare and Long-Term Care- Medicare does not cover long-term "custodial" care (help with everyday activities like bathing or eating). However, it does cover up to 100 days of skilled nursing facility care or rehabilitation following a qualifying hospital stay of at least three days.

 

Medicare Losses- Medicare experiences billions of dollars in annual losses due to fraud and abuse. Senior Medicare Patrol (SMP), a federal program, helps Medicare beneficiaries and caregivers prevent, detect, and report Medicare fraud, errors, and abuse. SMP operates in every U.S. state.

 

Medicare Appeals- Beneficiaries can appeal a decision not to cover a specific medical procedure. A common culprit is that the billing code was entered incorrectly. About 70% of appeals are successful. Of course, documentation is needed to present a strong case.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Barbservations From a Death Cafe

As I have noted previously, I volunteer as a room host for the same non-profit educational foundation that I am a paid instructor for. As a result, I get to learn a lot of interesting things for free. I recently attended a Death Café class as a volunteer (and observer). Below are my key take-aways:

Death Café Definition- A Death Café is a welcoming, group-directed conversation where people gather to discuss death, dying, and end-of-life experiences in a safe, respectful environment. It is NOT a grief support group or counseling session but, rather, an opportunity to share thoughts, ask questions, and engage in meaningful dialogue. A local hospice agency facilitated the group.

 

Death Café Movement- This program was definitely not unique to the Florida city where I live. The Death Café movement began in Switzerland in 2004 and later expanded internationally, encouraging open conversations about mortality and helping people make the most of their lives. People enjoy free refreshments as they talk about death and dying in a relaxed environment.

 

Range of Emotions- After an initial full group conversation, the16 attendees were divided into two smaller groups of eight. Over the course of 90 minutes, I observed both hearty laughter and heavy sobbing (men and women alike!) as people shared stories about themselves, their loved ones, and their greatest joys and fears. There were no lectures but, instead, totally authentic sharing among people who were strangers. The biggest financial fear that I heard expressed was running out of money during their remaining lifetime, which echoes findings from many older adult surveys.

 

Thought-Provoking Questions- The initial full group conversation started out with three questions: How old do you want to be when you die? How far are you from that age? and What are you planning to do in between? (i.e., what is on your “bucket list?”).  I was amazed that a handful of  people said things like “ I don’t have a bucket list,” “I’ve done everything I want to do,” and I’m OK if it (death) happens tonight.” I erroneously assumed that everyone has some unfinished business on a “to do” list but apparently not so. Instead, I noticed a sense of calm about facing the end of life.

 

More Pointed Questions- In the small groups, people were given large index cards with questions like “Who is your support system?” and “When you die, do you want to be alone or with others?” and “You have one week to live: what concerns do you have?” and “Who was the first person who you saw die and how did you feel?” and “How much end-of life medical treatment do you want?

 

Wide Range of Topics- As a volunteer, I was seated close enough to the two groups to follow their conversations. Among the topics that came up were probating a will, dying without a will, finding an attorney, regrets about not being able to go back to talk with ancestors, several “I wish I’s…”, estranged relationships, fear of an extended need for long-term care, suicide and assisted suicide, and the difficulty of holding end-of-life conversations with loved ones.

 

To summarize, the experience of watching an in-person Death Café in action was enlightening and provided lots of insights to write this post and to prepare future personal finance classes. There are also virtual Death Cafes that are held on Zoom and hosted by various facilitators worldwide.

 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.