[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2206 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
1st Session
S. 2206
To create Federal child savings accounts, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 24, 2021
Mr. Casey (for himself, Mr. Wyden, and Mr. Schumer) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To create Federal child savings accounts, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Young American Savers Act of 2021''.
SEC. 2. ESTABLISHMENT OF CHILD SAVINGS ACCOUNT PROGRAM.
(a) Establishment of Program.--The Secretary of the Treasury shall,
not later than December 31, 2022, establish a permanent program, to be
known as the ``Federal Child Savings Account Program'', which meets the
requirements of this section to establish and maintain a savings
account meeting the requirements of subsection (c) on behalf of
eligible individuals.
(b) Program Specifications.--
(1) In general.--
(A) Savings accounts.--The Federal Child Savings
Account Program established under this section shall--
(i) permit the parent or guardian of an
eligible individual to establish a savings
account which meets the requirements of this
subsection and subsection (c) on behalf of the
individual;
(ii) establish a savings account which
meets the requirements of this subsection and
subsection (c) on behalf of--
(I) eligible individuals who are in
foster care, in coordination with the
Administration for Children and
Families; and
(II) other eligible individuals on
whose behalf no account has been
established by a parent or guardian
under clause (i) as of the time the
first deposit under paragraph (4)(A) is
due to be made on behalf of such
individuals,
and notify such individuals of the
establishment of such accounts;
(iii) require the assets of each savings
account established under the program to be
held by the designated custodian;
(iv) within the limitations of paragraph
(3), permit contributions to be made
periodically to such savings accounts by direct
deposit through payroll deduction or by
electronic means, and by methods that provide
access for the unbanked;
(v) provide for the annual deposit under
paragraph (4) and the matching contributions
under paragraph (5) to be made to such savings
accounts, if applicable;
(vi) as provided in subsection (c), permit
distributions and rollovers from such savings
accounts upon request of the parent or guardian
of the individual on whose behalf the account
is established before the individual has
attained age 18, or upon request of such
individual after such individual has attained
age 18;
(vii) include procedures to consolidate
multiple accounts established for the same
individual and return excess contributions on
an annual basis, with notice provided to the
parent or guardian of the individual (or, if
appropriate, to the individual) and a procedure
for resolution of disputes; and
(viii) ensure that such savings accounts
are invested solely in United States Treasury
bonds.
(B) Regulations, etc.--The Secretary of the
Treasury shall have authority to promulgate such
regulations, rules, and other guidance as are necessary
to implement the Federal Child Savings Account Program,
and are consistent with this section and section 529B
of the Internal Revenue Code of 1986, including--
(i) rules regarding the provision of
periodic notices to individuals and parents or
guardians of individuals, as appropriate, on
whose behalf accounts are established under the
program, including information on account
balances and activity;
(ii) rules regarding beneficiary
designation in the case of the death of the
individual on whose behalf an account was
established; and
(iii) coordination rules permitting savings
accounts to be established under the Federal
Child Savings Account Program in connection
with State and local laws that provide
contributions to savings accounts for
residents.
(C) Pilot program for deposits made with federal
partners.--The Secretary of the Treasury may, in
fulfillment of subparagraph (A)(iv), establish a pilot
program which would allow grocery stores, pharmacies,
banks, and other similar businesses to partner with the
Federal Government to accept cash deposits from
customers and to remit such deposits to the Treasury
for payment into savings accounts under the Federal
Child Savings Account Program.
(2) No fees.--No fees shall be assessed on participants in
the Federal Child Savings Account Program.
(3) Limitations.--
(A) Contribution minimum.--The Secretary of the
Treasury may establish minimum amounts for initial and
additional contributions to a savings account under the
Federal Child Savings Account Program, not to exceed
$5.
(B) Contribution limitation.--
(i) In general.--Contributions to a savings
account under the Federal Child Savings Account
Program during any taxable year (other than the
contribution made under paragraph (4)) shall
not be accepted to the extent such
contributions exceed $2,500.
(ii) Phaseout.--The $2,500 amount under
clause (i) shall be reduced (but not below
zero) by $125 for each $2,000 (or fraction
thereof) by which the taxpayer's modified
adjusted gross income for the taxable year
exceeds $200,000.
(C) Limitation on participation.--Within a
reasonable amount of time before the date an eligible
individual attains age 17, the designated custodian
shall provide notice to the eligible individual and the
parent or guardian of the eligible individual that--
(i) no deposits under paragraph (4) or (5)
will be made for calendar years after the year
in which the individual attains age 17;
(ii) no further contributions made by any
person will be accepted after the date the
individual attains age 26; and
(iii) the individual (or, as provided, the
individual's parent or guardian) may elect to
have the account balance rolled over or
distributed as provided, and at the time
specified, in subsection (c).
(4) Annual deposit.--
(A) In general.--Within a reasonable amount of time
(not to exceed 60 days) after the filing of the return
of tax for each taxable year by a taxpayer claiming an
eligible individual as a dependent, the Secretary of
the Treasury shall deposit $500 into the savings
account established for such individual under the
Federal Child Savings Account Program.
(B) Phaseout.--The $500 amount under subparagraph
(A) shall be reduced (but not below zero) by $25 for
each $1,000 (or fraction thereof) by which the
taxpayer's modified adjusted gross income for the
taxable year exceeds $100,000.
(C) Deposit on behalf of children in foster care.--
At an appropriate time each year as determined by the
Secretary of the Treasury in coordination with the
Administration for Children and Families, such
Secretary shall deposit $500 into the savings account
established under such Program for any eligible
individual in foster care in any State with respect to
whom no deposit was made for such year under
subparagraph (A).
(5) Matching contributions.--If a credit is allowed under
section 32 of the Internal Revenue Code of 1986 to the parent
or guardian or an eligible individual for a taxable year, with
respect to contributions made by such parent or guardian to the
savings account of such eligible individual under the Federal
Child Savings Account Program during the succeeding taxable
year, the Secretary of the Treasury shall deposit into such
savings account an amount equal to so much of such
contributions as does not exceed $250. Such deposit shall be
made in addition to the deposit under paragraph (4).
(6) Designated custodian.--For purposes of this section,
the designated custodian is the person designated by the
Secretary of the Treasury to act as custodian of the savings
accounts established on behalf of participants in the Federal
Child Savings Account Program.
(7) State.--For purposes of this section, the term
``State'' includes the District of Columbia, any possession of
the United States, and any Indian tribe (as defined in section
45A(c)(6) of the Internal Revenue Code of 1986).
(8) Deposit of matching contributions into roth ira.--If a
parent or guardian of an eligible individual is eligible to
receive any matching contribution under paragraph (5), such
parent or guardian may elect either to have such matching
contribution paid to the savings account of such eligible
individual under the Federal Child Savings Account Program or
to a Roth IRA of such parent or guardian. The Secretary of the
Treasury shall establish a permanent program that creates and
maintains a Roth IRA (within the meaning of section 408A of the
Internal Revenue Code) on behalf of a parent or guardian who
elects for the matching contribution to be made to his or her
Roth IRA and who either affirmatively chooses to participate in
the program or does not identify a Roth IRA for receipt of the
matching contribution. The permanent program shall provide for
investment of account balances solely within United States
Treasury bonds and shall not charge any fees to account owners.
(9) Inflation adjustments.--
(A) In general.--In the case of any calendar year
after 2023, the $2,500 amount in paragraph (3)(B), the
$500 amount in paragraphs (4)(A), (4)(B), and (4)(C),
and the $250 amount in paragraph (5) shall each be
increased by an amount equal to--
(i) such dollar amount; multiplied by
(ii) the cost-of-living adjustment
determined under section 1(f)(3) of the
Internal Revenue Code of 1986 for the calendar
year, determined by substituting ``calendar
year 2022'' for ``calendar year 2016'' in
subparagraph (A)(ii) thereof.
(B) Rounding.--If any dollar amount increased under
subparagraph (A) is not a multiple of $5, such dollar
amount shall be rounded to the nearest multiple of $5.
(10) Accounts may not be assigned.--An account established
on behalf of an individual under the Federal Child Savings
Account Program may not be pledged or assigned to any other
person.
(11) Modified adjusted gross income.--For purposes of this
subsection, the term ``modified adjusted gross income'' means
adjusted gross income (as defined in section 62 of the Internal
Revenue Code of 1986) increased by--
(A) any amount excluded from gross income under
section 911 of such Code,
(B) any amount of interest received or accrued by
the taxpayer during the taxable year which is exempt
from tax, and
(C) an amount equal to the portion of the
taxpayer's social security benefits (as defined in
section 86(d) of such Code) which is not included in
gross income under such section 86 for the taxable
year.
(c) Distributions From Savings Account.--
(1) In general.--After the earlier of--
(A) the date the individual on whose behalf the
savings account under the Federal Child Savings Account
Program was established attains age 26; or
(B) the date such individual receives a bachelor's
degree or associate's degree, or enlists in active duty
military service of the United States,
amounts in such account may be contributed in a direct transfer
to a Roth IRA (as defined in section 408A(b) of the Internal
Revenue Code of 1986) or a designated Roth account (within the
meaning of section 402A of such Code) according to the rules of
the Internal Revenue Code of 1986, or distributed to the
individual in cash.
(2) Distributions for higher education expenses.--Without
regard to the date requirements of paragraph (1), a portion of
the amount in a savings account established under the Federal
Child Savings Account Program may be distributed in cash to the
individual or to the parent or guardian of the individual for
the payment of qualified higher education expenses of the
individual at an eligible educational institution. The
aggregate amount so distributed shall not exceed 50 percent of
the amount in such account as of the due date for the first
payment of tuition for the enrollment of the individual on
whose behalf the account is established as an eligible student
at such eligible educational institution.
(3) Contribution to able account.--Without regard to the
date requirements of paragraph (1), all or a portion of the
amount in a savings account established under the Federal Child
Savings Account Program may be contributed in a direct transfer
to an ABLE account established for the benefit of the
individual under section 529A of the Internal Revenue Code of
1986 (if the individual is eligible for purposes of section
529A(e)(1) of such Code).
(4) Definitions.--Any term used in this subsection which is
also used in section 529 of the Internal Revenue Code of 1986
has the same meaning as when used in such section.
(d) Eligible Individual.--For purposes of this section, the term
``eligible individual'' means a child who has not attained age 18 and
is a resident of the United States.
(e) Treatment of Accounts Under Certain Federal Programs.--
(1) Account funds disregarded for purposes of certain other
means-tested federal programs.--Notwithstanding any other
provision of Federal law that requires consideration of one or
more financial circumstances of an individual, for the purpose
of determining eligibility to receive, or the amount of, any
assistance or benefit authorized by such provision to be
provided to or for the benefit of such individual, any amount
(including earnings thereon) in an individual's account
established under the Federal Child Savings Account Program,
any contributions to such account, and any distribution (or
portion thereof) which is exempt from the tax under section
529B(d)(3) of the Internal Revenue Code of 1986 shall be
disregarded for such purpose with respect to any period during
which such individual maintains, makes contributions to, or
receives distributions from such account, except that--
(A) a distribution for qualified acquisition costs
(within the meaning of section 529B(d)(3)(C)(ii) of
such Code) shall not be so disregarded; and
(B) any amount (including such earnings) in such
account shall be considered a resource of the
individual to the extent that such amount exceeds
$100,000.
(2) Suspension of ssi benefits during periods of excessive
account funds.--
(A) In general.--The benefits of an individual
under the supplemental security income program under
title XVI of the Social Security Act shall not be
terminated, but shall be suspended, by reason of excess
resources of the individual attributable to an amount
in the account of the individual established under the
Federal Child Savings Account Program not disregarded
under paragraph (1).
(B) No impact on medicaid eligibility.--An
individual who would be receiving payment of such
supplemental security income benefits but for the
application of subparagraph (A) shall be treated for
purposes of title XIX of the Social Security Act as if
the individual continued to be receiving payment of
such benefits.
(f) Disclosure of Taxpayer Information.--
(1) In general.--Subsection (l) of section 6103 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
``(23) Disclosure of return information for purposes of
administration of the federal child savings account program.--
The Secretary shall disclose to any officer or employee of the
Department of the Treasury, as necessary for the administration
of the Federal Child Savings Account Program established under
section 2(a) of the Young American Savers Act of 2021, return
information relating to taxpayer identity, dependents, adjusted
gross income, and whether the taxpayer has claimed the earned
income credit under section 32 for the taxable year.''.
(2) Prohibition of redisclosure.--Paragraph (3) of section
6103(a) of the Internal Revenue Code of 1986 is amended by
striking ``or (21)'' and inserting ``(21), or (23)''.
(g) Child Savings Account Program.--Part VIII of subchapter F of
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting
after section 529A the following new section:
``SEC. 529B. CHILD SAVINGS ACCOUNT PROGRAM.
``(a) General Rule.--The Federal Child Savings Account Program
shall be exempt from taxation under this subtitle.
``(b) Federal Child Savings Account Program.--For purposes of this
title, the term `Federal Child Savings Account Program' means the
program established under section 2(a) of the Young American Savers Act
of 2021.
``(c) Treatment of Contributions and Earnings.--
``(1) In general.--No amount shall be includible in gross
income of an individual on whose behalf an account is
established under the Federal Child Savings Account Program, or
of any taxpayer claiming such individual as a dependent, with
respect to any earnings under the program.
``(2) Governmental and matching contributions.--Gross
income of an individual on whose behalf an account is
established under the Federal Child Savings Account Program, or
of any taxpayer claiming such individual as a dependent, shall
not include the amount of any deposit made to the individual's
account under the program pursuant to section 2(b)(4)(A),
2(b)(4)(C), or 2(b)(5) of the Young American Savers Act of
2021.
``(d) Treatment of Distributions.--
``(1) In general.--Gross income shall not include any cash
distribution from an account under the Federal Child Savings
Account Program permitted under section 2(c) of the Young
American Savers Act of 2021.
``(2) Treatment of rollovers.--
``(A) Roth iras.--Any contribution from the Federal
Child Savings Account Program to a Roth IRA permitted
under section 2(c)(1) of the Young American Savers Act
of 2021 shall be treated--
``(i) as a contribution from another Roth
IRA as described in section 408A(e)(1)(A), and
``(ii) as having been contributed to such
Roth IRA in a direct trustee-to-trustee
transfer within 60 days of the distribution for
purposes of section 408(d)(3).
``(B) Designated roth accounts.--Any contribution
from the Federal Child Savings Account Program to a
designated Roth account permitted under section 2(c)(1)
of the Young American Savers Act of 2021 shall be
treated--
``(i) as a contribution from another
designated Roth account for purposes of section
402A(c)(3), and
``(ii) as having been contributed to such
designated Roth account in a direct trustee-to-
trustee transfer within 60 days of the
distribution for purposes of section 402(c).
``(C) ABLE accounts.--Any contribution from the
Federal Child Savings Account Program to an ABLE
account permitted under section 2(c)(3) of the Young
American Savers Act of 2021 shall be treated--
``(i) as a contribution from another ABLE
account as described in section
529A(c)(1)(C)(i), and
``(ii) as having been contributed to such
ABLE account within 60 days of the distribution
for purposes of such section.
``(3) Tax on nonqualified use.--
``(A) In general.--The tax imposed by this title
for the taxable year shall be increased by an amount
equal to 20 percent of the amount of any distribution
other than a rollover described in paragraph (2) from
an account under the Federal Child Savings Account
Program during the taxable year, unless the qualified
expenses of the individual on whose behalf the account
was established paid or incurred during the taxable
year of the distribution are equal to or exceed the
amount of such distribution.
``(B) Distributions from roth ira.--If any amount
is contributed to a Roth IRA in a rollover distribution
from an account under the Federal Child Savings Program
as provided in section 2(c)(1) of the Young American
Savers Act of 2021, the tax imposed by this title for
any taxable year shall be increased by an amount equal
to 20 percent of the amount of any distribution from
such Roth IRA within the 5-year period beginning on the
date of the rollover, to the extent that such
distribution from the Roth IRA, when aggregated with
all other distributions from such Roth IRA during such
5-year period, does not exceed the amount contributed
in such rollover distribution. The preceding sentence
shall not apply to the extent the qualified expenses of
the individual on whose behalf the account under the
Federal Child Savings Account Program was established
which are paid or incurred during the taxable year of
the distribution from the Roth IRA are equal to or
exceed the amount of such distribution.
``(C) Qualified expenses.--For purposes of
subparagraphs (A) and (B), the term `qualified
expenses' means amounts paid or incurred by an
individual--
``(i) as collateral required for a loan
provided by the Small Business Administration,
``(ii) as qualified acquisition costs (as
defined in section 72(t)(8)(C)) with respect to
a residence intended to be the primary
residence of the individual, or
``(iii) for qualified higher education
expenses of the individual at an eligible
educational institution.
``(4) Definitions.--Any term used in this subsection which
is also used in section 529 of the Internal Revenue Code of
1986 has the same meaning as when used in such section.''.
(h) Clerical Amendment.--The table of sections for part VIII of
subchapter F of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after the item relating to section 529A the
following new item:
``Sec. 529B. Child Savings Account Program.''.
(i) Appropriation.--There is hereby appropriated to the Secretary
of the Treasury, to remain available until spent without fiscal year
limitation--
(1) $100,000,000 for technology and technology systems
necessary for the implementation and administration of the
Federal Child Savings Account Program;
(2) $25,000,000 for each fiscal year beginning with fiscal
year 2022 for the administration of the Federal Child Savings
Account Program; and
(3) such sums as are necessary to make contributions to
Federal Child Savings Accounts as required under paragraphs
(4)(A), (4)(C), and (5) of subsection (c).
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