Federal

American Opportunity Accounts Act

Source: Congress.gov · 5,447 words in original text

What This Bill Does

This bill creates a savings account system called American Opportunity (AO) accounts for eligible children. Every qualifying child receives government contributions starting at $1,000, with additional yearly deposits based on their family's income. The accounts grow through government investments and can be used starting at age 18 for education, home purchases, or other approved long-term wealth-building expenses. ##

Who It Affects

- Children born after December 31, 2005 who are under age 18 - Families with children (contributions vary by household income) - The Treasury Department (administers the fund) - The Social Security Administration (certifies eligible children) - The American Opportunity Fund Board (manages the accounts) ##

Key Provisions

- The government establishes an American Opportunity Fund in the Treasury and creates individual AO accounts for each eligible child automatically when they receive a Social Security number (Sec. 3 and Sec. 4) - Each child gets an initial $1,000 deposit, then annual contributions based on household income on a sliding scale ranging from $0 to $2,000 per year until age 18 (Sec. 3) - Account holders cannot withdraw money before age 18 except for qualified higher education expenses while in school (Sec. 4) - Money can be used for education at colleges or career schools, home purchases, expenses after age 59½, or other approved investments in financial assets or personal capital (Sec. 4) - Account balances do not count when determining eligibility for federal benefits like student financial aid (Sec. 9) - The Treasury Department can access tax return information to determine correct contribution amounts (Sec. 3) ##

What Changes

If this bill becomes law, the federal government will begin depositing money into savings accounts for newborns. Families with lower incomes will receive larger annual contributions than wealthier families. These accounts will remain separate from the Social Security system. Tax law will be updated to make account contributions and distributions tax-free for account holders. ##

Important Definitions

- **AO Account:** An American opportunity account established for an eligible individual that holds government contributions and investment earnings - **Eligible Individual:** Anyone born after December 31, 2005 who has not yet reached age 18 and has a valid Social Security number - **American Opportunity Fund:** The government fund established in the Treasury that holds all AO accounts - **Qualified Expense:** Costs for higher education, home ownership, expenses after age 59½, or other approved investments that build long-term wealth - **Executive Director:** The person appointed to manage the American Opportunity Fund Board's operations ##

Effective Date

The tax changes apply to tax years beginning after December 31, 2023 (Sec. 12). Initial contributions of $1,000 begin for children born after December 31, 2023 when they receive a Social Security number (Sec. 3). Annual contributions begin the year after an account is established and continue until the account holder turns 18.

I 118TH CONGRESS 1ST SESSION H. R. 1041 To establish American opportunity accounts, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 14, 2023 Ms. PRESSLEY (for herself, Ms. TLAIB, Mrs. WATSON COLEMAN, Mrs. BEATTY, Mr. AUCHINCLOSS, Mr. CARTER of Louisiana, Ms. LEE of Cali- fornia, Ms. JAYAPAL, Mr. BOWMAN, Ms. NORTON, Mr. DAVIS of Illinois, Mr. EVANS, Mr. BLUMENAUER, Ms. OMAR, Mr. MOULTON, Ms. MENG, Mr. LARSON of Connecticut, Mr. CARSON, Mr. THOMPSON of Mississippi, Mr. CLEAVER, Ms. CLARKE of New York, Ms. DELAURO, Ms. SCHA- KOWSKY, Ms. JACOBS, Ms. BUSH, Ms. CROCKETT, Mr. COURTNEY, Ms. BARRAGA´N, Mr. CASAR, Ms. OCASIO-CORTEZ, and Ms. LEE of Pennsyl- vania) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To establish American opportunity accounts, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘American Opportunity Accounts Act’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1041 IH Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. American Opportunity Fund. Sec. 4. AO accounts. Sec. 5. Assignment, alienation, and treatment of deceased individuals. Sec. 6. Rules governing AO accounts relating to investment, accounting, and reporting. Sec. 7. American Opportunity Fund Board. Sec. 8. Fiduciary responsibilities. Sec. 9. Accounts disregarded in determining eligibility for Federal benefits. Sec. 10. Reports. Sec. 11. Programs for promoting financial capability. Sec. 12. Tax treatment. SEC. 2. DEFINITIONS. 1 For purposes of this title— 2 (1) AMERICAN OPPORTUNITY FUND.—The term 3 ‘‘American Opportunity Fund’’ means the fund es- 4 tablished under section 3. 5 (2) AO ACCOUNT.—The term ‘‘AO account’’ 6 means an American opportunity account established 7 under section 4. 8 (3) SECRETARY.—The term ‘‘Secretary’’ means 9 the Secretary of the Treasury or the Secretary’s del- 10 egate. 11 (4) AMERICAN OPPORTUNITY FUND BOARD.— 12 The term ‘‘American Opportunity Fund Board’’ 13 means the board established pursuant to section 7. 14 (5) EXECUTIVE DIRECTOR.—The term ‘‘Execu- 15 tive Director’’ means the executive director ap- 16 pointed pursuant to section 7. 17 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1041 IH SEC. 3. AMERICAN OPPORTUNITY FUND. 1 (a) ESTABLISHMENT.—There is established in the 2 Treasury of the United States a fund to be known as the 3 ‘‘American Opportunity Fund’’. 4 (b) AMOUNTS HELD BY FUND.—The American Op- 5 portunity Fund shall consist of the sum of all amounts 6 paid into the Fund under this Act, increased by the total 7 net earnings from investments of sums held in the Fund 8 or reduced by the total net losses from investments of 9 sums held in the Fund, and reduced by the total amount 10 of payments made from the Fund (including payments for 11 administrative expenses). 12 (c) USE OF FUND.— 13 (1) IN GENERAL.—The sums in the American 14 Opportunity Fund shall be appropriated and shall 15 remain available without fiscal year limitation— 16 (A) to make contributions to AO accounts; 17 (B) to invest under section 6; 18 (C) to make distributions in accordance 19 with this Act; 20 (D) to pay the administrative expenses of 21 carrying out this Act; and 22 (E) to purchase insurance as provided in 23 section 8(c)(2). 24 (2) EXCLUSIVE PURPOSES.—The sums in the 25 American Opportunity Fund shall not be appro- 26 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1041 IH priated for any purpose other than the purposes 1 specified in this section and may not be used for any 2 other purpose. 3 (d) TRANSFERS TO AMERICAN OPPORTUNITY 4 FUND.—The Secretary shall make transfers from the gen- 5 eral fund of the Treasury to the American Opportunity 6 Fund as follows: 7 (1) INITIAL CONTRIBUTION FOR ELIGIBLE INDI- 8 VIDUALS BORN AFTER DECEMBER 31, 2023.—Upon 9 receipt of a certification under section 4(b)(2) with 10 respect to an individual born after December 31, 11 2023, the Secretary shall transfer $1,000 to the AO 12 account of the individual. 13 (2) ANNUAL CONTRIBUTIONS.— 14 (A) IN GENERAL.—Each year which occurs 15 after the year in which an AO account is estab- 16 lished for an eligible individual and before the 17 year the eligible individual attains the age of 18 18, the Secretary shall transfer the annual con- 19 tribution amount to the AO account of the indi- 20 vidual. 21 (B) ANNUAL CONTRIBUTION AMOUNT.— 22 The annual contribution amount shall be the 23 amount such that the annual contribution 24 amount for any taxpayer whose household in- 25 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1041 IH come is within an income tier specified in the 1 following table shall decrease, on a sliding scale 2 in a linear manner, from the initial amount to 3 the final amount specified in such table for 4 such income tier: 5 In the case of household income (expressed as a percent of the poverty line) within the following income tier: The initial amount is— The final amount is— Up to 100 percent .................................................. $2,000 $2,000 100 percent up to 125 percent ............................... 2,000 1,500 125 percent up to 175 percent ............................... 1,500 1,000 175 percent up to 225 percent ............................... 1,000 500 225 percent up to 325 percent ............................... 500 250 325 percent up to 500 percent ............................... 250 0 500 percent or more ............................................... 0 0. (C) APPLICABLE HOUSEHOLD INCOME; 6 POVERTY LINE.—For purposes of this para- 7 graph— 8 (i) APPLICABLE HOUSEHOLD IN- 9 COME.—The term ‘‘applicable household 10 income’’ means household income (as de- 11 fined in section 36B(d) of the Internal 12 Revenue Code of 1986), except that— 13 (I) with respect to any calendar 14 year, the Secretary shall use the in- 15 come of the second calendar year pre- 16 ceding the calendar year for which the 17 contribution relates; and 18 VerDate Sep 11 2014 22:36 Mar 09, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1041 IH (II) in determining household in- 1 come the Secretary shall aggregate 2 the income of married individuals fil- 3 ing separate tax returns. 4 (ii) SPECIAL RULE FOR INDIVIDUALS 5 NOT FILING RETURNS.— 6 (I) IN GENERAL.—In the case of 7 any taxpayer who was not required to 8 file a return of tax for the tax im- 9 posed by section 1 for the taxable 10 year described in clause (i)(I) or for 11 whom the information described in 12 clause (i) is not available for such 13 year, such taxpayer shall be treated as 14 a taxpayer with a household income 15 which is less than 100 percent of the 16 poverty line. 17 (II) USE OF OTHER DATA.—Sub- 18 clause (I) shall not apply if the Sec- 19 retary determines, based on such 20 other information from any agency of 21 the United States as the Secretary de- 22 termines is reliable, that the tax- 23 payer’s household income for such 24 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1041 IH year is 100 percent of the poverty line 1 or greater. 2 (iii) POVERTY LINE.—The term ‘‘pov- 3 erty line’’ has the meaning given such term 4 under section 36B(d) of the Internal Rev- 5 enue Code of 1986. 6 (D) AUTHORITY TO PROVIDE TAX INFOR- 7 MATION.— 8 (i) IN GENERAL.—Section 6103(l) of 9 the Internal Revenue Code of 1986 is 10 amended by adding at the end the fol- 11 lowing new paragraph: 12 ‘‘(23) DISCLOSURE OF RETURN INFORMATION 13 TO CARRY OUT ELIGIBILITY REQUIREMENTS FOR 14 CERTAIN PROGRAMS.— 15 ‘‘(A) IN GENERAL.—The Secretary shall 16 disclose to officers and employees of the De- 17 partment of the Treasury or the American Op- 18 portunity Fund Board return information of 19 any taxpayer whose income is relevant in deter- 20 mining any annual contribution to an American 21 Opportunity Account under section 3 of the 22 American Opportunity Accounts Act. Such re- 23 turn information shall be limited to— 24 VerDate Sep 11 2014 22:36 Mar 09, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1041 IH ‘‘(i) taxpayer identity information 1 with respect to such taxpayer, 2 ‘‘(ii) the filing status of such tax- 3 payer, 4 ‘‘(iii) the number of individuals for 5 whom a deduction is allowed under section 6 151 with respect to the taxpayer (including 7 the taxpayer and the taxpayer’s spouse), 8 ‘‘(iv) the modified adjusted gross in- 9 come (as defined in section 36B) of such 10 taxpayer, of any spouse of such taxpayer 11 who filed a separate return, and of each of 12 the other individuals included under clause 13 (iii) who are required to file a return of tax 14 imposed by chapter 1 for the taxable year, 15 ‘‘(v) such other information as is pre- 16 scribed by the Secretary by regulation as 17 might indicate whether the taxpayer is eli- 18 gible for such an annual contribution (and 19 the amount thereof), and 20 ‘‘(vi) the taxable year with respect to 21 which the preceding information relates or, 22 if applicable, the fact that such informa- 23 tion is not available. 24 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 1041 IH ‘‘(B) RESTRICTION ON USE OF DISCLOSED 1 INFORMATION.—Return information disclosed 2 under subparagraph (A) may be used by offi- 3 cers and employees of the Department of the 4 Treasury or the American Opportunity Fund 5 Board for the purposes of, and to the extent 6 necessary in establishing eligibility for, and 7 verifying the appropriate amount of, any annual 8 contribution described in subparagraph (A).’’. 9 (ii) PROCEDURES AND RECORD- 10 KEEPING RELATED TO DISCLOSURES.— 11 Paragraph (4) of section 6103(p) of such 12 Code is amended by striking ‘‘or (22)’’ 13 each place it appears and inserting ‘‘(22), 14 or (23)’’. 15 (E) STUDY ON INCORPORATION OF OTHER 16 WEALTH FACTORS.—Not later than 2 years 17 after the date of the enactment of this Act, the 18 Comptroller General shall submit to Congress 19 and the Secretary of the Treasury a report on 20 the feasibility and distributive impacts of a new 21 measure for determining the amount of the an- 22 nual contribution amount under this paragraph 23 based on family wealth, total assets, and overall 24 net worth. Such measure may— 25 VerDate Sep 11 2014 22:36 Mar 09, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 1041 IH (i) include financial assets, the value 1 of family home, retirement accounts, busi- 2 ness and entrepreneurial ventures, poten- 3 tial future inheritances, and any other as- 4 sets or debts; and 5 (ii) continue to factor in current or 6 past income to the extent such information 7 is useful in estimating overall household 8 wealth. 9 (3) ADJUSTMENT FOR INFLATION.— 10 (A) IN GENERAL.—For each calendar year 11 beginning after 2024, each of the dollar 12 amounts under paragraphs (1) and (2)(B)(i) 13 shall be increased by such dollar amount multi- 14 plied by the cost-of-living adjustment deter- 15 mined under section 1(f)(3) of the Internal 16 Revenue Code of 1986 determined by sub- 17 stituting ‘‘calendar year 2023’’ for ‘‘calendar 18 year 2016’’ in subparagraph (A)(ii) thereof. 19 (B) ROUNDING.—If any amount adjusted 20 under paragraph (1) is not a multiple of $50, 21 such amount shall be rounded to the next low- 22 est multiple of $50. 23 (e) PROHIBITION ON USE OF PAYROLL TAXES TO 24 FUND AO ACCOUNTS.—The American Opportunity Fund 25 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 1041 IH and AO accounts are wholly separate and unique from the 1 Social Security system. No amount from any tax on em- 2 ployment may be contributed to the American Opportunity 3 Fund or AO accounts. 4 SEC. 4. AO ACCOUNTS. 5 (a) IN GENERAL.— 6 (1) ESTABLISHMENT.—The Executive Director 7 shall establish in the American Opportunity Fund an 8 account (to be known as an ‘‘American Opportunity 9 account’’ or an ‘‘AO account’’) for each eligible indi- 10 vidual certified under subsection (b). Each such ac- 11 count shall be identified to its account holder by 12 means of a unique personal identifier currently rec- 13 ognized by the Internal Revenue Service and shall 14 remain in the American Opportunity Fund. 15 (2) ACCOUNT BALANCE.—The balance in an ac- 16 count holder’s AO account at any time is the excess 17 of— 18 (A) the sum of— 19 (i) all deposits made into the Amer- 20 ican Opportunity Fund and credited to the 21 account under paragraph (3); and 22 (ii) the total amount of allocations 23 made to and reductions made in the ac- 24 count pursuant to paragraph (4); over 25 VerDate Sep 11 2014 07:27 Mar 07, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1041.IH H1041 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 1041 IH (B) the amounts paid out of the account 1 with respect to such individual under subsection 2 (c). 3 (3) CREDITING OF CONTRIBUTIONS.—Pursuant 4 to regulations which shall be prescribed by the Exec- 5 utive Director, the Executive Director shall credit to 6 each AO account the amounts paid into the Amer- 7 ican Opportunity Fund under section 3(d) which are 8 attributable to the account holder of such account. 9 (4) ALLOCATION OF EARNINGS AND LOSSES.— 10 The Executive Director shall allocate to each AO ac- 11 count an amount equal to the net earnings and net 12 losses from each investment of sums in the Amer- 13 ican Opportunity Fund which are attributable, on a 14 pro rata basis, to sums credited to such account, re- 15 duced by an appropriate share of the administrative 16 expenses paid out of the net earnings, as determined 17 by the Executive Director. 18 (b) ELIGIBLE INDIVIDUAL.—For purposes of this 19 title— 20 (1) IN GENERAL.—The term [Text truncated for display. Full text available on Congress.gov.]

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