Young American Savers Act of 2020

II 116TH CONGRESS 2D SESSION S. 3764 To create Federal child savings accounts, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 19, 2020 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Young American Sav- 4 ers Act of 2020’’. 5 SEC. 2. ESTABLISHMENT OF CHILD SAVINGS ACCOUNT 6 PROGRAM. 7 (a) ESTABLISHMENT OF PROGRAM.—The Secretary 8 of the Treasury shall, not later than December 31, 2021, 9 establish a permanent program, to be known as the ‘‘Fed- 10 eral Child Savings Account Program’’, which meets the 11 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 3764 IS requirements of this section to establish and maintain a 1 savings account meeting the requirements of subsection 2 (c) on behalf of eligible individuals. 3 (b) PROGRAM SPECIFICATIONS.— 4 (1) IN GENERAL.— 5 (A) SAVINGS ACCOUNTS.—The Federal 6 Child Savings Account Program established 7 under this section shall— 8 (i) permit the parent or guardian of 9 an eligible individual to establish a savings 10 account which meets the requirements of 11 this subsection and subsection (c) on be- 12 half of the individual; 13 (ii) establish a savings account which 14 meets the requirements of this subsection 15 and subsection (c) on behalf of— 16 (I) eligible individuals who are in 17 foster care, in coordination with the 18 Administration for Children and Fam- 19 ilies; and 20 (II) other eligible individuals on 21 whose behalf no account has been es- 22 tablished by a parent or guardian 23 under clause (i) as of the time the 24 first deposit under paragraph (4)(A) 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 3764 IS is due to be made on behalf of such 1 individuals, 2 and notify such individuals of the estab- 3 lishment of such accounts; 4 (iii) require the assets of each savings 5 account established under the program to 6 be held by the designated custodian; 7 (iv) within the limitations of para- 8 graph (3), permit contributions to be made 9 periodically to such savings accounts by di- 10 rect deposit through payroll deduction or 11 by electronic means, and by methods that 12 provide access for the unbanked; 13 (v) provide for the annual deposit 14 under paragraph (4) and the matching 15 contributions under paragraph (5) to be 16 made to such savings accounts, if applica- 17 ble; 18 (vi) as provided in subsection (c), per- 19 mit distributions and rollovers from such 20 savings accounts upon request of the par- 21 ent or guardian of the individual on whose 22 behalf the account is established before the 23 individual has attained age 18, or upon re- 24 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 3764 IS quest of such individual after such indi- 1 vidual has attained age 18; 2 (vii) include procedures to consolidate 3 multiple accounts established for the same 4 individual and return excess contributions 5 on an annual basis, with notice provided to 6 the parent or guardian of the individual 7 (or, if appropriate, to the individual) and a 8 procedure for resolution of disputes; and 9 (viii) ensure that such savings ac- 10 counts are invested solely in United States 11 Treasury bonds. 12 (B) REGULATIONS, ETC.—The Secretary 13 of the Treasury shall have authority to promul- 14 gate such regulations, rules, and other guidance 15 as are necessary to implement the Federal 16 Child Savings Account Program, and are con- 17 sistent with this section and section 529B of 18 the Internal Revenue Code of 1986, including— 19 (i) rules regarding the provision of 20 periodic notices to individuals and parents 21 or guardians of individuals, as appropriate, 22 on whose behalf accounts are established 23 under the program, including information 24 on account balances and activity; 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 3764 IS (ii) rules regarding beneficiary des- 1 ignation in the case of the death of the in- 2 dividual on whose behalf an account was 3 established; and 4 (iii) coordination rules permitting sav- 5 ings accounts to be established under the 6 Federal Child Savings Account Program in 7 connection with State and local laws that 8 provide contributions to savings accounts 9 for residents. 10 (C) PILOT PROGRAM FOR DEPOSITS MADE 11 WITH FEDERAL PARTNERS.—The Secretary of 12 the Treasury may, in fulfillment of subpara- 13 graph (A)(iv), establish a pilot program which 14 would allow grocery stores, pharmacies, banks, 15 and other similar businesses to partner with the 16 Federal Government to accept cash deposits 17 from customers and to remit such deposits to 18 the Treasury for payment into savings accounts 19 under the Federal Child Savings Account Pro- 20 gram. 21 (2) NO FEES.—No fees shall be assessed on 22 participants in the Federal Child Savings Account 23 Program. 24 (3) LIMITATIONS.— 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 3764 IS (A) CONTRIBUTION MINIMUM.—The Sec- 1 retary of the Treasury may establish minimum 2 amounts for initial and additional contributions 3 to a savings account under the Federal Child 4 Savings Account Program, not to exceed $5. 5 (B) CONTRIBUTION LIMITATION.—Con- 6 tributions to a savings account under the Fed- 7 eral Child Savings Account Program during any 8 taxable year (other than the contribution made 9 under paragraph (4)) shall not be accepted to 10 the extent such contributions exceed $2,500. 11 (C) LIMITATION ON PARTICIPATION.— 12 Within a reasonable amount of time before the 13 date an eligible individual attains age 17, the 14 designated custodian shall provide notice to the 15 eligible individual and the parent or guardian of 16 the eligible individual that— 17 (i) no deposits under paragraph (4) or 18 (5) will be made for calendar years after 19 the year in which the individual attains age 20 17; 21 (ii) no further contributions made by 22 any person will be accepted after the date 23 the individual attains age 26; and 24 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 3764 IS (iii) the individual (or, as provided, 1 the individual’s parent or guardian) may 2 elect to have the account balance rolled 3 over or distributed as provided, and at the 4 time specified, in subsection (c). 5 (4) ANNUAL DEPOSIT.— 6 (A) IN GENERAL.—Within a reasonable 7 amount of time (not to exceed 60 days) after 8 the filing of the return of tax for each taxable 9 year by a taxpayer claiming an eligible indi- 10 vidual as a dependent, the Secretary of the 11 Treasury shall deposit $500 into the savings ac- 12 count established for such individual under the 13 Federal Child Savings Account Program. 14 (B) PHASEOUT.—The $500 amount under 15 subparagraph (A) shall be reduced (but not 16 below zero) by $25 for each $1,000 (or fraction 17 thereof) by which the taxpayer’s adjusted gross 18 income (as defined in section 62 of the Internal 19 Revenue Code of 1986) exceeds $100,000. 20 (C) DEPOSIT ON BEHALF OF CHILDREN IN 21 FOSTER CARE.—At an appropriate time each 22 year as determined by the Secretary of the 23 Treasury in coordination with the Administra- 24 tion for Children and Families, such Secretary 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 3764 IS shall deposit $500 into the savings account es- 1 tablished under such Program for any eligible 2 individual in foster care in any State with re- 3 spect to whom no deposit was made for such 4 year under subparagraph (A). 5 (5) MATCHING CONTRIBUTIONS.—If a credit is 6 allowed under section 32 of the Internal Revenue 7 Code of 1986 to the parent or guardian or an eligi- 8 ble individual for a taxable year, with respect to con- 9 tributions made by such parent or guardian to the 10 savings account of such eligible individual under the 11 Federal Child Savings Account Program during the 12 succeeding taxable year, the Secretary of the Treas- 13 ury shall deposit into such savings account an 14 amount equal to so much of such contributions as 15 does not exceed $250. Such deposit shall be made in 16 addition to the deposit under paragraph (4). 17 (6) DESIGNATED CUSTODIAN.—For purposes of 18 this section, the designated custodian is the person 19 designated by the Secretary of the Treasury to act 20 as custodian of the savings accounts established on 21 behalf of participants in the Federal Child Savings 22 Account Program. 23 (7) STATE.—For purposes of this section, the 24 term ‘‘State’’ includes the District of Columbia, any 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 3764 IS possession of the United States, and any Indian 1 tribe (as defined in section 45A(c)(6) of the Internal 2 Revenue Code of 1986). 3 (8) DEPOSIT OF MATCHING CONTRIBUTIONS 4 INTO ROTH IRA.—If a parent or guardian of an eli- 5 gible individual is eligible to receive any matching 6 contribution under paragraph (5), such parent or 7 guardian may elect either to have such matching 8 contribution paid to the savings account of such eli- 9 gible individual under the Federal Child Savings Ac- 10 count Program or to a Roth IRA of such parent or 11 guardian. The Secretary of the Treasury shall estab- 12 lish a permanent program that creates and main- 13 tains a Roth IRA (within the meaning of section 14 408A of the Internal Revenue Code) on behalf of a 15 parent or guardian who elects for the matching con- 16 tribution to be made to his or her Roth IRA and 17 who either affirmatively chooses to participate in the 18 program or does not identify a Roth IRA for receipt 19 of the matching contribution. The permanent pro- 20 gram shall provide for investment of account bal- 21 ances solely within United States Treasury bonds 22 and shall not charge any fees to account owners. 23 (9) INFLATION ADJUSTMENTS.— 24 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 3764 IS (A) IN GENERAL.—In the case of any cal- 1 endar year after 2021, the $2,500 amount in 2 paragraph (3)(B), the $500 amount in para- 3 graphs (4)(A), (4)(B), and (4)(C), and the 4 $250 amount in paragraph (5) shall each be in- 5 creased by an amount equal to— 6 (i) such dollar amount; multiplied by 7 (ii) the cost-of-living adjustment de- 8 termined under section 1(f)(3) of the In- 9 ternal Revenue Code of 1986 for the cal- 10 endar year, determined by substituting 11 ‘‘calendar year 2020’’ for ‘‘calendar year 12 2016’’ in subparagraph (A)(ii) thereof. 13 (B) ROUNDING.—If any dollar amount in- 14 creased under subparagraph (A) is not a mul- 15 tiple of $5, such dollar amount shall be rounded 16 to the nearest multiple of $5. 17 (10) ACCOUNTS MAY NOT BE ASSIGNED.—An 18 account established on behalf of an individual under 19 the Federal Child Savings Account Program may 20 not be pledged or assigned to any other person. 21 (c) DISTRIBUTIONS FROM SAVINGS ACCOUNT.— 22 (1) IN GENERAL.—After the earlier of— 23 (A) the date the individual on whose behalf 24 the savings account under the Federal Child 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 3764 IS Savings Account Program was established at- 1 tains age 26; or 2 (B) the date such individual receives a 3 bachelor’s degree or associate’s degree, or en- 4 lists in active duty military service of the 5 United States, 6 amounts in such account may be contributed in a di- 7 rect transfer to a Roth IRA (as defined in section 8 408A(b) of the Internal Revenue Code of 1986) or 9 a designated Roth account (within the meaning of 10 section 402A of such Code) according to the rules of 11 the Internal Revenue Code of 1986, or distributed to 12 the individual in cash. 13 (2) DISTRIBUTIONS FOR HIGHER EDUCATION 14 EXPENSES.—Without regard to the date require- 15 ments of paragraph (1), a portion of the amount in 16 a savings account established under the Federal 17 Child Savings Account Program may be distributed 18 in cash to the individual or to the parent or guard- 19 ian of the individual for the payment of qualified 20 higher education expenses of the individual at an eli- 21 gible educational institution. The aggregate amount 22 so distributed shall not exceed 50 percent of the 23 amount in such account as of the due date for the 24 first payment of tuition for the enrollment of the in- 25 VerDate Sep 11 2014 01:17 Jun 11, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3764.IS S3764 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 3764 IS dividual on whose behalf the account is established 1 as an eligible student at such eligible educational in- 2 stitution. 3 (3) CONTRIBUTION TO ABLE ACCOUNT.—With- 4 out regard to the date requirements of paragraph 5 (1), all or a portion of the amount in a savings ac- 6 count established under the Federal Child Savings 7 Account Program may be contributed in a direct 8 transfer to an ABLE account established for the 9 benefit of the individual under section 529A of the 10 Internal Revenue Code of 1986 (if the individual is 11 eligible for purposes of section 529A(e)(1) of such 12 Code). 13 (4) DEFINITIONS.—Any term used in this sub- 14 section which is also used in section 529 of the In- 15 ternal Revenue Code of 1986 has the same meaning 16 as when used in such section. 17 (d) ELIGIBLE INDIVIDUAL.—For purposes of this 18 section, the term ‘‘eligible individual’’ means a child who 19 has not attained age 18 and is a resident of the United 20 States. 21 (e) TREATMENT OF ACCOUNTS UNDER CERTAIN 22 FEDERAL PROGRAMS.— 23 (1) ACCOUNT FUNDS DISREGARDED FOR PUR- 24 POSES OF CERTAIN OTHER MEANS-TESTED FEDERAL 25 VerDate Sep 11 2014 01: [Text truncated for display. 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