Encouraging Americans to Save Act

I 116TH CONGRESS 2D SESSION H. R. 7418 To amend the Internal Revenue Code of 1986 to provide matching payments for retirement savings contributions by certain individuals. IN THE HOUSE OF REPRESENTATIVES JUNE 30, 2020 Ms. JUDY CHU of California (for herself, Mr. PANETTA, and Ms. SEWELL of Alabama) introduced the following bill; which was referred to the Com- mittee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide matching payments for retirement savings contributions by certain individuals. 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 ‘‘Encouraging Ameri- 4 cans to Save Act’’. 5 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 7418 IH SEC. 2. MATCHING PAYMENTS FOR ELECTIVE DEFERRAL 1 AND IRA CONTRIBUTIONS BY CERTAIN INDI- 2 VIDUALS. 3 (a) IN GENERAL.—Subchapter B of chapter 65 of the 4 Internal Revenue Code of 1986 is amended by adding at 5 the end the following new section: 6 ‘‘SEC. 6433. SAVER’S MATCH. 7 ‘‘(a) IN GENERAL.— 8 ‘‘(1) ALLOWANCE OF CREDIT.—Any eligible in- 9 dividual who makes qualified retirement savings con- 10 tributions for the taxable year shall be allowed a 11 credit for such taxable year in an amount equal to 12 the applicable percentage of so much of the qualified 13 retirement savings contributions made by such eligi- 14 ble individual for the taxable year as does not exceed 15 $3,000. 16 ‘‘(2) PAYMENT OF CREDIT.—The credit under 17 this section shall be paid by the Secretary as a con- 18 tribution (as soon as practicable after the eligible in- 19 dividual has filed a tax return for the taxable year) 20 to the applicable retirement savings vehicle of an eli- 21 gible individual. 22 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 23 this section— 24 ‘‘(1) IN GENERAL.—Except as provided in para- 25 graph (2), the applicable percentage is 50 percent. 26 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 7418 IH ‘‘(2) PHASEOUT.—The percentage under para- 1 graph (1) shall be reduced (but not below zero) by 2 the number of percentage points which bears the 3 same ratio to 50 percentage points as— 4 ‘‘(A) the excess of— 5 ‘‘(i) the taxpayer’s modified adjusted 6 gross income for such taxable year, over 7 ‘‘(ii) the applicable dollar amount, 8 bears to 9 ‘‘(B) the phaseout range. 10 If any reduction determined under this paragraph is 11 not a whole percentage point, such reduction shall be 12 rounded to the next lowest whole percentage point. 13 ‘‘(3) APPLICABLE DOLLAR AMOUNT; PHASEOUT 14 RANGE.— 15 ‘‘(A) JOINT RETURNS.—Except as pro- 16 vided in subparagraph (B)— 17 ‘‘(i) the applicable dollar amount is 18 $80,000, and 19 ‘‘(ii) the phaseout range is $20,000. 20 ‘‘(B) OTHER RETURNS.—In the case of— 21 ‘‘(i) a head of a household (as defined 22 in section 2(b)), the applicable dollar 23 amount and the phaseout range shall be 3⁄4 24 of the amounts applicable under subpara- 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 7418 IH graph (A) (as adjusted under subsection 1 (g)), and 2 ‘‘(ii) any taxpayer who is not filing a 3 joint return and who is not a head of a 4 household (as so defined), the applicable 5 dollar amount and the phaseout range 6 shall be 1⁄2 of the amounts applicable 7 under subparagraph (A) (as so adjusted). 8 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 9 section— 10 ‘‘(1) IN GENERAL.—The term ‘eligible indi- 11 vidual’ means any individual if such individual has 12 attained the age of 18 as of the close of the taxable 13 year. 14 ‘‘(2) DEPENDENTS AND FULL-TIME STUDENTS 15 NOT ELIGIBLE.—The term ‘eligible individual’ shall 16 not include— 17 ‘‘(A) any individual with respect to whom 18 a deduction under section 151 is allowed to an- 19 other taxpayer for a taxable year beginning in 20 the calendar year in which such individual’s 21 taxable year begins, and 22 ‘‘(B) any individual who is a student (as 23 defined in section 152(f)(2)). 24 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 7418 IH ‘‘(d) QUALIFIED RETIREMENT SAVINGS CONTRIBU- 1 TIONS.—For purposes of this section— 2 ‘‘(1) IN GENERAL.—The term ‘qualified retire- 3 ment savings contributions’ means, with respect to 4 any taxable year, the sum of— 5 ‘‘(A) the amount of the qualified retire- 6 ment contributions (as defined in section 7 219(e)) made by the eligible individual, 8 ‘‘(B) the amount of— 9 ‘‘(i) any elective deferrals (as defined 10 in section 402(g)(3)) of such individual, 11 and 12 ‘‘(ii) any elective deferral of com- 13 pensation by such individual under an eli- 14 gible deferred compensation plan (as de- 15 fined in section 457(b)) of an eligible em- 16 ployer described in section 457(e)(1)(A), 17 and 18 ‘‘(C) the amount of voluntary employee 19 contributions by such individual to any qualified 20 retirement plan (as defined in section 4974(c)). 21 Such term shall not include any amount attributable 22 to a payment under subsection (a). 23 ‘‘(2) REDUCTION FOR CERTAIN DISTRIBU- 24 TIONS.— 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 7418 IH ‘‘(A) IN GENERAL.—The qualified retire- 1 ment savings contributions determined under 2 paragraph (1) for a taxable year shall be re- 3 duced (but not below zero) by the aggregate 4 distributions received by the individual during 5 the testing period from any entity of a type to 6 which contributions under paragraph (1) may 7 be made. 8 ‘‘(B) TESTING PERIOD.—For purposes of 9 subparagraph (A), the testing period, with re- 10 spect to a taxable year, is the period which in- 11 cludes— 12 ‘‘(i) such taxable year, 13 ‘‘(ii) the 2 preceding taxable years, 14 and 15 ‘‘(iii) the period after such taxable 16 year and before the due date (including ex- 17 tensions) for filing the return of tax for 18 such taxable year. 19 ‘‘(C) EXCEPTED DISTRIBUTIONS.—There 20 shall not be taken into account under subpara- 21 graph (A)— 22 ‘‘(i) any distribution referred to in 23 section 72(p), 401(k)(8), 401(m)(6), 24 402(g)(2), 404(k), or 408(d)(4), 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 7418 IH ‘‘(ii) any distribution to which section 1 408(d)(3) or 408A(d)(3) applies, and 2 ‘‘(iii) any portion of a distribution if 3 such portion is transferred or paid in a 4 rollover contribution (as defined in section 5 402(c), 403(a)(4), 403(b)(8), 408A(e), or 6 457(e)(16)) to an account or plan to which 7 qualified retirement contributions can be 8 made. 9 ‘‘(D) TREATMENT OF DISTRIBUTIONS RE- 10 CEIVED BY SPOUSE OF INDIVIDUAL.—For pur- 11 poses of determining distributions received by 12 an individual under subparagraph (A) for any 13 taxable year, any distribution received by the 14 spouse of such individual shall be treated as re- 15 ceived by such individual if such individual and 16 spouse file a joint return for such taxable year 17 and for the taxable year during which the 18 spouse receives the distribution. 19 ‘‘(e) APPLICABLE RETIREMENT SAVINGS VEHI- 20 CLE.— 21 ‘‘(1) IN GENERAL.—The term ‘applicable retire- 22 ment savings vehicle’ means— 23 ‘‘(A) an account or plan elected by the eli- 24 gible individual under paragraph (2), or 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 7418 IH ‘‘(B) if no such election is made or the 1 Secretary is not able to make a contribution 2 into the account or plan selected by the eligible 3 individual, a MyRA established for the benefit 4 of the eligible individual. 5 For purposes of subparagraph (B), if no MyRA has 6 previously been established for the benefit of the in- 7 dividual, the Secretary shall establish such an ac- 8 count for such individual for purposes of contribu- 9 tions under this section. 10 ‘‘(2) OTHER RETIREMENT VEHICLES.—An eligi- 11 ble individual may elect to have the amount deter- 12 mined under subsection (a) contributed to an ac- 13 count or plan which— 14 ‘‘(A) is a Roth IRA or a designated Roth 15 account (within the meaning of section 402A) 16 of an applicable retirement plan (as defined in 17 section 402A(e)(1)), 18 ‘‘(B) is for the benefit of the eligible indi- 19 vidual, 20 ‘‘(C) accepts contributions made under this 21 section, and 22 ‘‘(D) is designated by such individual (in 23 such form and manner as the Secretary may 24 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 7418 IH provide) on the return of tax for the taxable 1 year. 2 ‘‘(3) MYRA.—For purposes of paragraph (1), 3 the term ‘MyRA’ means a Roth IRA which is estab- 4 lished— 5 ‘‘(A) under the MyRA program established 6 under section 3 of the Encouraging Americans 7 to Save Act, and 8 ‘‘(B) by the individual for whose benefit 9 the Roth IRA was created or by the Secretary 10 on behalf of such individual. 11 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.— 12 ‘‘(1) MODIFIED ADJUSTED GROSS INCOME.— 13 For purposes of this section, the term ‘modified ad- 14 justed gross income’ means adjusted gross income— 15 ‘‘(A) determined without regard to sections 16 911, 931, and 933, and 17 ‘‘(B) determined without regard to any ex- 18 clusion or deduction allowed for any qualified 19 retirement savings contribution made during 20 the taxable year. 21 ‘‘(2) TREATMENT OF CONTRIBUTIONS.—In the 22 case of any contribution under subsection (a)(2)— 23 ‘‘(A) except as otherwise provided in this 24 section or by the Secretary under regulations, 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 7418 IH such contribution shall be treated in the same 1 manner as a contribution made by the indi- 2 vidual on whose behalf such contribution was 3 made, 4 ‘‘(B) such contribution shall not be treated 5 as income to the taxpayer, and 6 ‘‘(C) such contribution shall not be taken 7 into account with respect to any applicable limi- 8 tation under sections 402(g)(1), 403(b), 9 408(a)(1), 408(b)(2)(B), 408A(c)(2), 414(v)(2), 10 415(c), or 457(b)(2). 11 ‘‘(3) TREATMENT OF QUALIFIED PLANS, ETC.— 12 A plan or arrangement to which a contribution is 13 made under this section shall not be treated as vio- 14 lating any requirement under section 401, 403, 408, 15 or 457 solely by reason of accepting such contribu- 16 tion. 17 ‘‘(4) ERRONEOUS CREDITS.—If any contribu- 18 tion is erroneously paid under subsection (a)(2), the 19 amount of such erroneous payment shall be treated 20 as an underpayment of tax. 21 ‘‘(g) INFLATION ADJUSTMENTS.— 22 ‘‘(1) IN GENERAL.—In the case of any taxable 23 year beginning in a calendar year after 2021, each 24 of the dollar amounts in subsections (a)(2) and 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 7418 IH (b)(3)(A)(i) shall be increased by an amount equal 1 to— 2 ‘‘(A) such dollar amount, multiplied by 3 ‘‘(B) the cost-of-living adjustment deter- 4 mined under section 1(f)(3) for the calendar 5 year in which the taxable year begins, deter- 6 mined by substituting ‘calendar year 2020’ for 7 ‘calendar year 2016’ in subparagraph (A)(ii) 8 thereof. 9 ‘‘(2) ROUNDING.—Any increase determined 10 under paragraph (1) shall be rounded to the nearest 11 multiple of— 12 ‘‘(A) $100 in the case of an adjustment of 13 the amount in subsection (a)(2), and 14 ‘‘(B) $1,000 in the case of an adjustment 15 of the amount in subsection (b)(3)(A)(i).’’. 16 (b) PAYMENT AUTHORITY.—Section 1324(b)(2) of 17 title 31, United States Code, is amended by striking 18 ‘‘6431’’ and inserting ‘‘6433’’. 19 (c) DEFICIENCIES.—Section 6211(b)(4) of the Inter- 20 nal Revenue Code of 1986 is amended by striking ‘‘and 21 6428’’ and inserting ‘‘6428, and 6433’’. 22 (d) CONFORMING AMENDMENTS.— 23 (1) Section 25B of the Internal Revenue Code 24 of 1986 is amended to read as follows: 25 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 7418 IH ‘‘SEC. 25B. SAVER’S CREDIT. 1 ‘‘For payment of credit related to qualified retire- 2 ment savings contributions, see section 6433.’’. 3 (2) The table of sections for subchapter B of 4 chapter 65 of such Code is amended by adding after 5 the item relating to section 6430 the following new 6 item: 7 ‘‘Sec. 6433. Saver’s match.’’. (3) The table of sections for subpart A of part 8 IV of subchapter A of chapter 1 of such Code is 9 amended by striking the item relating to section 25B 10 and inserting the following new item: 11 ‘‘Sec. 25B. Saver’s credit.’’ (e) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to taxable years beginning after 13 December 31, 2020. 14 SEC. 3. ESTABLISHMENT OF MYRA PROGRAM. 15 (a) IN GENERAL.—The Secretary of the Treasury (or 16 the Secretary’s delegate) shall, not later than December 17 31, 2020, establish a permanent program, to be known 18 as the ‘‘MyRA Program’’, which meets the requirements 19 of this section to establish and maintain a Roth IRA on 20 behalf of individuals. 21 (b) PROGRAM SPECIFICATIONS.— 22 (1) IN GENERAL.— 23 VerDate Sep 11 2014 23:27 Aug 06, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H7418.IH H7418 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 7418 IH (A) ROTH IRAS.—The MyRA Program es- 1 tablished under this section shall— 2 (i) permit an individual to establish a 3 Roth IRA which satisfies the requirements 4 of section 408A of the Internal Revenue 5 Code of 1986 on behalf of the individual; 6 (ii) permit an employer to establish 7 such a Roth IRA on behalf of 1 or more 8 employees of such employer; 9 (iii) require the assets of each Roth 10 IRA established under the program to be 11 held by the designated Roth IRA custo- 12 dian; 13 (iv) permit contributions to be made 14 periodically to such Roth IRAs by direct 15 deposit or other electronic means and by 16 methods that provide access for the 17 unban [Text truncated for display. 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