113 HR 5576 IH: USAccounts: Investing in America’s Future Act of 2014
U.S. House of Representatives
2014-09-18
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; table of contents
(a)This Act may be cited as the USAccounts: Investing in America’s Future Act of 2014
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. USAccount Fund.
Sec. 4. USAccounts.
Sec. 5. Assignment, alienation, and treatment of deceased individuals.
Sec. 6. Rules governing USAccounts relating to investment, accounting, and reporting.
Sec. 7. USAccount Fund Board.
Sec. 8. Fiduciary responsibilities.
Sec. 9. Accounts disregarded in determining eligibility for Federal benefits.
Sec. 10. Reports.
Sec. 11. Tax provisions.
(c)For purposes of this Act—
(1)The term USAccount Fund means the fund established under section 3.
(2)The term USAccount means an account established under section 4.
(3)The term Secretary means the Secretary of the Treasury or the Secretary’s delegate.
(4)The term USAccount Fund Board means the board established pursuant to section 7.
(5)The term Executive Director means the executive director appointed pursuant to section 7.
2.The Congress finds the following:
(1)There is a strong link between savings and economic opportunity. Children in the poorest fifth of
households who manage to move up the income ladder as adults have almost
ten times the wealth of those who remain at the bottom.
(2)Even a small amount of children’s savings can have a significant impact on college success, a key
driver of economic mobility. Low- and moderate-income children with less
than $500 saved for college are three times more likely to enroll in
college and four times more likely to graduate than children with no
savings.
(3)Most working families in America lack savings and face financial insecurity as a result. 44 percent
of families are “liquid asset poor,” meaning they lack accessible savings
to survive for three months at the Federal poverty level.
(4)Families with children face additional barriers to building savings. These families are more likely
than childless households to live in asset poverty.
(5)The Great Recession has exacerbated financial insecurity for millions of American families. Between
2009 and 2011, the bottom 93 percent of households saw a drop in net
worth, while the wealthiest 7 percent of households saw a significant
increase in net worth.
(6)Children’s savings accounts programs are evidence-based and have been tested throughout the
country. In 2003, the Saving for Education, Entrepreneurship, and
Downpayment (SEED) national demonstration project was established to
evaluate the policy and practice of savings accounts for children. SEED
found that even very low-income parents will save and invest for their
children’s future if given the opportunity.
(7)Since 2009, publicly funded, universal children’s savings accounts programs have launched citywide
in San Francisco, California, countywide in Cuyahoga County, Ohio, and
statewide in Nevada and Maine. Additional children’s savings programs
serving thousands of children have launched or are launching in Colorado,
Hawaii, Illinois, Kansas, Michigan, Minnesota, Mississippi, New Mexico,
New York, Pennsylvania, South Dakota, Texas, Washington, and
Washington, DC.
(8)In order to expand economic opportunity and spur economic growth, the United States should promote
savings and investments for all Americans.
3.
(a)There is established in the Treasury of the United States a fund to be known as the USAccount Fund
.
(b)The USAccount Fund consists of the sum of all amounts paid into the Fund under this Act, increased
by the total net earnings from investments of sums held in the Fund or
reduced by the total net losses from investments of sums held in the Fund,
and reduced by the total amount of payments made from the Fund (including
payments for administrative expenses).
(c)
(1)The sums in the USAccount Fund are appropriated and shall remain available without fiscal year
limitation—
(A)to make contributions to USAccounts,
(B)to invest under section 6,
(C)to make distributions in accordance with this Act,
(D)to pay the administrative expenses of carrying out this Act, and
(E)to purchase insurance as provided in section 8(c)(2).
(2)The sums in the USAccount Fund shall not be appropriated for any purpose other than the purposes
specified in this section and may not be used for any other purpose.
(d)Transfers to USAccount FundThe Secretary shall make transfers from the general fund of the Treasury to the USAccount Fund as
follows:
(1)Upon receipt of a certification under section 4(b)(2) with respect to an individual, the Secretary
shall transfer $500 to the USAccount of the individual.
(2)Upon receipt of each certification under section 4(d) with respect to an individual, the Secretary
shall transfer the matching amount to the USAccount of the individual.
(e)The Executive Director shall pay into the USAccount Fund such amounts as are contributed under
section 4(c).
(f)Prohibition on Use of Payroll Taxes To Fund USAccountsThe USAccount Fund and USAccounts are wholly separate and unique from the Social Security system.
No amount from any tax on employment may be contributed to the USAccount
Fund or USAccounts.
4.
(a)
(1)The Executive Director shall establish in the USAccount Fund an account (to be known as a USAccount
) for each qualifying child certified under subsection (b). Each such account shall be identified
to its account holder by means of a unique personal identifier currently
recognized by the Internal Revenue Service and shall remain in the
USAccount Fund unless transferred to private management under subsection
(g).
(2)The balance in an account holder’s USAccount at any time is the excess of—
(A)the sum of—
(i)all deposits made into the USAccount Fund and credited to the account under paragraph (3), and
(ii)the total amount of allocations made to and reductions made in the account pursuant to paragraph
(4), over
(B)the amounts paid out of the account with respect to such individual under subsection (d).
(3)Crediting of contributionsPursuant to regulations which shall be prescribed by the Executive Director, the Executive Director
shall credit to each USAccount the amounts paid into the USAccount Fund
under section 3(d) which are attributable to the account holder of such
account.
(4)Allocation of earnings and lossesThe Executive Director shall allocate to each USAccount an amount equal to the net earnings and net
losses from each investment of sums in the USAccount Fund which are
attributable, on a pro rata basis, to sums credited to such account,
reduced by an appropriate share of the administrative expenses paid out of
the net earnings, as determined by the Executive Director.
(b)For purposes of this Act—
(1)The term qualifying child has the meaning given such term by section 24(c) of the Internal Revenue Code of 1986.
(2)Certification of account holdersOn the date on which a qualifying child is registered for a USAccount, the Secretary shall certify
to the Executive Director the name of such qualifying child.
(c)
(1)The Executive Director shall accept cash contributions for payment into the USAccount Fund if such
contribution is identified (in such manner as the Executive Director may
require) with the account holder of a USAccount to whom it is to be
credited at the time the contribution is made.
(2)Alternative methods of contribution
(A)Under regulations prescribed by the Executive Director and at the election of the employer,
contributions under paragraph (1) may be made through payroll deductions.
(B)Under regulations prescribed by the Secretary, contributions under paragraph (1) may be made by an
election to contribute all or a portion of the tax refund of the
contributor.
(3)No contribution may be accepted under paragraph (1)—
(A)unless it is in cash,
(B)after the date on which the USAccount holder ceases to be a qualifying child, and
(C)except in the case of matching contributions under subsection (d), if such contribution would
result in aggregate contributions for the calendar year exceeding $2,000.
(d)Government matching contribution
(1)Upon such showing as the Executive Director may require to establish the basis for certification,
the Executive Director shall, with respect to each private contribution to
the account of an account holder which is made before such account holder
attains age 18, certify to the Secretary the matching amount with respect
to such contribution.
(2)
(A)For purposes of this subsection, the term matching amount means, an amount equal to 100 percent of private contributions to the USAccount of an individual
during any calendar year beginning after the calendar year in which the
USAccount is established, not in excess of $500 for the calendar year.
(B)Phaseout based on earned income credit phaseoutThe $500 in subparagraph (A) shall be reduced (but not below zero) by an amount equal to the
phaseout percentage of so much of the adjusted gross income (or, if
greater, the earned income) of the taxpayer for the taxable year as
exceeds the phaseout amount. For purposes of this paragraph, terms used in
the preceding sentence which are used in section 32 of the Internal
Revenue Code of 1986 shall have the meanings given such terms by such
section 32.
(3)For purposes of this subsection, the term private contribution means a contribution accepted under subsection (c).
(e)
(1)No amount may be distributed from a USAccount before the date on which the account holder attains
the age of 18.
(2)Higher education expensesParagraph (1) shall not apply to amounts paid for qualified tuition and related expenses (as
defined in section 25A(f)(1)) of the account holder if the account holder
is an eligible student (as defined in section 25A(b)(3)) with respect to
such expenses.
(3)Distributions from a USAccount after the date on which the account holder attains the age of 18
which, within 60 days of such distribution, are transferred to an
individual retirement plan (as defined in section 7701(a)(37) of the
Internal Revenue Code of 1986) of the account holder shall be treated as a
rollover contribution which meets the requirements of section 408(d)(3) of
such Code.
(4)
(A)On the date on which the account holder attains age 19, the account shall cease to be treated as a
USAccount and any remaining funds in the account shall be distributed to
the account holder’s retirement savings vehicle established pursuant to
the Presidential Memorandum on Retirement Savings Security issued January
28, 2014.
(B)Special rule relating to MyIRAAmounts transferred to a savings vehicle under subparagraph (A) may be distributed from such
vehicles during the 10-year period beginning on the date of such transfer
without any penalty under the Internal Revenue Code of 1986.
(f)Until the account holder of a USAccount attains age 18, any rights or duties of the account holder
under this Act with respect to such account shall be exercised or
performed by the legal guardian of such account holder.
(g)
(1)The account holder of a USAccount may elect, under regulations prescribed by the Secretary, to
transfer the USAccount to a trustee who meets the requirements of
paragraph (2).
(2)A trustee meets the requirements of this paragraph if the trustee—
(A)is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of
the Secretary that the manner in which that person will administer the
USAccount will be consistent with the requirements of this Act or who has
so demonstrated with respect to any USAccount,
(B)agrees to a cap on its fees and costs, as determined by the Treasury, for the management of
USAccounts,
(C)provides an investment fund that maximizes growth over time while minimizing risk, and
(D)provides the safeguards with respect to USAccounts required by the Secretary.
(3)For purposes of this subsection, rules similar to the rules of paragraphs (3), (4), and (5) of
section 408 of the Internal Revenue Code of 1986 shall apply.
(h)
(1)For each calendar year beginning after 2015, the dollar amounts under sections 3(d)(1), 4(c)(3)(C),
and 4(d)(2) shall each be increased by such dollar amount multiplied by
the cost-of-living adjustment determined under section 1(f)(3) of the
Internal Revenue Code of 1986 determined by substituting calendar year 2014
for calendar year 1992
in subparagraph (B) thereof.
(2)If any amount adjusted under clause (i) is not a multiple of $50, such amount shall be rounded to
the next lowest multiple of $50.
5.Assignment, alienation, and treatment of deceased individuals
(a)Assignment and alienationUnder regulations which shall be prescribed by the Executive Director, rules relating to assignment
and alienation applicable under chapter 84 of title 5, United States Code,
with respect to amounts held in accounts in the Thrift Savings Fund shall
apply with respect to amounts held in USAccounts in the USAccount Fund.
(b)Treatment of accounts of deceased individualsIn the case of a deceased account holder of a USAccount which has an account balance greater than
zero, upon receipt of notification of such individual’s death, the
Executive Director shall close the account and shall transfer the balance
in such account to the duly appointed legal representative of the estate
of the deceased account holder, or if there is no such representative, to
the person or persons determined to be entitled thereto under the laws of
the domicile of the deceased account holder.
6.Rules governing USAccounts relating to investment, accounting, and reporting
(a)Default investment programThe USAccount Fund Board shall establish a default investment program under which, in a manner
similar to a lifecycle investment program, sums in each USAccount are
allocated to investment funds in the USAccount Fund based on the amount of
time before the account holder attains the age of 18. Each account holder
of a USAccount shall be enrolled in such program unless such account
holder, in such form and manner as prescribed by the Executive Director,
elects otherwise.
(b)
(1)Under regulations which shall be prescribed by the Executive Director, and subject to the
provisions of this Act, the following provisions shall apply with respect
to the USAccount Fund and accounts maintained in such Fund in the same
manner and to the same extent as such provisions relate to the Thrift
Savings Fund and the accounts maintained in the Thrift Savings Fund:
(A)Section 8438 of title 5, United States Code (relating to investment of the Thrift Savings Fund).
(B)Section 8439(b) of such title (relating to engagement of independent qualified public accountant).
(C)Section 8439(c) of such title (relating to periodic statements and summary descriptions of
investment options).
(D)Section 8439(d) of such title (relating to assumption of risk).
(2)For purposes of paragraph (1), references in such sections 8438 and 8439 to an employee, Member,
former employee, or former Member shall be deemed references to an account
holder of a USAccount in the USAccount Fund.
(c)Confidentiality and disclosure
(1)Except as otherwise authorized by Federal law, the USAccount Fund Board, the Executive Director,
and any employee of the USAccount Fund Board shall not disclose
information with respect to the USAccount Fund and or any account
maintained in such Fund.
(2)Disclosure to designee of beneficiaryThe Executive Director may, subject to such requirements and conditions as he may prescribe by
regulations, disclose such information with respect to the USAccount of
the beneficiary to such person or persons as the beneficiary may designate
in a request for or consent to such disclosure, or to any other person at
the beneficiary’s request to the extent necessary to comply with a request
for information or assistance made by the beneficiary to such other
person.
7.
(a)There is established in the executive branch of the Government a USAccount Fund Board.
(b)Composition, duties, and responsibilitiesSubject to the provisions of this Act, the following provisions shall apply with respect to the
USAccount Fund Board in the same manner and to the same extent as such
provisions relate to the Federal Retirement Thrift Investment Board:
(1)Section 8472 of title 5, United States Code (relating to composition of Federal Retirement Thrift
Investment Board).
(2)Section 8474 of such title (relating to Executive Director).
(3)Section 8475 of such title (relating to investment policies).
(4)Section 8476 of such title (relating to administrative provisions).
8.Fiduciary responsibilities
(a)Under regulations of the Secretary of Labor, the provisions of sections 8477 and 8478 of title 5,
United States Code, shall apply in connection with the USAccount Fund and
the accounts maintained in such Fund in the same manner and to the same
extent as such provisions apply in connection with the Thrift Savings Fund
and the accounts maintained in the Thrift Savings Fund.
(b)Any authority available to the Secretary of Labor under section 504 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1134) is hereby made available to the Secretary of Labor, and any officer designated by
the Secretary of Labor, to determine whether any person has violated, or
is about to violate, any provision applicable under subsection (a).
(c)Exculpatory provisions; insurance
(1)Any provision in an agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or duty
under this Act shall be void.
(2)Amounts in the USAccount Fund available for administrative expenses shall be available and may be
used at the discretion of the Executive Director to purchase insurance to
cover potential liability of persons who serve in a fiduciary capacity
with respect to the Fund and accounts maintained therein, without regard
to whether a policy of insurance permits recourse by the insurer against
the fiduciary in the case of a breach of a fiduciary obligation.
9.Accounts disregarded in determining eligibility for Federal benefitsAmounts in any USAccount shall not be taken into account in determining any individual’s or
household’s financial eligibility for, or amount of, any benefit or
service, paid for in whole or in part with Federal funds, including
student financial aid.
10.The Executive Director, in consultation with the Secretary, shall annually transmit a written
report to the Congress. Such report shall include—
(1)a detailed description of the status and operation of the USAccount Fund and the management of the
USAccounts, and
(2)a detailed accounting of the administrative expenses in carrying out this Act, including the ratio
of such administrative expenses to the balance of the USAccount Fund and
the methodology adopted by the Executive Director for allocating such
expenses among the USAccounts.
11.
(a)Tax treatment of USAccounts
Subchapter F of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the
following new part:
IXUSAccount Fund and USAccounts
Sec. 530A. USAccount Fund and USAccounts.
530A.USAccount Fund and USAccounts
(a)The USAccount Fund and USAccounts shall be exempt from taxation under this subtitle.
Notwithstanding the preceding sentence, a USAccount shall be subject to
the taxes imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable organizations).
(b)For purposes of this section, the terms USAccount Fund and USAccount have the meanings given such terms by the USAccounts: Investing in America’s Future Act of 2014.
(c)Tax treatment of distributionsAny amount paid or distributed out of a USAccount—
(1)which meets the distribution rules of the USAccounts: Investing in America’s Future Act of 2014 shall not be includible in gross income, and
(2)which does not meet the distribution rules of section 4(d) of such Act shall be included in the
gross income of the account holder..
(b)Enforcement provisions relating to private management of USAccounts
(1)Section 4973 of the Internal Revenue Code of 1986 is amended—
(A)by striking or
at the end of subsection (a)(4), by inserting or
at the end of subsection (a)(5), and by inserting after subsection (a)(5) the following new
paragraph:
(5)a USAccount subject to management under section 4(g) of the USAccounts: Investing in America’s Future Act of 2014,, and
(B)by adding at the end the following new subsection:
(h)Excess contributions to privately managed USAccountsFor purposes of this section, in the case of a USAccount subject to management under section 4(g)
of the USAccounts: Investing in America’s Future Act of 2014, the term excess contributions means the sum of—
(1)the aggregate amount contributed for the taxable year to the account, and
(2)the amount determined under this subsection for the preceding taxable year, reduced by the sum of—
(A)the distributions out of the account, and
(B)the excess (if any) of—
(i)the maximum amount allowable as a contribution under section 4(c)(3)(C) of the USAccounts: Investing in America’s Future Act of 2014 for the taxable year, over
(ii)the amount contributed to the account for the taxable year..
(2)Section 4975 of the Internal Revenue Code of 1986 is amended—
(A)by adding at the end of subsection (c) the following new paragraph:
(7)Special rule for USAccountsAn individual for whose benefit a USAccount subject to management under section 4(g) of the USAccounts: Investing in America’s Future Act of 2014 shall be exempt from the tax imposed by this section with respect to any transaction concerning
such account (which would otherwise be taxable under this section) if,
with respect to such transaction, the account ceases to be a USAccount by
reason of the application of section 530A(c)(2) to such account., and
(B)in subsection (e)(1) by redesignating subparagraph (G) as subparagraph (H) and by inserting after
subparagraph (F) the following new subparagraph:
(G)a USAccount subject to management under section 4(g) of the USAccounts: Investing in America’s Future Act of 2014,.
(c)Increase in child tax credit
(1)Section 24 of the Internal Revenue Code of 1986 is amended by adding at the end the following:
(g)For purposes of this section—
(1)The amount allowed as a credit under subsection (a) shall be increased by the USAccount
contribution amount.
(2)USAccount contribution amountThe term USAccount contribution amount means with respect to each qualifying child the amount contributed by the taxpayer to the
USAccount of the taxpayer for the taxable year which is taken into account
under section 4(d)(2)(B)(i) of the USAccounts: Investing in America’s Future Act of 2014.
(3)The amount under paragraph (2) shall be reduced (but not below zero) under subsection (b)(1) in the
same manner as the credit under subsection (a) is reduced under subsection
(b)(1).
(4)The aggregate credits allowed to the taxpayer under subpart C shall be increased by the amount of
the increase under this subsection and such amount—
(A)shall not be treated as a credit allowed under this subpart, and
(B)shall reduce the amount of credit otherwise allowable under subsection (a) without regard to
section 26(a)..
(2)The amendment made by subsection (a) shall apply to taxable years beginning after December 31,
2014.