[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2740 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2740

  To provide for the establishment of Individual Development Accounts 
 (IDAs) that will allow individuals and families with limited means an 
opportunity to accumulate assets, to access education, to own their own 
     homes and businesses, and ultimately to achieve economic self-
sufficiency, and to increase the limit on deductible IRA contributions, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 15, 2000

 Ms. Landrieu introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To provide for the establishment of Individual Development Accounts 
 (IDAs) that will allow individuals and families with limited means an 
opportunity to accumulate assets, to access education, to own their own 
     homes and businesses, and ultimately to achieve economic self-
sufficiency, and to increase the limit on deductible IRA contributions, 
                        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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Savings Accounts 
Are Valuable for Everyone Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.
   TITLE I--QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNTS FOR LOW-INCOME 
                                WORKERS

Sec. 101. Structure and administration of qualified individual 
                            development account programs.
Sec. 102. Procedures for opening an Individual Development Account and 
                            qualifying for matching funds.
Sec. 103. Contributions to Individual Development Accounts.
Sec. 104. Deposits by qualified individual development account 
                            programs.
Sec. 105. Withdrawal procedures.
Sec. 106. Certification and termination of qualified individual 
                            development account programs.
Sec. 107. Reporting, monitoring, and evaluation.
Sec. 108. Funds in parallel accounts of program participants 
                            disregarded for purposes of certain means-
                            tested Federal programs.
 TITLE II--QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
                                CREDITS

Sec. 201. Qualified individual development account program investment 
                            credits.
Sec. 202. CRA credit treatment for qualified individual development 
                            account program investments.
Sec. 203. Designation of earned income tax credit payments for deposit 
                            to Individual Development Accounts.
           TITLE III--MODIFICATION OF IRA CONTRIBUTION LIMIT

Sec. 301. Modification of limit on deductible IRA contributions.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) One-third of all Americans have no assets available for 
        investment, and another 20 percent have only negligible assets. 
        The household savings rate of the United States lags far behind 
        other industrial nations, presenting a barrier to national 
        economic growth and preventing many Americans from entering the 
        economic mainstream by buying a house, obtaining an adequate 
        education, or starting a business.
            (2) By building assets, Americans can improve their 
        economic independence and stability, stimulate the development 
        of human and other capital, and work toward a viable and 
        hopeful future for themselves and their children. Thus, 
        economic well-being does not come solely from income, spending, 
        and consumption, but also requires savings, investment, and 
        accumulation of assets.
            (3) Traditional public assistance programs based on income 
        and consumption have rarely been successful in promoting and 
        supporting the transition to increased economic self-
        sufficiency. Income-based social policies that meet consumption 
        needs (including food, child care, rent, clothing, and health 
        care) should be complemented by asset-based policies that can 
        provide the means to achieve long-term independence and 
        economic well-being.
            (4) Individual Development Accounts (IDAs) can provide 
        working Americans with strong incentives to build assets, basic 
        financial management training, and access to secure and 
        relatively inexpensive banking services.
            (5) There is reason to believe that Individual Development 
        Accounts would also foster greater participation in electric 
        fund transfers (EFT), generate financial returns, including 
        increased income, tax revenue, and decreased welfare cash 
        assistance, that will far exceed the cost of public investment 
        in the program.

SEC. 3. PURPOSES.

    The purposes of this Act are to provide for the establishment of 
individual development account programs that will--
            (1) provide individuals and families with limited means an 
        opportunity to accumulate assets and to enter the financial 
        mainstream;
            (2) promote education, homeownership, and the development 
        of small businesses;
            (3) stabilize families and build communities; and
            (4) support continued United States economic expansion.

SEC. 4. DEFINITIONS.

    As used in this Act:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means an individual who--
                            (i) has attained the age of 18 years;
                            (ii) is a citizen or legal resident of the 
                        United States; and
                            (iii) is a member of a household the gross 
                        income of which does not exceed 80 percent of 
                        the area median income (as published by the 
                        Department of Housing and Urban Affairs).
                    (B) Household.--The term ``household'' means all 
                individuals who share use of a dwelling unit as primary 
                quarters for living and eating separate from other 
                individuals.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means a regular interest bearing savings 
        account established for an eligible individual as part of a 
        qualified individual development account program, but only if 
        the written governing instrument creating the account meets the 
        following requirements:
                    (A) The sole owner of the account is the eligible 
                individual.
                    (B) No contribution will be accepted unless it is 
                in cash, by check, or by electronic fund transfer.
                    (C) The holder of the account is a qualified 
                financial institution or a qualified nonprofit 
                organization.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
fund or common investment fund.
                    (E) Except as provided in section 105(b), any 
                amount in the account may be paid out only for the 
                purpose of paying the qualified expenses of the 
                eligible individual.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an eligible individual 
        as part of a qualified individual account program, the sole 
        owner of which is a qualified financial institution or a 
        qualified nonprofit organization
            (4) Qualified financial institution.--
                    (A) In general.--The term ``qualified financial 
                institution'' means any person authorized to be a 
                trustee of any individual retirement account under 
                section 408(a)(2).
                    (B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a person 
                described in subparagraph (A) from collaborating with 1 
                or more qualified nonprofit organizations to carry out 
                an individual development account program established 
                under section 101.
            (5) Qualified nonprofit organization.--The term ``qualified 
        nonprofit organization'' means--
                    (A) any organization described in section 501(c)(3) 
                of the Internal Revenue Code of 1986 and exempt from 
                taxation under section 501(a) of such Code;
                    (B) any community development financial institution 
                as certified by the Community Development Financial 
                Institution Fund; or
                    (C) any credit union certified by the National 
                Credit Union Administration,
        that meets standards for financial management and fiduciary 
        responsibility as defined by the Secretary or an organization 
        designated by the Secretary.
            (6) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established under section 101 under which--
                    (A) individual development accounts and parallel 
                accounts are held by a qualified financial institution 
                or a qualified nonprofit organization; and
                    (B) additional activities determined by the 
                Secretary, or an organization designated by the 
                Secretary, as necessary to responsibly develop and 
                administer accounts, including recruiting, providing 
                financial education and other training to account 
                holders, and regular program monitoring, are carried 
                out by such institution or nonprofit organization.
            (7) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid or distributed out 
                of an Individual Development Account and a parallel 
                account established for an eligible individual if such 
                amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of such individual or such 
                        individual's spouse or dependents,
                            (ii) is paid by the qualified financial 
                        institution or qualified nonprofit organization 
                        directly to the person to whom the amount is 
                        due or to another Individual Development 
                        Account, and
                            (iii) is paid after the holder of the 
                        Individual Development Account has completed a 
                        financial education course as required under 
                        section 102(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following:
                                    (I) Qualified higher education 
                                expenses.
                                    (II) Qualified first-time homebuyer 
                                costs.
                                    (III) Qualified business 
                                capitalization costs.
                                    (IV) Qualified rollovers.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 72(t)(7) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating postsecondary vocational 
                                educational schools as eligible 
                                educational institutions.
                                    (II) Postsecondary vocational 
                                education school.--The term 
                                ``postsecondary vocational educational 
                                school'' means an area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined in 
                                section 521(33) of such Act), as such 
                                sections are in effect on the date of 
                                enactment of this Act.
                                    (III) Coordination with other 
                                benefits.--The amount of qualified 
                                higher education expenses for any 
                                taxable year shall be reduced as 
                                provided in section 25A(g)(2) of such 
                                Code and by the amount of such expenses 
                                for which a credit or exclusion is 
                                allowed under chapter 1 of such Code 
                                for such taxable year.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8) of such 
                        Code without regard to subparagraph (B) 
                        thereof) with respect to a principal residence 
                        (within the meaning of section 121 of such 
                        Code) for a qualified first-time homebuyer (as 
defined in section 72(t)(8) of such Code).
                            (iv) Qualified business capitalization 
                        costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization 
                                costs'' means qualified expenditures 
                                for the capitalization of a qualified 
                                business pursuant to a qualified 
                                business plan.
                                    (II) Qualified expenditures.--The 
                                term ``qualified expenditures'' means 
                                expenditures included in a qualified 
                                business plan, including capital, 
                                plant, equipment, working capital and 
                                inventory expenses.
                                    (III) Qualified business.--The term 
                                ``qualified business'' means any 
                                business that does not contravene any 
                                law.
                                    (IV) Qualified business plan.--The 
                                term ``qualified business plan'' means 
                                a business plan which meets such 
                                requirements as the Secretary or an 
                                organization designated by the 
                                Secretary may specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means, with respect to 
                        any distribution from an Individual Development 
                        Account, the payment, within 120 days of such 
                        distribution, of all or a portion of such 
                        distribution to such account or to another 
                        Individual Development Account established in 
                        another qualified financial institution or 
                        qualified nonprofit organization for the 
                        benefit of the eligible individual. Rules 
                        similar to the rules of section 408(d)(3) of 
                        such Code (other than subparagraph (C) thereof) 
                        shall apply for purposes of this clause.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

    TITLE I--INDIVIDUAL DEVELOPMENT ACCOUNTS FOR LOW-INCOME WORKERS

SEC. 101. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution or qualified nonprofit 
organization may establish 1 or more qualified individual development 
account programs which meet the requirements of this Act.
    (b) Basic Program Structure.--
            (1) In general.--All qualified individual development 
        account programs shall consist of the following 2 components:
                    (A) An Individual Development Account to which an 
                eligible individual may contribute money in accordance 
                with section 103.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 104.
            (2) Tailored ida programs.--A qualified financial 
        institution or qualified nonprofit organization may tailor its 
        qualified individual development account program to allow 
        matching funds to be spent on 1 or more of the categories of 
qualified expenses.
    (c) Account Population Distribution Requirement.--An individual 
development account program shall be treated as qualified under this 
Act only if not less than one third of the Individual Development 
Accounts under such program are owned by eligible individuals each of 
whom is a member of a household the gross income of which does not 
exceed 50 percent of the area median income (as published by the 
Department of Housing and Urban Affairs).
    (d) Tax Treatment of Accounts.--Any account described in 
subparagraph (B) of subsection (b)(1) is exempt from taxation under the 
Internal Revenue Code of 1986 unless such account has ceased to be such 
an account by reason of section 105(c) or the termination of the 
qualified individual development account program under section 106(b).

SEC. 102. PROCEDURES FOR OPENING AN INDIVIDUAL DEVELOPMENT ACCOUNT AND 
              QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual must open an 
Individual Development Account with a qualified financial institution 
or qualified nonprofit organization and contribute money in accordance 
with section 103 to qualify for matching funds in a parallel account.
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw 
        matching funds to pay for qualified expenses, holders of 
        Individual Development Accounts must complete a financial 
        education course offered by a qualified financial institution, 
        a qualified nonprofit organization, or a government entity.
            (2) Standard and applicability of course.--The Secretary or 
        an organization designated by the Secretary, in consultation 
        with representatives of qualified individual development 
        account programs and financial educators, shall establish 
        minimum performance standards for financial education courses 
        offered under paragraph (1) and a protocol to exempt eligible 
        individuals from the requirement under paragraph (1) because of 
        hardship or lack of need.

SEC. 103. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Except in the case of a qualified rollover, 
individual contributions to an Individual Development Account will not 
be accepted for the taxable year in excess of the lesser of--
            (1) $2,000; or
            (2) an amount equal to the compensation (as defined in 
        section 219(f)(1) of the Internal Revenue Code of 1986) 
        includible in the individual's gross income for such taxable 
        year.
    (b) Proof of Compensation and Status as an Eligible Individual.--
Federal W-2 forms and other forms specified by the Secretary proving 
the eligible individual's wages and other compensation and the status 
of the individual as an eligible individual shall be presented at the 
time of the establishment of the Individual Development Account and at 
least once annually thereafter.
    (c) Time When Contributions Deemed Made.--For purposes of this 
section, a taxpayer shall be deemed to have made a contribution to an 
Individual Development Account on the last day of the preceding taxable 
year if the contribution is made on account of such taxable year and is 
made not later than the time prescribed by law for filing the Federal 
income tax return for such taxable year (not including extensions 
thereof).
    (d) Cross Reference.--

                                For designation of earned income tax 
credit payments for deposit to an Individual Development Account, see 
section 32(o) of the Internal Revenue Code of 1986.

SEC. 104. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT 
              PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution or 
qualified nonprofit organization shall deposit all matching funds for 
each Individual Development Account into a parallel account at a 
qualified financial institution or qualified nonprofit organization. 
The parallel account or accounts shall earn not less than the market 
rate of interest.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution or qualified nonprofit organization shall 
        deposit not less than quarterly into the parallel account with 
        respect to each eligible individual the following:
                    (A) A dollar-for-dollar match for the first $500 
                contributed by the eligible individual into an 
                Individual Development Account with respect to any 
                taxable year.
                    (B) Any matching funds provided by State, local, or 
                private sources in accordance to the matching ratio set 
                by those sources.
            (2) Cross reference.--

                                For allowance of tax credit to 
qualified financial institutions for Individual Development Account 
subsidies, including matching funds, see section 30B of the Internal 
Revenue Code of 1986.
    (c) Forfeiture of Matching Funds.--Matching funds that are 
forfeited under section 105(b) shall be used by the qualified financial 
institution or qualified nonprofit organization to pay matches for 
other Individual Development Account contributions by eligible 
individuals.
    (d) Uniform Accounting Regulations.--The Secretary shall prescribe 
regulations with respect to accounting for matching funds from all 
possible sources in the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution or qualified nonprofit organization shall report the 
balances in any Individual Development Account and parallel account of 
an eligible individual on not less than a quarterly basis.

SEC. 105. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--To withdraw money from an 
eligible individual's Individual Development Account to pay qualified 
expenses of such individual or such individual's spouse or dependents, 
the qualified financial institution or qualified nonprofit organization 
shall directly transfer such funds from the Individual Development 
Account, and, if applicable, from the parallel account electronically 
to the vendor or other Individual Development Account. If the vendor is 
not equipped to receive funds electronically, the qualified financial 
institution or qualified nonprofit organization may issue such funds by 
paper check to the vendor.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account holder may unilaterally withdraw funds from the 
Individual Development Account for purposes other than to pay qualified 
expenses, but shall forfeit the corresponding matching funds and 
interest earned on the matching funds by doing so, unless such 
withdrawn funds are recontributed to such Account within 1 year of 
withdrawal.
    (c) Deemed Withdrawals From Accounts of Noneligible Individuals.--
If the individual for whose benefit an Individual Development Account 
is established ceases to be an eligible individual, such account shall 
cease to be an Individual Development Account as of the first day of 
the taxable year of such individual and any balance in such account 
shall be deemed to have been withdrawn on such first day by such 
individual for purposes other than to pay qualified expenses.
    (d) Tax Treatment of Matching Funds.--Any amount withdrawn from a 
parallel account shall not be includible in an eligible individual's 
gross income.

SEC. 106. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 101, a qualified 
financial institution or qualified nonprofit organization shall certify 
to the Secretary, or an organization designated by the Secretary, on 
forms prescribed by the Secretary or such organization and accompanied 
by any documentation required by the Secretary or such organization, 
that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 101(b)(1) are operating pursuant to all the provisions 
        of this Act; and
            (2) the qualified financial institution or qualified 
        nonprofit organization agrees to implement an information 
        system necessary to monitor the cost and outcomes of the 
        qualified individual development account program.
    (b) Authority To Terminate Qualified IDA Program.--If the 
Secretary, or an organization designated by the Secretary, determines 
that a qualified financial institution or qualified nonprofit 
organization under this Act is not operating a qualified individual 
development account program in accordance with the requirements of this 
Act (and has not implemented any corrective recommendations directed by 
the Secretary or such organization), the Secretary or such organization 
shall terminate such institution's or nonprofit organization's 
authority to conduct the program. If the Secretary, or an organization 
designated by the Secretary, is unable to identify a qualified 
financial institution or qualified nonprofit organization to assume the 
authority to conduct such program, then any account established for the 
benefit of any eligible individual under such program shall cease to be 
an Individual Development Account as of the first day of such 
termination and any balance in such account shall be deemed to have 
been withdrawn on such first day by such individual for purposes other 
than to pay qualified expenses.

SEC. 107. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions and 
Qualified Nonprofit Organizations.--Each qualified financial 
institution or qualified nonprofit organization that establishes a 
qualified individual development account program under section 101 
shall report annually to the Secretary, directly or through an 
organization designated by the Secretary, within 90 days after the end 
of each calendar year on--
            (1) the number of eligible individuals making contributions 
        into Individual Development Accounts;
            (2) the amounts contributed into Individual Development 
        Accounts and deposited into parallel accounts for matching 
        funds;
            (3) the amounts withdrawn from Individual Development 
        Accounts and parallel accounts, and the purposes for which such 
        amounts were withdrawn;
            (4) the balances remaining in Individual Development 
        Accounts and parallel accounts; and
            (5) such other information needed to help the Secretary, or 
        an organization designated by the Secretary, monitor the cost 
        and outcomes of the qualified individual development account 
        program.
    (b) Responsibilities of the Secretary or Designated Organization.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of enactment of this Act, the Secretary, or an 
        organization designated by the Secretary, shall develop and 
        implement a protocol and process to continually monitor the 
        cost and outcomes of the qualified individual development 
        account programs established under section 101.
            (2) Annual reports.--In each year after the date of 
        enactment of this Act, the Secretary, or an organization 
        designated by the Secretary, shall issue a progress report on 
        the status of such qualified individual development account 
        programs.
            (3) Appropriations for monitoring.--There is authorized to 
        be appropriated $5,000,000 for the purposes of monitoring 
        qualified individual development account programs established 
        under section 101, to remain available until expended.

SEC. 108. FUNDS IN PARALLEL ACCOUNTS OF PROGRAM PARTICIPANTS 
              DISREGARDED FOR PURPOSES OF CERTAIN MEANS-TESTED FEDERAL 
              PROGRAMS.

    Notwithstanding any provision of the Internal Revenue Code of 1986 
or the Social Security Act that requires consideration of 1 or more 
financial circumstances of an individual, for the purposes 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, the lesser of--
            (1) the sum of all contributions by an eligible individual 
        (including earnings thereon) to any Individual Development 
        Account and matching deposits made on behalf of such individual 
        (including earnings thereon) in any parallel account; or
            (2) $10,000,
shall be disregarded for such purpose with respect to any period during 
which the individual participates in a qualified individual development 
account program established under section 101.

 TITLE II--QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
                                CREDITS

SEC. 201. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
              CREDITS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to other credits) is 
amended by inserting after section 30A the following:

``SEC. 30B. QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM INVESTMENT 
              CREDIT.

    ``(a) Determination of Amount.--There shall be allowed as a credit 
against the applicable tax for the taxable year an amount equal to the 
qualified individual development account program investment provided by 
an eligible taxpayer during the taxable year under a qualified 
individual development account program established under section 101 of 
the Savings Accounts Are Valuable for Everyone Act of 2000.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the sum of--
                    ``(A) the tax imposed under this chapter (other 
                than the taxes imposed under the provisions described 
                in subparagraphs (C) through (Q) of section 26(b)(1)), 
                plus
                    ``(B) the tax imposed under section 3111, over
            ``(2) the credits allowable under subparts B and D of this 
        part.
    ``(c) Qualified Individual Development Account Program 
Investment.--For purposes of this section, the term `qualified 
individual development account program investment' means, with respect 
to a qualified individual development account program of an eligible 
taxpayer in any taxable year, an amount equal to--
            ``(1) in the case of an eligible taxpayer which is a 
        qualified financial institution, the sum of--
                    ``(A) the lesser of--
                            ``(i) 90 percent of the aggregate amount of 
                        dollar-for-dollar matches under such program by 
                        such taxpayer under section 104 of the Savings 
                        Accounts Are Valuable for Everyone Act of 2000 
                        for such taxable year, or
                            ``(ii) $90,000,000, plus
                    ``(B) the lesser of--
                            ``(i) 50 percent of the aggregate costs 
                        paid or incurred under such program by the 
                        eligible taxpayer during such taxable year--
                                    ``(I) to provide financial 
                                education courses to Individual 
                                Development Account holders under 
                                section 102(b) of such Act, and
                                    ``(II) to underwrite program 
                                activities described in section 4(6)(B) 
                                of such Act), or
                            ``(ii) $5,000,000, and
            ``(2) in the case of an eligible taxpayer which is not a 
        qualified financial institution, the lesser of--
                    ``(A) the sum of--
                            ``(i) 50 percent of the aggregate amount of 
                        such dollar-for-dollar matches by such taxpayer 
                        for such taxable year, plus
                            ``(ii) 50 percent of the aggregate costs 
                        described in paragraph (1)(B)(i) paid 
or incurred under such program by the eligible taxpayer during such 
taxable year, or
                    ``(B) $5,000,000.
    ``(d) Eligible Taxpayer.--For purposes of this section, a taxpayer 
shall be considered an eligible taxpayer if at least 70 percent of the 
expenditures by such taxpayer with respect to any qualified individual 
development account program for any taxable year are described in 
subsection (c)(1)(A).
    ``(e) Other Definitions and Special Rules.--
            ``(1) Other definitions.--For purposes of this section, the 
        terms `Individual Development Account', `qualified individual 
        development account program', and `qualified financial 
        institution' have the meanings given such terms by section 4 of 
        the Savings Accounts Are Valuable for Everyone Act of 2000.
            ``(2) Certain rules made applicable.--Rules similar to the 
        rules of paragraphs (1) and (2) of section 41(f) shall apply 
        for purposes of this section.
    ``(f) Regulations.--The Secretary may prescribe such regulations as 
may be necessary or appropriate to carry out this section, including 
regulations providing for a recapture of the credit allowed under this 
section in cases where there is a forfeiture under section 105(b) of 
the Savings Accounts Are Valuable for Everyone Act of 2000 in a 
subsequent taxable year of any amount which was taken into account in 
determining the amount of such credit.
    ``(g) Termination.--This section shall not apply to any taxable 
year beginning after December 31, 2005.''.
    (b) Transfer to Trust Funds.--The Secretary of the Treasury shall 
transfer from the general fund of the United States Treasury to the 
Federal Old-Age and Survivors Insurance Trust Fund, the Federal 
Disability Insurance Trust Fund, and the Federal Hospital Insurance 
Trust Fund amounts equivalent to the amount of the reduction in taxes 
imposed by section 3111 of the Internal Revenue Code of 1986 by reason 
of the credit determined under section 30B (relating to the qualified 
individual development account program investment credit). Any such 
transfer shall be made at the same time that the reduced taxes would 
have been deposited in such Trust Funds.
    (c) Conforming Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 30A the 
following:

``Sec. 30B. Qualified individual development account program investment
                            credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 202. CRA CREDIT TREATMENT FOR QUALIFIED INDIVIDUAL DEVELOPMENT 
              ACCOUNT PROGRAM INVESTMENTS.

    Qualified financial institutions which establish qualified 
individual development account programs under section 101 shall not 
receive credit for funding, administration, and education expenses 
under any test contained in regulations for the Community Reinvestment 
Act of 1977 for those activities and expenses related to such programs 
and taken into account for purposes of the tax credit allowed under 
section 30B of the Internal Revenue Code of 1986.

SEC. 203. DESIGNATION OF EARNED INCOME TAX CREDIT PAYMENTS FOR DEPOSIT 
              TO INDIVIDUAL DEVELOPMENT ACCOUNTS.

    (a) In General.--Section 32 of the Internal Revenue Code of 1986 
(relating to earned income credit) is amended by adding at the end the 
following:
    ``(o) Designation of Credit for Deposit to Individual Development 
Account.--
            ``(1) In general.--With respect to the return of any 
        eligible individual (as defined in section 4(1) of the Savings 
        Accounts Are Valuable for Everyone Act of 2000) for the taxable 
        year of the tax imposed by this chapter, such individual may 
        designate that a specified portion (not less than $1) of any 
        overpayment of tax for such taxable year which is attributable 
        to the credit allowed under this section shall be deposited by 
        the Secretary into an Individual Development Account (as 
        defined in section 4(2) of such Act) of such individual. The 
        Secretary shall so deposit such portion designated under this 
        paragraph.
            ``(2) Manner and time of designation.--A designation under 
        paragraph (1) may be made with respect to any taxable year--
                    ``(A) at the time of filing the return of the tax 
                imposed by this chapter for such taxable year, or
                    ``(B) at any other time (after the time of filing 
                the return of the tax imposed by this chapter for such 
                taxable year) specified in regulations prescribed by 
                the Secretary.
        Such designation shall be made in such manner as the Secretary 
        prescribes by regulations.
            ``(3) Portion attributable to earned income tax credit.--
        For purposes of paragraph (1), an overpayment for any taxable 
        year shall be treated as attributable to the credit allowed 
        under this section for such taxable year to the extent that 
        such overpayment does not exceed the credit so allowed.
            ``(4) Overpayments treated as refunded.--For purposes of 
        this title, any portion of an overpayment of tax designated 
        under paragraph (1) shall be treated as being refunded to the 
        taxpayer as of the last date prescribed for filing the return 
        of tax imposed by this chapter (determined without regard to 
        extensions) or, if later, the date the return is filed.
            ``(5) Termination.--This subsection shall not apply to any 
        taxable year beginning after December 31, 2005.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

           TITLE III--MODIFICATION OF IRA CONTRIBUTION LIMIT

SEC. 301. MODIFICATION OF LIMIT ON DEDUCTIBLE IRA CONTRIBUTIONS.

    (a) Increase in Contribution Limit.--Paragraph (1)(A) of section 
219(b) of the Internal Revenue Code of 1986 (relating to maximum amount 
of deduction) is amended by striking ``$2,000'' and inserting 
``$3,500''.
    (b) Conforming Amendments.--
            (1) Section 408(a)(1) of the Internal Revenue Code of 1986 
        is amended by striking ``$2,000'' and inserting ``$3,500''.
            (2) Section 408(b)(2)(B) of such Code is amended by 
        striking ``$2,000'' and inserting ``$3,500''.
            (3) Section 408(b) of such Code is amended by striking 
        ``$2,000'' in the matter following paragraph (4) and inserting 
        ``$3,500''.
            (4) Section 408(j) of such Code is amended by striking 
        ``$2,000'' and inserting ``$3,500''.
            (5) Section 408(p)(8) of such Code is amended by striking 
        ``$2,000'' and inserting ``$3,500''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.
                                 <all>