[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1025 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1025

              To provide for savings for working families.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 13, 2001

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

_______________________________________________________________________

                                 A BILL


 
              To provide for savings for working families.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Savings for Working Families Act of 
2001''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress makes the following findings:
            (1) For the vast majority of households the pathway to the 
        economic mainstream and financial security is not through 
        spending and consumption, but through saving, investing, and 
        the accumulation of assets. Assets promote economic household 
        stability, decrease economic strain on households, promote 
        educational attainment, decrease marital dissolution, decrease 
        the risk of intergenerational poverty transmission, increase 
        health and satisfaction among adults, increase property values, 
        decrease residential mobility, increase property maintenance, 
        and increase local civic involvement.
            (2) One-third of all Americans have no assets available for 
        investment and another 20 percent have only negligible assets. 
        Assets are distributed far more unevenly than income. Whereas 
        the top 20 percent of American households earn over 43 percent 
        of all income, such households hold over 68 percent of net 
        worth and almost 87 percent of net financial assets. Moreover, 
        asset poverty and wealth gaps are even higher among minority 
        households by a ratio of more than 11 to 1. Up to 20 percent of 
        all households are unbanked and do not have access to the basic 
        financial tools that make asset accumulation possible.
            (3) Public policy has contributed to large asset gaps in 
        the United States. Traditional public assistance programs based 
        on income and consumption have rarely been successful in 
        supporting the transition to economic self-sufficiency. Tax 
        policy, through $288,000,000,000 in annual tax incentives, has 
        helped lay the foundation for the great American middle class, 
        but only for some citizens. Fully 90 percent of such current 
        tax benefits accrue to households earning more than $50,000 per 
        year, roughly half of all American households. Lacking an 
        income tax liability, low-income working families cannot take 
        advantage of asset development incentives. Moreover, low-income 
        families seeking public assistance must first spend down their 
        assets and face severe asset limits once on assistance.
            (4) Individual Development Accounts, or IDAs, have proven 
        to be successful in helping low-income working families save 
        and accumulate assets. In one national demonstration project, 
        2,378 low-income families saved a total of $834,442 in one year 
        which generated another $1,644,510 in private matching funds. 
        Thus far, IDA savings have been used to purchase long-term, 
        high-return assets, including homes, post-secondary education 
        and training, and small businesses. Presently, about 10,000 
        IDAs are in existence in the United States, held by a very 
        small fraction of the at least 70 million Americans who are 
        asset poor.
            (5) Therefore, the Federal Government should support, 
        through the tax code, a significant expansion of Individual 
        Development Accounts so that millions of low-income working 
        families across the country can save, accumulate assets, and 
        move their lives forward, and thus make positive contributions 
        to the economic and social well-being of the United States, as 
        well as to its future.
    (b) 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. 3. 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 but 
                        not the age of 61;
                            (ii) is a citizen or legal resident of the 
                        United States;
                            (iii) is not a student (as defined in 
                        section 151(c)(4)); and
                            (iv) is a taxpayer the adjusted gross 
                        income of whom for the preceding taxable year 
                        does not exceed--
                                    (I) $20,000, in the case of a 
                                taxpayer described in section 1(c) or 
                                1(d) of the Internal Revenue Code of 
                                1986;
                                    (II) $25,000, in the case of a 
                                taxpayer described in section 1(b) of 
                                such Code; and
                                    (III) $40,000, in the case of a 
                                taxpayer described in section 1(a) of 
                                such Code.
                    (B) Inflation adjustment.--
                            (i) In general.--In the case of any taxable 
                        year beginning after 2002, each dollar amount 
                        referred to in subparagraph (A)(iv) shall be 
increased by an amount equal to--
                                    (I) such dollar amount, multiplied 
                                by
                                    (II) the cost-of-living adjustment 
                                determined under section (1)(f)(3) of 
                                the Internal Revenue Code of 1986 for 
                                the calendar year in which the taxable 
                                year begins, by substituting ``2001'' 
                                for ``1992''.
                            (ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the nearest multiple 
                        of $50.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an 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 individual 
                for whom the account was established.
                    (B) No contribution will be accepted unless it is 
                in cash.
                    (C) The holder of the account is a qualified 
                financial institution.
                    (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 7(b), any amount 
                in the account may be paid out only for the purpose of 
                paying the qualified expenses of the account owner.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an Individual 
        Development Account owner as part of a qualified individual 
        development account program, the sole owner of which is a 
        qualified financial institution, a qualified nonprofit 
        organization, or an Indian tribe.
            (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) of the Internal Revenue Code of 1986.
                    (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 contractual affiliates, qualified nonprofit 
                organizations, or Indian tribes to carry out an 
                individual development account program established 
                under section 4.
            (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 
                certified by the Community Development Financial 
                Institution Fund; or
                    (C) any credit union chartered under Federal or 
                State law.
            (6) Indian tribe.--The term ``Indian tribe'' means any 
        Indian tribe as defined in section 4(12) of the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4103(12), and includes any tribal subsidiary, 
        subdivision, or other wholly owned tribal entity.
            (7) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established under section 4 under which--
                    (A) Individual Development Accounts and parallel 
                accounts are held by a qualified financial institution; 
                and
                    (B) additional activities determined by the 
                Secretary as necessary to responsibly develop and 
                administer accounts, including recruiting, providing 
                financial education and other training to account 
                owners, and regular program monitoring, are carried out 
                by the qualified financial institution, a qualified 
                nonprofit organization, or an Indian tribe.
            (8) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) 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 the Individual 
                        Development Account owner or such owner's 
                        spouse or dependents, as approved by the 
                        qualified financial institution, qualified 
                        nonprofit organization, or Indian tribe;
                            (ii) is paid by the qualified financial 
                        institution, qualified nonprofit organization, 
                        or Indian tribe--
                                    (I) except as otherwise provided in 
                                this clause, directly to the unrelated 
                                third party to whom the amount is due;
                                    (II) in the case of distributions 
                                for working capital under a qualified 
                                business plan (as defined in 
                                subparagraph (B)(iv)(IV)), directly to 
                                the account owner;
                                    (III) in the case of any qualified 
                                rollover, directly to another 
                                Individual Development Account and 
                                parallel account; or
                                    (IV) in the case of a qualified 
                                final distribution, directly to the 
                                spouse, dependent, or other 
named beneficiary of the deceased account owner; and
                            (iii) is paid after the account owner has 
                        completed a financial education course as 
                        required under section 5(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 or expansion costs.
                                    (IV) Qualified rollovers.
                                    (V) Qualified final distribution.
                            (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 
                                the 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 the 
                                Internal Revenue Code of 1986 and may 
                                not be taken into account for purposes 
                                of determining qualified higher 
                                education expenses under section 135, 
                                529, or 530 of such Code.
                            (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 or 
                        expansion costs.--
                                    (I) In general.--The term 
                                ``qualified business capitalization or 
                                expansion costs'' means qualified 
                                expenditures for the capitalization or 
                                expansion 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, 
                                inventory expenses, attorney and 
                                accounting fees, and other costs 
                                normally associated with starting or 
                                expanding a business.
                                    (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 has been approved 
                                by the qualified financial institution, 
                                qualified nonprofit organization, or 
                                Indian tribe and which meets such 
                                requirements as the Secretary may 
                                specify.
                            (v) Qualified rollovers.--The term 
                        ``qualified rollover'' means the complete 
                        distribution of the amounts in an Individual 
                        Development Account and parallel account to 
                        another Individual Development Account and 
                        parallel account established in another 
                        qualified financial institution, qualified 
                        nonprofit organization, or Indian tribe for the 
                        benefit of the account owner.
                            (vi) Qualified final distribution.--The 
                        term ``qualified final distribution'' means, in 
                        the case of a deceased account owner, the 
                        complete distribution of the amounts in an 
                        Individual Development Account and parallel 
                        account directly to the spouse, any dependent, 
                        or other named beneficiary of the deceased.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 4. STRUCTURE AND ADMINISTRATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Establishment of Qualified Individual Development Account 
Programs.--Any qualified financial institution, qualified nonprofit 
organization, or Indian tribe 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 cash in accordance 
                with section 5.
                    (B) A parallel account to which all matching funds 
                shall be deposited in accordance with section 6.
            (2) Tailored ida programs.--A qualified financial 
        institution, a qualified nonprofit organization, or an Indian 
        tribe 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) Tax Treatment of Parallel Accounts.--Any account described in 
subparagraph (B) of subsection (b)(1) is exempt from taxation under the 
Internal Revenue Code of 1986.

SEC. 5. PROCEDURES FOR OPENING AND MAINTAINING AN INDIVIDUAL 
              DEVELOPMENT ACCOUNT AND QUALIFYING FOR MATCHING FUNDS.

    (a) Opening an Account.--An eligible individual may open an 
Individual Development Account with a qualified financial institution, 
a qualified nonprofit organization, or an Indian tribe upon 
certification that such individual maintains no other Individual 
Development Account (other than an Individual Development Account to be 
terminated by a qualified rollover).
    (b) Required Completion of Financial Education Course.--
            (1) In general.--Before becoming eligible to withdraw 
        matching funds to pay for qualified expenses, owners of 
        Individual Development Accounts must complete a financial 
        education course offered by a qualified financial institution, 
        a qualified nonprofit organization, an Indian tribe, or a 
        government entity.
            (2) Standard and applicability of course.--The Secretary, 
        in consultation with representatives of qualified individual 
        development account programs and financial educators, shall 
        establish minimum quality standards for the contents of 
        financial education courses and providers of such courses 
        offered under paragraph (1) and a protocol to exempt 
        individuals from the requirement under paragraph (1) because of 
        hardship or lack of need.
    (c) Proof of Status as an Eligible Individual.--Federal income tax 
forms from the preceding taxable year (or in the absence of such forms, 
such documentation as specified by the Secretary proving the eligible 
individual's adjusted gross income and the status of the individual as 
an eligible individual) shall be presented to the qualified financial 
institution, qualified nonprofit organization, or Indian tribe at the 
time of the establishment of the Individual Development Account and in 
any taxable year in which contributions are made to the Account to 
qualify for matching funds under section 6(b)(1)(A).
    (d) Direct Deposits.--The Secretary may, under regulations, provide 
for the direct deposit of any portion (not less than $1) of any 
overpayment of Federal tax of an individual as a contribution to the 
Individual Development Account of such individual.

SEC. 6. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Parallel Accounts.--The qualified financial institution, 
qualified nonprofit organization, or Indian tribe shall deposit all 
matching funds for each Individual Development Account into a parallel 
account at a qualified financial institution, a qualified nonprofit 
organization, or an Indian tribe.
    (b) Regular Deposits of Matching Funds.--
            (1) In general.--Subject to paragraph (2), the qualified 
        financial institution, qualified nonprofit organization, or 
        Indian tribe shall not less than quarterly (or upon a proper 
        withdrawal request under section 7, if necessary) deposit 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) Inflation adjustment.--
                    (A) In general.--In the case of any taxable year 
                beginning after 2002, the dollar amount referred to in 
                paragraph (1)(A) shall be increased by an amount equal 
                to--
                            (i) such dollar amount, multiplied by
                            (ii) the cost-of-living adjustment 
                        determined under section (1)(f)(3) of the 
                        Internal Revenue Code of 1986 for the calendar 
                        year in which the taxable year begins, by 
                        substituting ``2001'' for ``1992''.
                    (B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $20, such amount 
                shall be rounded to the nearest multiple of $20.
            (3) Cross reference.--

                                For allowance of tax credit for 
Individual Development Account subsidies, including matching funds, see 
section 30B of the Internal Revenue Code of 1986.
    (c) Deposit of Matching Funds Into Individual Development Account 
of Individual Who Has Attained Age 61.--In the case of an Individual 
Development Account owner who attains the age of 61, the qualified 
financial institution, qualified nonprofit organization, or Indian 
tribe which holds the parallel account for such individual shall 
deposit the funds in such parallel account into the Individual 
Development Account of such individual on the first day of the 
succeeding taxable year of such individual.
    (d) Uniform Accounting Regulations.--To ensure proper recordkeeping 
and determination of the tax credit under section 30B of the Internal 
Revenue Code of 1986, the Secretary shall prescribe regulations with 
respect to accounting for matching funds in the parallel accounts.
    (e) Regular Reporting of Accounts.--Any qualified financial 
institution, qualified nonprofit organization, or Indian tribe shall 
report the balances in any Individual Development Account and parallel 
account of an individual on not less than an annual basis to such 
individual.

SEC. 7. WITHDRAWAL PROCEDURES.

    (a) Withdrawals for Qualified Expenses.--To withdraw money from an 
individual's Individual Development Account to pay qualified expenses 
of such individual or such individual's spouse or dependents, the 
qualified financial institution, qualified nonprofit organization, or 
Indian tribe shall directly transfer such funds from the Individual 
Development Account, and, if applicable, from the parallel account 
electronically to the distributees described in section 3(8)(A)(ii). If 
the distributee is not equipped to receive funds electronically, the 
qualified financial institution, qualified nonprofit organization, or 
Indian tribe may issue such funds by paper check to the distributee.
    (b) Withdrawals for Nonqualified Expenses.--An Individual 
Development Account owner may unilaterally withdraw any amount of funds 
from the Individual Development Account for purposes other than to pay 
qualified expenses, but shall forfeit a proportionate amount of 
matching funds from the individual's parallel account by doing so, 
unless such withdrawn funds are recontributed to such Account by 
September 30 following the withdrawal.
    (c) 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 
remain an Individual Development Account, but such individual shall not 
be eligible for any further matching funds under section 6(b)(1)(A) 
during the period--
            (1) beginning on the first day of the taxable year of such 
        individual following the beginning of such ineligibility, and
            (2) ending on the last day of the taxable year of such 
        individual in which such ineligibility ceases.
    (d) Tax Treatment of Matching Funds.--Any amount withdrawn from a 
parallel account shall not be includible in an eligible individual's 
gross income.
    (e) Withdrawal Liability Rests Only With Eligible Individuals.--
Nothing in this Act may be construed to impose liability on a qualified 
financial institution, a qualified nonprofit organization, or an Indian 
tribe for non-compliance with the requirements of this Act related to 
withdrawals from Individual Development Accounts.

SEC. 8. CERTIFICATION AND TERMINATION OF QUALIFIED INDIVIDUAL 
              DEVELOPMENT ACCOUNT PROGRAMS.

    (a) Certification Procedures.--Upon establishing a qualified 
individual development account program under section 4, a qualified 
financial institution, a qualified nonprofit organization, or an Indian 
tribe shall certify to the Secretary on forms prescribed by the 
Secretary and accompanied by any documentation required by the 
Secretary, that--
            (1) the accounts described in subparagraphs (A) and (B) of 
        section 4(b)(1) are operating pursuant to all the provisions of 
        this Act; and
            (2) the qualified financial institution, qualified 
        nonprofit organization, or Indian tribe 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 
determines that a qualified financial institution, a qualified 
nonprofit organization, or an Indian tribe 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), the 
Secretary shall terminate such institution's, nonprofit organization's, 
or Indian tribe's authority to conduct the program. If the Secretary is 
unable to identify a qualified financial institution, a qualified 
nonprofit organization, or an Indian tribe to assume the authority to 
conduct such program, then any funds in a parallel account established 
for the benefit of any individual under such program shall be deposited 
into the Individual Development Account of such individual as of the 
first day of such termination.

SEC. 9. REPORTING, MONITORING, AND EVALUATION.

    (a) Responsibilities of Qualified Financial Institutions, Qualified 
Nonprofit Organizations, and Indian Tribes.--Each qualified financial 
institution, qualified nonprofit organization, or Indian tribe that 
operates a qualified individual development account program under 
section 4 shall report annually to 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 
        monitor the cost and outcomes of the qualified individual 
        development account program (provided in a non-individually-
        identifiable manner).
    (b) Responsibilities of the Secretary.--
            (1) Monitoring protocol.--Not later than 12 months after 
        the date of the enactment of this Act, the Secretary shall 
        develop and implement a protocol and process to monitor the 
        cost and outcomes of the qualified individual development 
        account programs established under section 4.
            (2) Annual reports.--In each year after the date of the 
        enactment of this Act, the Secretary shall submit a progress 
        report to Congress on the status of such qualified individual 
        development account programs. Such report shall include from a 
        representative sample of qualified individual development 
        account programs information on--
                    (A) the characteristics of participants, including 
                age, gender, race or ethnicity, marital status, number 
                of children, employment status, and monthly income;
                    (B) deposits, withdrawals, balances, uses of 
                Individual Development Accounts, and participant 
                characteristics;
                    (C) the characteristics of qualified individual 
                development account programs, including match rate, 
economic education requirements, permissible uses of accounts, staffing 
of programs in full time employees, and the total costs of programs; 
and
                    (D) process information on program implementation 
                and administration, especially on problems encountered 
                and how problems were solved.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated to the Secretary $1,000,000 
for fiscal year 2002 and for each fiscal year through 2008, for the 
purposes of implementing this Act, including the reporting, monitoring, 
and evaluation required under section 9, to remain available until 
expended.

SEC. 11. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF CERTAIN MEANS-TESTED 
              FEDERAL PROGRAMS.

    Notwithstanding any other provision of Federal law 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, an amount equal to 
the sum of--
            (1) all amounts (including earnings thereon) in any 
        Individual Development Account; plus
            (2) the matching deposits made on behalf of such individual 
        (including earnings thereon) in any parallel account,
shall be disregarded for such purposes.

SEC. 12. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS PROVIDED 
              THROUGH A TAX CREDIT FOR QUALIFIED FINANCIAL 
              INSTITUTIONS.

    (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 new section:

``SEC. 30B. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT FOR 
              QUALIFIED FINANCIAL INSTITUTIONS.

    ``(a) Determination of Amount.--There shall be allowed as a credit 
against the applicable tax for the taxable year an amount equal to the 
individual development account investment provided by an eligible 
entity during the taxable year under an individual development account 
program established under section 4 of the Savings for Working Families 
Act of 2001.
    ``(b) Applicable Tax.--For the purposes of this section, the term 
`applicable tax' means the excess (if any) of--
            ``(1) the tax imposed under this chapter (other than the 
        taxes imposed under the provisions described in subparagraphs 
        (C) through (Q) of section 26(b)(2)), over
            ``(2) the credits allowable under subpart B (other than 
        this section) and subpart D of this part.
    ``(c) Individual Development Account Investment.--
            ``(1) In general.--For purposes of this section, the term 
        `individual development account investment' means, with respect 
        to an individual development account program of a qualified 
        financial institution in any taxable year, an amount equal to 
        the sum of--
                    ``(A) the aggregate amount of dollar-for-dollar 
                matches under such program under section 6(b)(1)(A) of 
                the Savings for Working Families Act of 2001 for such 
                taxable year, plus
                    ``(B) an amount equal to the sum of--
                            ``(i) with respect to each Individual 
                        Development Account opened during such taxable 
                        year, $100, plus
                            ``(ii) with respect to each Individual 
                        Development Account maintained during such 
                        taxable year, $30.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning after 2002, each dollar amount referred to in 
                paragraph (1)(B) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section (1)(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `2001' for `1992'.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $5, such amount 
                shall be rounded to the nearest multiple of $5.
    ``(d) Eligible Entity.--For purposes of this section, the term 
`eligible entity' means a qualified financial institution, or 1 or more 
contractual affiliates of such an institution as defined by the 
Secretary in regulations.
    ``(e) Other Definitions.--For purposes of this section, any term 
used in this section and also in the Savings for Working Families Act 
of 2001 shall have the meaning given such term by such Act.
    ``(f) Denial of Double Benefit.--No deduction or credit (other than 
under this section) shall be allowed under this chapter with respect to 
any expense which is taken into account under subsection (c)(1)(A) in 
determining the credit under this section.
    ``(g) 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 (notwithstanding any termination date described in subsection 
(h)) in cases where there is a forfeiture under section 7(b) of the 
Savings for Working Families Act of 2001 in a subsequent taxable year 
of any amount which was taken into account in determining the amount of 
such credit.
    ``(h) Application of Section.--This section shall apply to any 
expenditure made in any taxable year beginning after December 31, 2001, 
and before January 1, 2009, with respect to any Individual Development 
Account opened before January 1, 2007.''.
    (b) 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 new item:

``Sec. 30B. Individual development account investment credit for 
                            qualified financial institutions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.
                                 <all>