[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5576 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 5576

            To establish USAccounts, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 18, 2014

  Mr. Crowley (for himself and Mr. Ellison) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
            To establish USAccounts, 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 ``USAccounts: 
Investing in America's Future Act of 2014''.
    (b) Table of Contents.--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) Definitions.--For purposes of this Act--
            (1) USAccount fund.--The term ``USAccount Fund'' means the 
        fund established under section 3.
            (2) USAccount.--The term ``USAccount'' means an account 
        established under section 4.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or the Secretary's delegate.
            (4) USAccount fund board.--The term ``USAccount Fund 
        Board'' means the board established pursuant to section 7.
            (5) Executive director.--The term ``Executive Director'' 
        means the executive director appointed pursuant to section 7.

SEC. 2. FINDINGS.

    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.

SEC. 3. USACCOUNT FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States a fund to be known as the ``USAccount Fund''.
    (b) Amounts Held by Fund.--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) Use of Fund.--
            (1) In general.--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) Exclusive purposes.--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 Fund.--The Secretary shall make 
transfers from the general fund of the Treasury to the USAccount Fund 
as follows:
            (1) Automatic contribution.--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) Matching contributions.--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) Private Contributions.--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 USAccounts.--The 
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.

SEC. 4. USACCOUNTS.

    (a) In General.--
            (1) Establishment.--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) Account balance.--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 contributions.--Pursuant 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 losses.--The 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) Qualifying Child.--For purposes of this Act--
            (1) In general.--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 holders.--On 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) Private Contributions.--
            (1) In general.--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) Payroll deduction.--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) Tax refunds.--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) Annual limitation.--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) In general.--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) Matching amount.--
                    (A) In general.--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 
                phaseout.--The $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) Private contribution.--For purposes of this subsection, 
        the term ``private contribution'' means a contribution accepted 
        under subsection (c).
    (e) Distributions.--
            (1) In general.--No amount may be distributed from a 
        USAccount before the date on which the account holder attains 
        the age of 18.
            (2) Higher education expenses.--Paragraph (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) Rollover.--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) Account termination.--
                    (A) In general.--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 myira.--Amounts 
                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) Rights of Legal Guardian.--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) Private Management.--
            (1) In general.--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) Trustee requirements.--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) Additional requirements.--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) Adjustment for Inflation.--
            (1) In general.--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) Rounding.--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.

SEC. 5. ASSIGNMENT, ALIENATION, AND TREATMENT OF DECEASED INDIVIDUALS.

    (a) Assignment and Alienation.--Under 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 Individuals.--In 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.

SEC. 6. RULES GOVERNING USACCOUNTS RELATING TO INVESTMENT, ACCOUNTING, 
              AND REPORTING.

    (a) Default Investment Program.--The 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) Other Rules.--
            (1) In general.--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) Application rules.--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) In general.--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 beneficiary.--The 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.

SEC. 7. USACCOUNT FUND BOARD.

    (a) In General.--There is established in the executive branch of 
the Government a USAccount Fund Board.
    (b) Composition, Duties, and Responsibilities.--Subject 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).

SEC. 8. FIDUCIARY RESPONSIBILITIES.

    (a) In General.--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) Investigative Authority.--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) In general.--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) Insurance.--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.

SEC. 9. ACCOUNTS DISREGARDED IN DETERMINING ELIGIBILITY FOR FEDERAL 
              BENEFITS.

    Amounts 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.

SEC. 10. REPORTS.

    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.

SEC. 11. TAX PROVISIONS.

    (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:

                ``PART IX--USACCOUNT FUND AND USACCOUNTS

``Sec. 530A. USAccount Fund and USAccounts.

``SEC. 530A. USACCOUNT FUND AND USACCOUNTS.

    ``(a) General Rule.--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) Definitions.--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 Distributions.--Any 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) Excess contributions.--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 USAccounts.--For 
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) Prohibited transactions.--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 usaccounts.--An 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) In general.--Section 24 of the Internal Revenue Code of 
        1986 is amended by adding at the end the following:
    ``(g) USAccount Contributions.--For purposes of this section--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) shall be increased by the USAccount contribution 
        amount.
            ``(2) USAccount contribution amount.--The 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) Limitation.--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) Amount fully refundable.--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) Effective date.--The amendment made by subsection (a) 
        shall apply to taxable years beginning after December 31, 2014.
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