[Congressional Record Volume 150, Number 87 (Tuesday, June 22, 2004)]
[House]
[Pages H4663-H4665]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WORKING FAMILIES ASSISTANCE ACT OF 2004
Mr. CANTOR. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4372) to amend the Internal Revenue Code of 1986 to provide
for the carryforward of $500 of unused benefits in cafeteria plans and
flexible spending arrangements for dependent care assistance.
The Clerk read as follows:
H.R. 4372
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 ``Working Families Assistance
Act of 2004''.
SEC. 2. CARRYFORWARD OF UNUSED BENEFITS IN CAFETERIA PLANS
AND FLEXIBLE SPENDING ARRANGEMENTS FOR
DEPENDENT CARE ASSISTANCE.
(a) In General.--Section 125 of the Internal Revenue Code
of 1986 (relating to cafeteria plans) is amended by
redesignating subsections (h) and (i) as subsections (i) and
(j), respectively, and by inserting after subsection (g) the
following new subsection:
``(h) Carryforward of Certain Unused Benefits for Dependent
Care.--
``(1) In general.--For purposes of this title, a plan or
other arrangement shall not
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fail to be treated as a cafeteria plan solely because
qualified benefits under such plan include a dependent care
flexible spending arrangement under which not more than $500
of unused dependent care benefits may be carried forward to
the succeeding plan year of such dependent care flexible
spending arrangement.
``(2) Dependent care flexible spending arrangement.--For
purposes of this subsection, the term `dependent care
flexible spending arrangement' means a flexible spending
arrangement (as defined in section 106(c)) that is a
qualified benefit and only permits reimbursement for expenses
for dependent care assistance which meets the requirements of
section 129(d).
``(3) Unused dependent care benefits.--For purposes of this
subsection, with respect to an employee, the term `unused
dependent care benefits' means the excess of--
``(A) the maximum amount of reimbursement allowable to the
employee for a plan year under a dependent care flexible
spending arrangement, over
``(B) the actual amount of reimbursement for such year
under such arrangement.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to taxable years beginning after December 31,
2003.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Virginia (Mr. Cantor) and the gentleman from Maryland (Mr. Cardin) each
will control 20 minutes.
The Chair recognizes the gentleman from Virginia (Mr. Cantor).
Mr. CANTOR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, families today shoulder tremendous financial burdens.
The USDA's 2003 report estimates two-parent middle income families
spend between $9,000 and $10,000 a year to raise one child. With 61
percent of working families relying on some form of child care, costs
add up very quickly especially in families with more than one child.
But it is not just child care expenses that families face. Many
families have non-child dependents, including disabled parents or
spouses living at home.
Dependent care accounts were created to assist families with two
working parents to care for the young children or help these families
who care for a disabled spouse or parent. These accounts allow up to
$5,000 to be withheld pretax to help pay for this important care.
Unfortunately, these accounts are not being utilized to their fullest
extent. They were created in a use-it-or-lose-it fashion which often
causes its users to underestimate the amount of money they need to put
away, shortchanging the very people it was intended to help.
In 2002, the average contribution to these accounts was $3,024 with a
net tax savings of $690, but this average contribution is almost $2,000
below the allowed contribution limit. The result is most families are
missing out on almost 40 percent of the benefit.
Mr. Speaker, H.R. 4372, the Working Families Assistance Act, gives
families peace of mind by allowing them the flexibility to roll over up
to $500 of their money into the next year flexible savings account. So
if you overestimated the amount you would spend on dependent care, you
will now have a cushion to ensure your flexible spending account
investment does not completely disappear.
The Working Families Assistance Act gives families the chance to
realize the full tax benefit of this important program.
Mr. Speaker, I reserve the balance of my time.
Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me thank my friend from Virginia for bringing
forward this legislation which I support. I think it is a very
important change in the flexible spending arrangements that are
permitted under the Internal Revenue Code. And I thank the gentleman
from Virginia (Mr. Cantor) for bringing forward this legislation.
Mr. Speaker, as my friend has indicated, this bill would permit a
taxpayer to carry forward up to $500 of unused benefits in a dependent
care flexible spending arrangement from one year to the next plan year.
The flexible spending arrangements are a way that you can use pretax
dollars to pay for expenses that are, according to what the policy
makers have determined, areas that we want to encourage our
constituents to be able to spend. This is in dependent care expenses,
to take care of our children. This is certainly an area where it is
becoming more and more difficult for working families to be able to
afford dependent care for their children.
The flexible spending arrangements allow them to use pretax dollars
in order to offer some help and assistance. The problem with the
flexible spending arrangements is that you have to determine at the
beginning of the year how much money you are going to spend for
dependent care. If you are wrong and you put away too much money, you
lose that money. That is certainly a pretty harsh penalty for
misjudging the amount of money that you will need for dependent care.
And, therefore, this bill would allow a taxpayer to roll over up to
$500 from one tax year to another. And it certainly makes sense to make
this modification in our Internal Revenue Code.
Mr. Speaker, I might point out though that I am disappointed that we
are not doing more, not doing more for dependent care in our society.
In the committee that I serve on, the Committee on Ways and Means, we
have looked at authorizing additional day care aid to our states. In my
own state of Maryland the only way that you can get assistance on
dependent care is to go on to cash assistance welfare. That does not
make a lot of sense.
Prior to a year ago, we were helping working poor in our state with
dependent care from the state government using Federal assistance.
Well, we have not increased that Federal assistance. I would urge us to
consider increasing the amount of dollars made available for safe,
affordable day care for our constituents.
In the meantime, Mr. Speaker, I do support H.R. 4372. It is a step in
the right direction. And I would encourage my colleagues to accept this
bill.
Mr. Speaker, I reserve the balance of my time.
Mr. CANTOR. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I appreciate the remarks of the gentleman from Maryland.
I think this, again, is a tremendous step forward in giving working
families the ability to project what their dependent care expenses
would be for the upcoming year and then to give them some flexibility
if they do not quite hit the mark, so to speak. And this provision,
this legislation echoes what we have done in the health savings
accounts arena a few weeks ago in this House.
Mr. Speaker, I yield 3 minutes to my colleague, the gentleman from
Minnesota (Mr. Kennedy).
Mr. KENNEDY of Minnesota. Mr. Speaker, I rise today in strong support
of the Working Families Assistance Act and would like to thank my
friend from Virginia for taking the leadership role in this important
piece of legislation.
We should be doing everything possible to make it easier for parents
to raise their children. The Working Families Assistance Act does just
that, by helping to ease the burdens of dependent care for hard working
families. Currently, 22 percent of employers offer dependent care
flexible savings accounts or FSAs to their employees.
{time} 1145
Employees may take $2,500 individually or $5,000 per married couple,
put it in that FSA to pay for dependent care. Dependents, for purposes
of the FSA, are children under age 13 or individuals such as disabled
parents who require full-time care due to physical or mental condition.
Parents can use the money in these accounts to pay for day care,
nursery care, or even have an adult relative care for children; but
only 14 percent of eligible families participate in these FSAs. Why?
One of the big reasons is that, like the health care FSA, employees
must forfeit any unused funds back to their employer at the end of the
year.
The use-it-or-lose-it provision has made these accounts a bad fit for
many families who are trying to create and keep a budget for the year;
and for those who use dependent care FSAs, many families are forced to
underestimate the amount of money they will need for the year so they
do not lose money at the end of the year, essentially defeating the
point of the account.
Recently, we passed legislation allowing hardworking families to
carry over $500 from health FSAs. That is what we are doing here today
for child and dependent care. The Working Family Assistance Act would
fix that problem by allowing families to carry over
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$500 into the next year's FSA. This change will give parents a safety
net as they try to predict their family's dependent care costs.
This bill also gives parents more choices and more flexibility in
meeting their family's needs. We should be taking every opportunity we
can to let families keep and use their own money to raise their
children.
I am pleased to be one of the sponsors of this legislation to help
working families meet their dependent care needs. I urge my colleagues
to support this legislation.
Mr. CANTOR. Mr. Speaker, I thank the gentleman from Minnesota (Mr.
Kennedy) and the gentleman from Maryland (Mr. Cardin) for their
remarks, and I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Graves). The question is on the motion
offered by the gentleman from Virginia (Mr. Cantor) that the House
suspend the rules and pass the bill, H.R. 4372.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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