Young Savers Security in Retirement Act of 2014 - Amends the Internal Revenue Code to establish a tax-exempt individual retirement account for taxpayers under age 18, to be known as a young savers account. Treats such accounts as Roth individual retirement accounts for income tax purposes. Allows the tax credit for retirement savings for contributions to a young savers account. Directs the Secretary of the Treasury to pay any overpayment of tax that is attributable to the tax credit for retirement savings to the taxpayer's young savers account.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5281 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5281
To amend the Internal Revenue Code of 1986 to provide for tax preferred
savings accounts for individuals under age 18, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 30, 2014
Mr. Hanna (for himself and Mr. Kind) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for tax preferred
savings accounts for individuals under age 18, 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.
This Act may be cited as the ``Young Savers Security in Retirement
Act of 2014''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Studies indicate that children as young as 3 years old
are able to grasp financial concepts and that basic financial
habits are largely formulated by age 7.
(2) Research shows that children born to low-income parents
who are good financial savers are more likely to move up the
economic ladder than children from low-income households that
do not save. According to a 2011 study controlled for income
and demographic factors, youth who own financial accounts are 7
times more likely to attend college.
(3) If tax-advantaged retirement accounts such as Roth IRAs
could be opened for children between the ages of zero and 18,
these individuals are likely to acquire substantially more tax-
free assets by retirement age than their peers.
(4) Children who possess retirement accounts from a young
age will benefit from longer exposure to compound interest and
can be expected to attain higher levels of financial literacy,
college graduation and retirement security in adulthood.
(5) Greater private retirement savings for Americans of all
ages will increase personal financial security and
responsibility, reducing the likelihood that seniors will need
to rely solely on Social Security for their retirement income.
(6) Federal policy should better enable parents, guardians
and families of all income levels to encourage youth saving and
investment for retirement at an earlier age.
(7) Federal policy should help create retirement savings
incentives for low-income Americans because studies show that
low-income Americans will save more for retirement if there are
incentives and structures in place to help them do so. A
refundable incentive like the Saver's Credit would reach 50
million low-income households--nearly 10 times the number a
non-refundable credit reaches.
SEC. 3. YOUNG SAVERS ACCOUNT.
(a) Establishment of Accounts.--
(1) In general.--Section 408A of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(g) Young Savers Account.--
``(1) In general.--Except as provided in this subsection, a
young savers account shall be treated in the same manner as a
Roth IRA.
``(2) Young savers account.--For purposes of this
subsection, the term `young savers account' means, with respect
to any taxable year, a Roth IRA which is maintained on behalf
of an individual who has not attained age 18 before the close
of the taxable year and which is designated (in such manner as
the Secretary may prescribe) at the time of establishment as a
young savers account.
``(3) Contribution limits.--In the case of any
contributions for any taxable year to 1 or more young savers
accounts maintained on behalf of an individual, each of the
following contribution limits for the taxable year shall be
increased as follows:
``(A) The contribution limit applicable to the
individual under subsection (c)(2) shall be increased
by the aggregate amount of qualified young saver
contributions to such accounts for the taxable year.
``(B) The contribution limits applicable to the
young savers accounts under subsection (a)(1) or
(b)(2)(B) of section 408, whichever is applicable,
shall be increased by the deductible amount in effect
under section 219(b)(5) for such taxable year
(determined without regard to subparagraph (B)
thereof).
``(4) Qualified young saver contributions.--For purposes of
this subsection--
``(A) In general.--The term `qualified young saver
contribution' means a contribution by an individual
(with respect to whom a young savers account is not
maintained during the taxable year) to a young savers
account maintained on behalf of another individual.
``(B) Limitations.--
``(i) Limit on accounts with respect to
individual.--The aggregate amount of
contributions which may be made for any taxable
year to all young savers accounts maintained on
behalf of an individual shall not exceed the
deductible amount in effect for the taxable
year under section 219(b)(5) (determined
without regard to subparagraph (B) thereof).
``(ii) Limit on contributors.--The
aggregate amount of qualified young saver
contributions an individual may make for any
taxable year to all young savers accounts shall
not exceed the deductible amount in effect for
the taxable year under section 219(b)(5)
(determined without regard to subparagraph (B)
thereof), reduced by any contributions made by
or on behalf of the individual to any Roth IRA
maintained on behalf of the individual.''.
(b) Eligible for Savers Credit.--Paragraph (1) of section 25B(d) of
such Code is amended by striking ``and'' at the end of subparagraph
(B)(ii), by striking the period at the end of subparagraph (C) and
inserting ``, and'', and by adding at the end the following new
subparagraph:
``(D) the amount of any contribution to a young
savers account.''.
(c) Refund Payable to Young Savers Account.--
(1) In general.--Subchapter B of chapter 65 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 6433. YOUNG SAVERS ACCOUNT REFUND PAYMENT.
``In the case of any overpayment (or portion thereof) which is
attributable to a credit allowed to an individual under section 25B by
reason of a contribution to a young savers account, the Secretary shall
pay the amount of such overpayment (or such portion) into the young
savers account to which such contribution was made. The Secretary shall
prescribe such regulations as may be necessary to carry out the
purposes of this section.''.
(2) Clerical amendment.--The table of sections for
subchapter B of chapter 65 of such Code is amended by adding at
the end the following new item:
``Sec. 6433. Young savers account refund payment.''.
(d) Young Savers Account Information Included With Application for
Social Security Card.--The Commissioner of Social Security, in
consultation with the Secretary of the Treasury, shall include with
materials relating to the application for a social security card
information describing young savers accounts (as defined in section
408A(g)(2) of the Internal Revenue Code of 1986) and related tax
benefits.
(e) Account Funds Disregarded for Purposes of All Means Tested
Federal Programs.--Notwithstanding any other provision of Federal law,
assets accumulated in young savers accounts (within the meaning of
section 408A(g) of the Internal Revenue Code of 1986) 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.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2013.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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