II 

117TH CONGRESS 

2D SESSION S. 4722 

To amend the Internal Revenue Code of 1986 to establish qualified down 

payment savings programs. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 2, 2022 

Mr. WARNOCK introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

qualified down payment savings programs. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Dream 

5 Down Payment Act of 2022’’. 

6 SEC. 2. QUALIFIED DOWN PAYMENT SAVINGS PROGRAMS. 

7 (a) IN GENERAL.—Part VIII of subchapter F of 

8 chapter 1 of the Internal Revenue Code of 1986 is amend9 ed by inserting after section 529A the following new sec10 tion: 


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1 ‘‘SEC. 529B. QUALIFIED DOWN PAYMENT SAVINGS PRO2 GRAMS. 

3 ‘‘(a) IN GENERAL.—A qualified down payment sav4 ings program shall be exempt from taxation under this 

5 subtitle. Notwithstanding the preceding sentence, such 

6 program shall be subject to the taxes imposed by section 

7 511 (relating to imposition of tax on unrelated business 

8 income of charitable organizations). 

9 ‘‘(b) QUALIFIED DOWN PAYMENT SAVINGS PRO10 GRAM.—For purposes of this section— 

11 ‘‘(1) IN GENERAL.—The term ‘qualified down 

12 payment savings program’ means a program estab13 lished and maintained by a State or agency or in14 strumentality thereof— 

15 ‘‘(A) under which a person may make con16 tributions to a qualified down payment savings 

17 account which is established for the purpose of 

18 meeting qualified down payment expenses of the 

19 designated beneficiary of the account, and 

20 ‘‘(B) which meets the other requirements 

21 of this subsection. 

22 ‘‘(2) CASH CONTRIBUTIONS.— 

23 ‘‘(A) IN GENERAL.—A program shall not 

24 be treated as a qualified down payment savings 

25 program unless it provides that no contribution 

26 will be accepted— 


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1 ‘‘(i) unless it is in cash, and 

2 ‘‘(ii) except in the case of contribu3 tions under subsection (c)(3)(C), if such 

4 contribution to a qualified down payment 

5 savings account would result in the balance 

6 of such account exceeding $129,440. 

7 ‘‘(B) INFLATION ADJUSTMENT.— 

8 ‘‘(i) IN GENERAL.—In the case of any 

9 calendar year beginning after 2022, the 

10 $129,440 amount in subparagraph (A)(ii) 

11 shall be increased by an amount equal to— 

12 ‘‘(I) such dollar amount, multi13 plied by 

14 ‘‘(II) the cost-of-living adjust15 ment determined under clause (ii). 

16 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.— 

17 For purposes of clause (i), the cost-of-liv18 ing adjustment for any calendar year is the 

19 percentage (if any) by which— 

20 ‘‘(I) the CPI for the preceding 

21 calendar year, exceeds 

22 ‘‘(II) the CPI for calendar year 

23 2021. 

24 For purposes of this clause, the CPI for 

25 any calendar year shall be determined in 


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1 the same manner as it is determined under 

2 section 1(f)(4). 

3 ‘‘(iii) ROUNDING.—If any increase de4 termined under clause (i) is not a multiple 

5 of $10, such increase shall be rounded to 

6 the nearest multiple of $10. 

7 ‘‘(3) SEPARATE ACCOUNTING.—A program shall 

8 not be treated as a qualified down payment savings 

9 program unless it provides separate accounting for 

10 each designated beneficiary. 

11 ‘‘(4) INVESTMENT DIRECTION.—A program 

12 shall not be treated as a qualified down payment 

13 savings program unless it provides that— 

14 ‘‘(A) except as provided in subparagraph 

15 (B), any contributor to, or designated bene16 ficiary under, such program may, directly or in17 directly, direct the investment of any contribu18 tions to the program (or any earnings thereon) 

19 no more than 2 times in any calendar year and 

20 subject to the regulations established pursuant 

21 to this section, and 

22 ‘‘(B) in the event that an account’s hold23 ings meet the value established under para24 graph (2)(B), the account funds will be transVerDate Sep 11 2014 03:27 Aug 06, 2022 Jkt 029200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4722.IS S4722

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1 ferred to investments in United States Treasury 

2 securities. 

3 ‘‘(5) NO PLEDGING OF INTEREST AS A SECU4 RITY.—A program shall not be treated as a qualified 

5 down payment savings program if it allows any in6 terest in the program or any portion thereof to be 

7 used as security for a loan. 

8 ‘‘(6) COMPLIANCE WITH REGULATIONS.—A 

9 program shall not be treated as a qualified down 

10 payment savings program unless it complies with all 

11 regulations issued pursuant to subsection (f). 

12 ‘‘(c) TAX TREATMENT OF DESIGNATED BENE13 FICIARIES AND CONTRIBUTORS.— 

14 ‘‘(1) IN GENERAL.—Except as otherwise pro15 vided in this subsection, no amount shall be includ16 ible in gross income of— 

17 ‘‘(A) a designated beneficiary under a 

18 qualified down payment savings program, or 

19 ‘‘(B) a contributor to such program on be20 half of a designated beneficiary, 

21 with respect to any distribution or earnings under 

22 such program. 

23 ‘‘(2) GIFT TAX TREATMENT OF CONTRIBU24 TIONS.—For purposes of chapters 12 and 13— 


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1 ‘‘(A) IN GENERAL.—Any contribution to a 

2 qualified down payment savings program on be3 half of any designated beneficiary shall be 

4 treated as a completed gift to such beneficiary 

5 which is not a future interest in property. 

6 ‘‘(B) TREATMENT OF EXCESS CONTRIBU7 TIONS.—If the aggregate amount of contribu8 tions described in subparagraph (A) during the 

9 calendar year by a donor exceeds the limitation 

10 for such year under section 2503(b), such ag11 gregate amount shall, at the election of the 

12 donor, be taken into account for purposes of 

13 such section ratably over the 5-year period be14 ginning with such calendar year. 

15 ‘‘(3) DISTRIBUTIONS.— 

16 ‘‘(A) IN GENERAL.—Any distribution 

17 under a qualified down payment savings pro18 gram shall be includible in the gross income of 

19 the distributee in the manner as provided under 

20 section 72 to the extent not excluded from gross 

21 income under any other provision of this chap22 ter. 

23 ‘‘(B) DISTRIBUTIONS FOR QUALIFIED

24 DOWN PAYMENT EXPENSES.—For purposes of 


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1 this paragraph, if distributions from a qualified 

2 down payment savings program— 

3 ‘‘(i) do not exceed the qualified down 

4 payment expenses, no amount shall be in5 cludible in gross income, and 

6 ‘‘(ii) in any other case, the amount 

7 otherwise includible in gross income shall 

8 be reduced by an amount which bears the 

9 same ratio to such amount as such ex10 penses bear to such distributions. 

11 ‘‘(C) ROLLOVERS.— 

12 ‘‘(i) IN GENERAL.—Subparagraph (A) 

13 shall not apply to that portion of any dis14 tribution which, within 60 days of such 

15 distribution, is transferred to another 

16 qualified down payment savings account 

17 for the benefit of the designated bene18 ficiary. 

19 ‘‘(ii) LIMITATION ON CERTAIN ROLL20 OVERS.—Clause (i) shall not apply to any 

21 transfer if such transfer occurs within 12 

22 months from the date of a previous trans23 fer to any qualified down payment savings 

24 account for the benefit of the designated 

25 beneficiary. 


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1 ‘‘(4) ESTATE TAX TREATMENT.— 

2 ‘‘(A) IN GENERAL.—No amount shall be 

3 includible in the gross estate of any individual 

4 for purposes of chapter 11 by reason of an in5 terest in a qualified down payment savings pro6 gram. 

7 ‘‘(B) AMOUNTS INCLUDIBLE IN ESTATE OF

8 DESIGNATED BENEFICIARY IN CERTAIN

9 CASES.—Subparagraph (A) shall not apply to 

10 amounts distributed on account of the death of 

11 a beneficiary. 

12 ‘‘(C) AMOUNTS INCLUDIBLE IN ESTATE OF

13 DONOR MAKING EXCESS CONTRIBUTIONS.—In 

14 the case of a donor who makes the election de15 scribed in paragraph (2)(B) and who dies be16 fore the close of the 5-year period referred to 

17 in such paragraph, notwithstanding subpara18 graph (A), the gross estate of the donor shall 

19 include the portion of such contributions prop20 erly allocable to periods after the date of death 

21 of the donor. 

22 ‘‘(5) OTHER GIFT TAX RULES.—For purposes 

23 of chapters 12 and 13, in no event shall a distribu24 tion from a qualified down payment savings account 

25 be treated as a taxable gift. 


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1 ‘‘(6) ADDITIONAL TAX.— 

2 ‘‘(A) IN GENERAL.—The tax imposed by 

3 this chapter for any taxable year on any tax4 payer who receives a distribution from a quali5 fied down payment savings program which is 

6 includible in gross income shall be increased by 

7 10 percent of the amount which is so includible. 

8 ‘‘(B) EXCEPTIONS.—Subparagraph (A) 

9 shall not apply if the payment or distribution 

10 is— 

11 ‘‘(i) made to a beneficiary (or to the 

12 estate of the designated beneficiary) on or 

13 after the death of the designated bene14 ficiary, or 

15 ‘‘(ii) attributable to the designated 

16 beneficiary’s being disabled (within the 

17 meaning of section 72(m)(7)). 

18 ‘‘(C) CONTRIBUTIONS RETURNED BEFORE

19 CERTAIN DATE.—Subparagraph (A) shall not 

20 apply to the distribution of any contribution 

21 made during a taxable year on behalf of the 

22 designated beneficiary if— 

23 ‘‘(i) such distribution is received on or 

24 before the day prescribed by law (including 

25 extensions of time) for filing such desVerDate Sep 11 2014 03:27 Aug 06, 2022 Jkt 029200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4722.IS S4722

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1 ignated beneficiary’s return for such tax2 able year, and 

3 ‘‘(ii) such distribution is accompanied 

4 by the amount of net income attributable 

5 to such excess contribution. 

6 ‘‘(d) REPORTS.—Each officer or employee having 

7 control of the qualified down payment savings program or 

8 their designee shall make such reports regarding such pro9 gram to the Secretary and to designated beneficiaries with 

10 respect to contributions, distributions, and such other 

11 matters as the Secretary may require. The reports re12 quired by this subsection shall be filed at such time and 

13 in such manner and furnished to such individuals at such 

14 time and in such manner as may be required by the Sec15 retary. 

16 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.— 

17 For purposes of this section— 

18 ‘‘(1) DESIGNATED BENEFICIARY.—The term 

19 ‘designated beneficiary’ means the individual des20 ignated at the commencement of participation in the 

21 qualified down payment savings program as the ben22 eficiary of amounts paid (or to be paid) to the pro23 gram. 

24 ‘‘(2) QUALIFIED DOWN PAYMENT EXPENSES.— 

25 The term ‘qualified down payment expenses’ means 


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1 amounts (including closing costs) paid or incurred to 

2 purchase a principal residence (within the meaning 

3 of section 121). 

4 ‘‘(3) QUALIFIED DOWN PAYMENT SAVINGS AC5 COUNT.—The term ‘qualified down payment savings 

6 account’ means an account maintained under a 

7 qualified down payment savings program. 

8 ‘‘(f) REGULATIONS.—Notwithstanding any other pro9 vision of this section, the Secretary, in consultation with 

10 the Chairman of the Securities and Exchange Commis11 sion, shall prescribe such regulations as may be necessary 

12 or appropriate to carry out the purposes of this section 

13 and to prevent abuse of such purposes. Such regulations 

14 shall include— 

15 ‘‘(1) impermissible investments for qualified 

16 down payment savings programs; 

17 ‘‘(2) permissible fees, including the maximum 

18 amount of overall fees and commissions, that may be 

19 charged in association with a qualified down pay20 ment savings program account; and 

21 ‘‘(3) minimum required disclosures to account 

22 beneficiaries, including disclosures related to any 

23 possible losses that could be incurred in a qualified 

24 down payment savings account.’’. 

25 (b) TAX ON EXCESS CONTRIBUTIONS.— 


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1 (1) IN GENERAL.—Subsection (a) of section 

2 4973 of the Internal Revenue Code of 1986 is 

3 amended by striking ‘‘or’’ at the end of paragraph 

4 (5), by inserting ‘‘or’’ at the end of paragraph (6), 

5 and by inserting after paragraph (6) the following 

6 new paragraph: 

7 ‘‘(7) a qualified down payment savings account 

8 (within the meaning of section 529B),’’. 

9 (2) EXCESS CONTRIBUTION.—Section 4973 of 

10 such Code is amended by adding at the end the fol11 lowing new subsection: 

12 ‘‘(i) EXCESS CONTRIBUTIONS TO QUALIFIED DOWN

13 PAYMENT SAVINGS ACCOUNTS.—For purposes of this sec14 tion— 

15 ‘‘(1) IN GENERAL.—In the case of a qualified 

16 down payment savings account (within the meaning 

17 of section 529B), the term ‘excess contributions’ 

18 means the amount by which the amount contributed 

19 for the taxable year to such account (other than con20 tributions under section 529B(c)(3)(C)) exceeds the 

21 contribution limit under section 529B(b)(2)(B). 

22 ‘‘(2) SPECIAL RULE.—For purposes of this sub23 section, any contribution which is distributed out of 

24 the qualified down payment savings account in a disVerDate Sep 11 2014 03:27 Aug 06, 2022 Jkt 029200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4722.IS S4722

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1 tribution to which section 529B(c)(6)(C) applies 

2 shall be treated as an amount not contributed.’’. 

3 (c) PENALTY FOR FAILURE TO FILE REPORTS.— 

4 Section 6693(a)(2) is amended by striking ‘‘and’’ at the 

5 end of subparagraph (E), by redesignating subparagraph 

6 (F) as subparagraph (G), and by inserting after subpara7 graph (E) the following: 

8 ‘‘(E) section 529B(d) (relating to qualified 

9 down payment savings programs), and’’. 

10 (d) OTHER CONFORMING AMENDMENTS.— 

11 (1) Section 26(b)(2) of the Internal Revenue 

12 Code of 1986 is amended by striking ‘‘and’’ at the 

13 end of subparagraph (Y), by striking the period at 

14 the end of subparagraph (Z) and inserting ‘‘, and’’, 

15 and by inserting after subparagraph (Y) the fol16 lowing: 

17 ‘‘(AA) section 529B(c)(6) (relating to ad18 ditional tax on qualified down payment savings 

19 program distributions not used for qualified 

20 down payment expenses).’’. 

21 (2) Section 877A of such Code is amended— 

22 (A) in subsection (e)(2) by inserting ‘‘a 

23 qualified down payment savings program (as 

24 defined in section 529B),’’ after ‘‘a qualified 


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1 ABLE program (as defined in section 529A),’’, 

2 and 

3 (B) in subsection (g)(6) by inserting 

4 ‘‘529B(c)(6),’’ after ‘‘529A(c)(3),’’. 

5 (3) Section 4965(c) of such Code is amended by 

6 striking ‘‘or’’ at the end of paragraph (7), by strik7 ing the period at the end of paragraph (8) and in8 serting ‘‘, or’’, and by inserting after paragraph (8) 

9 the following new paragraph: 

10 ‘‘(9) a program described in section 529B.’’. 

11 (4) The table of sections for part VIII of sub12 chapter F of chapter 1 of such Code is amended by 

13 inserting after the item relating to section 529A the 

14 following new item: 

‘‘Sec. 529B. Qualified down payment savings programs.’’. 

15 (e) REPORTS ON DOWN PAYMENT SAVINGS PRO16 GRAMS.—Beginning on that date that is 12 months after 

17 the regulations established pursuant to section 529B(f) 

18 are finalized, and every two years thereafter, the Secretary 

19 of the Treasury (or the Secretary’s delegate), in coordina20 tion with the Chairman of the Securities and Exchange 

21 Commission and the States offering qualified down pay22 ment savings programs, shall issue a public report detail23 ing the following: 

24 (1) The number of States that have established 

25 qualified down payment savings programs. 


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1 (2) The number of down payment savings pro2 gram accounts in existence during the time specified 

3 in the report and the number of such accounts that 

4 have been established over the life of the program. 

5 (3) The age distribution of down payment sav6 ings account beneficiaries. 

7 (4) The percentage of qualified down payment 

8 savings account beneficiaries that would be first-time 

9 homebuyers. 

10 (5) A summary of the account balances held in 

11 qualified down payment savings program accounts. 

12 (6) The race and gender distribution of quali13 fied down payment savings program account des14 ignated beneficiaries. 

15 (7) The income distribution of the designated 

16 beneficiaries of qualified down payment savings pro17 gram accounts. 

18 (8) The number of down payment savings pro19 gram distributions that have been made since the 

20 previous report. 

21 (9) Such other information as the Secretary (or 

22 the Secretary’s designee) shall determine is required 

23 to assess whether qualified down payment savings 

24 accounts have contributed to facilitating access to 

25 affordable homeownership, including first-time 


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1 homeownership, particularly among young people, 

2 low- and moderate-income people, and people from 

3 communities with historically low rates of homeown4 ership. 

5 (f) EFFECTIVE DATE.— 

6 (1) IN GENERAL.—The amendments made by 

7 this section shall apply to taxable years beginning 

8 after December 31, 2021. 

9 (2) REGULATIONS.—The Secretary of the 

10 Treasury (or the Secretary’s designee) shall promul11 gate the regulations or other guidance required 

12 under section 529B(f) of the Internal Revenue Code 

13 of 1986, as added by subsection (a), not later than 

14 6 months after the date of the enactment of this 

15 Act. 

Æ 


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