I

103D CONGRESS

1ST SESSION H. R. 456

To provide for the establishment of demonstration projects designed to determine the social, psychological, and economic effects of providing to individuals with limited means an opportunity to accumulate assets, and

to determine the extent to which an asset-based welfare policy may

be used to enable individuals with low income to achieve economic selfsufficiency.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1993

Mr. HALL of Ohio (for himself and Mr. EMERSON) introduced the following

bill; which was referred jointly to the Committees on Ways and Means

and Education and Labor

A BILL

To provide for the establishment of demonstration projects

designed to determine the social, psychological, and economic effects of providing to individuals with limited

means an opportunity to accumulate assets, and to determine the extent to which an asset-based welfare policy

may be used to enable individuals with low income to

achieve economic self-sufficiency.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 456 IH

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Individual Develop3 ment Account Demonstration Act’’.

4 SEC. 2. FINDINGS.

5 The Congress finds that—

6 (1) traditional welfare programs in the United

7 States have provided millions of low-income persons

8 with critically needed food, health, and cash benefits,

9 and such programs should be improved and contin10 ued;

11 (2) while such programs have sustained millions

12 of low-income persons, too rarely have such pro13 grams been successful in promoting and supporting

14 the transition to economic self-sufficiency;

15 (3) millions of Americans continue to live in

16 poverty and continue to receive public assistance;

17 (4) in addition to the social costs of poverty,

18 the economic costs to the Federal Government to

19 provide basic necessities to the poor exceeds

20 $120,000,000,000 each year;

21 (5) poverty is a loss of human resources and an

22 assault on human dignity;

23 (6) poverty rates remain high and welfare de24 pendency continues, in part, because welfare theory

25 has taken for granted that a certain level of income

26 or consumption is necessary for one’s economic well-
3

•HR 456 IH

1 being when, in fact, very few people manage to

2 spend or consume their way out of poverty;

3 (7) economic well-being does not come primarily

4 through income, spending, and consumption, but is

5 instead achieved through savings, investment, and

6 accumulation of assets, since assets can improve eco7 nomic stability, connect people with a viable and

8 hopeful future, stimulate development of human and

9 other capital, enable people to focus and specialize,

10 yield personal, social, and political dividends, and en11 hance the welfare of offspring;

12 (8) income-based welfare policy should be com13 plemented with asset-based welfare policy, because

14 while income-based policies ensure that present con15 sumption needs (such as food, child care, rent, cloth16 ing, and health care) are met, asset-based policies

17 can provide the means to achieve economic self-suffi18 ciency and, accordingly, to leave public assistance;

19 (9) the Federal Government spends more than

20 $100,000,000,000 each year to provide middle- and

21 upper-income persons with many incentives to accu22 mulate savings and assets (especially tax subsidies

23 for home equity accumulation and retirement pen24 sion accounts), but such benefits are beyond the

25 reach of most low-income persons;
4

•HR 456 IH

1 (10) under current welfare policies, poor fami2 lies must deplete most of their assets before qualify3 ing for public assistance;

4 (11) the Federal Government should develop

5 policies that promote higher rates of personal sav6 ings and net private domestic investment, both of

7 which fall behind the levels attained in other highly

8 developed industrial nations; and

9 (12) the Federal Government should undertake

10 an asset-based welfare policy demonstration project

11 to determine the social, psychological, and economic

12 effects of asset accumulation opportunities for low13 income persons and to determine if such a policy

14 could provide a new foundation for anti-poverty poli15 cies and programs in the United States.

16 SEC. 3. INDIVIDUAL DEVELOPMENT ACCOUNTS.

17 (a) IN GENERAL.—Part VII of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 (relating to

19 additional itemized deductions for individuals) is amended

20 by redesignating section 220 as section 221 and by insert21 ing after section 219 the following new section:

22 ‘‘SEC. 220. INDIVIDUAL DEVELOPMENT ACCOUNTS.

23 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi24 ble individual, there shall be allowed as a deduction the

25 sum of amounts paid in cash (other than assistance pro-
5

•HR 456 IH

1 vided under section 4(g) of the Individual Development

2 Account Demonstration Act) during the taxable year by

3 or on behalf of such individual to an individual develop4 ment account established for the purpose of accumulating

5 funds to pay the qualified expenses of such individual.

6 ‘‘(b) LIMITATIONS.—

7 ‘‘(1) ACCOUNT MAY NOT BE ESTABLISHED FOR

8 BENEFIT OF MORE THAN 1 INDIVIDUAL.—An indi9 vidual development account may not be established

10 for the benefit of more than 1 individual.

11 ‘‘(2) ELIGIBLE INDIVIDUAL TREATED AS ELIGI12 BLE INDIVIDUAL ONLY WITH RESPECT TO 1 AC13 COUNT.—If, at any time during a calendar year, 2

14 or more individual development accounts are main15 tained for the benefit of an eligible individual, such

16 individual shall be treated as an eligible individual

17 for the calendar year only with respect to the 1st of

18 such accounts.

19 ‘‘(3) MAXIMUM DEDUCTION PER ACCOUNT.—

20 The amount allowable as a deduction under sub21 section (a) to an eligible individual for amounts paid

22 to an individual development account for any taxable

23 year shall not exceed $2,000.

24 ‘‘(4) ADJUSTMENT OF DOLLAR AMOUNT LIMI25 TATIONS FOR INFLATION.—
6

•HR 456 IH

1 ‘‘(A) IN GENERAL.—If this paragraph ap2 plies to any calendar year, then each applicable

3 dollar amount for any taxable year beginning in

4 the adjustment period for such calendar year

5 shall be equal to the sum of—

6 ‘‘(i) such applicable dollar amount for

7 taxable years beginning in such calendar

8 year, plus

9 ‘‘(ii) $500.

10 ‘‘(B) YEARS TO WHICH APPLICABLE.—

11 This paragraph shall apply to any calendar year

12 if the excess (if any) of—

13 ‘‘(i) $2,000, increased by the cost-of14 living adjustment for such calendar year,

15 over

16 ‘‘(ii) the applicable dollar amount in

17 effect for such calendar year,

18 is equal to or greater than $500.

19 ‘‘(C) COST-OF-LIVING ADJUSTMENT.—For

20 purposes of this paragraph—

21 ‘‘(i) IN GENERAL.—The cost-of-living

22 adjustment for any calendar year is the

23 percentage (if any) by which—

24 ‘‘(I) the CPI for such calendar

25 year, exceeds
7

•HR 456 IH

1 ‘‘(II) the CPI for 1991.

2 ‘‘(ii) CPI FOR ANY CALENDAR

3 YEAR.—The CPI for any calendar year

4 shall be determined in the same manner as

5 under section 1(f)(4).

6 ‘‘(D) APPLICABLE DOLLAR AMOUNT.—For

7 purposes of this paragraph, the term ‘applicable

8 dollar amount’ means the dollar amount in ef9 fect under paragraph (3) and subsection

10 (c)(3)(A).

11 ‘‘(E) ADJUSTMENT PERIOD.—For pur12 poses of this paragraph, the term ‘adjustment

13 period’ means, with respect to any calendar

14 year to which this subsection applies, the pe15 riod—

16 ‘‘(i) beginning on the 1st day of the

17 calendar year following such calendar year,

18 and

19 ‘‘(ii) ending on the last day of the

20 next calendar year to which this paragraph

21 applies.

22 ‘‘(5) DENIAL OF DEDUCTION FOR AMOUNTS

23 TRANSFERRED FROM ANOTHER IDA.—No deduction

24 shall be allowed under this section with respect to
8

•HR 456 IH

1 any amount paid into an individual development ac2 count pursuant to subsection (c)(1)(E).

3 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) QUALIFIED EXPENSES.—The term ‘quali6 fied expenses’ means 1 or more of the following, as

7 provided by the organization providing assistance to

8 the individual under section 4(g) of the Individual

9 Development Account Demonstration Act:

10 ‘‘(A) POST-SECONDARY EDUCATION EX11 PENSES.—Post-secondary educational expenses

12 paid from an individual development account di13 rectly to an eligible educational institution. For

14 purposes of this subparagraph—

15 ‘‘(i) IN GENERAL.—The term ‘post16 secondary educational expenses’ means—

17 ‘‘(I) tuition and fees required for

18 the enrollment or attendance of a stu19 dent at an eligible educational institu20 tion,

21 ‘‘(II) fees, books, supplies, and

22 equipment required for courses of in23 struction at an eligible educational in24 stitution, and
9

•HR 456 IH

1 ‘‘(III) a reasonable allowance for

2 meals, lodging, transportation, and

3 child care, while attending an eligible

4 educational institution.

5 ‘‘(ii) ELIGIBLE EDUCATIONAL INSTI6 TUTION.—The term ‘eligible educational

7 institution’ means the following:

8 ‘‘(I) INSTITUTION OF HIGHER

9 EDUCATION.—An institution described

10 in section 481(a)(1) or 1201(a) of the

11 Higher Education Act of 1965 (20

12 U.S.C. 1088(a)(1) or 1141(a)), as

13 such sections are in effect on the date

14 of the enactment of this section.

15 ‘‘(II) POSTSECONDARY VOCA16 TIONAL EDUCATION SCHOOL.—An

17 area vocational education school (as

18 defined in subparagraph (C) or (D) of

19 section 521(4) of the Carl D. Perkins

20 Vocational and Applied Technology

21 Education Act (20 U.S.C. 2471(4)))

22 which is in any State (as defined in

23 section 521(33) of such Act), as such

24 sections are in effect on the date of

25 the enactment of this section.
10

•HR 456 IH

1 ‘‘(B) FIRST-HOME PURCHASE.—Qualified

2 acquisition costs with respect to a qualified

3 principal residence for a qualified first-time

4 homebuyer, if paid from an individual develop5 ment account directly to the persons to whom

6 the amounts are due. For purposes of this sub7 paragraph—

8 ‘‘(i) QUALIFIED ACQUISITION

9 COSTS.—The term ‘qualified acquisition

10 costs’ means the costs of acquiring, con11 structing, or reconstructing a residence.

12 The term includes any usual or reasonable

13 settlement, financing, or other closing

14 costs.

15 ‘‘(ii) QUALIFIED PRINCIPAL RESI16 DENCE.—The term ‘qualified principal res17 idence’ means a principal residence (within

18 the meaning of section 1034), the qualified

19 acquisition costs of which do not exceed

20 110 percent of the average area purchase

21 price applicable to such residence (deter22 mined in accordance with paragraphs (2)

23 and (3) of section 143(e)).

24 ‘‘(iii) QUALIFIED FIRST-TIME HOME25 BUYER.—
11

•HR 456 IH

1 ‘‘(I) IN GENERAL.—The term

2 ‘qualified first-time homebuyer’ means

3 a taxpayer (and, if married, the tax4 payer’s spouse) who has no present

5 ownership interest in a principal resi6 dence during the 3-year period ending

7 on the date of acquisition of the prin8 cipal residence to which this subpara9 graph applies.

10 ‘‘(II) DATE OF ACQUISITION.—

11 The term ‘date of acquisition’ means

12 the date on which a binding contract

13 to acquire, construct, or reconstruct

14 the principal residence to which this

15 subparagraph applies is entered into.

16 ‘‘(C) BUSINESS CAPITALIZATION.—

17 Amounts paid from an individual development

18 account directly to a business capitalization ac19 count which is established in a federally insured

20 financial institution and is restricted to use

21 solely for business capitalization expenses. For

22 purposes of this subparagraph—

23 ‘‘(i) QUALIFIED BUSINESS CAPITAL24 IZATION EXPENSES.—The term ‘qualified

25 business capitalization expenses’ means
12

•HR 456 IH

1 qualified expenses for the capitalization of

2 a qualified business pursuant to a qualified

3 plan.

4 ‘‘(ii) QUALIFIED EXPENSES.—The

5 term ‘qualified expenses’ means expenses

6 included in a qualified plan, including cap7 ital plant, equipment, working capital, and

8 inventory expenses.

9 ‘‘(iii) QUALIFIED BUSINESS.—The

10 term ‘qualified business’ means any busi11 ness that does not contravene any law or

12 public policy (as determined by the Sec13 retary).

14 ‘‘(iv) QUALIFIED PLAN.—The term

15 ‘qualified plan’ means a business plan

16 which—

17 ‘‘(I) is approved by a financial in18 stitution, or by a nonprofit loan fund

19 having demonstrated fiduciary integ20 rity,

21 ‘‘(II) includes a description of

22 services or goods to be sold, a market23 ing plan, and projected financial

24 statements, and
13

•HR 456 IH

1 ‘‘(III) may require the eligible in2 dividual to obtain the assistance of an

3 experienced entreprenurial advisor.

4 ‘‘(D) RETIREMENT EXPENSES.—Expenses

5 for which amounts may be distributed from an

6 individual retirement plan, subject to the same

7 requirements and limitations as apply to such

8 amounts.

9 ‘‘(E) TRANSFERS TO IDA’S OF FAMILY

10 MEMBERS.—Amounts paid from an individual

11 development account directly into another such

12 account established for the benefit of an eligible

13 individual who is—

14 ‘‘(i) the taxpayers spouse, or

15 ‘‘(ii) any dependent of the taxpayer

16 with respect to whom the taxpayer is al17 lowed a deduction under section 151.

18 ‘‘(2) ELIGIBLE INDIVIDUAL.—The term ‘eligible

19 individual’ means an individual for whom assistance

20 is (or at any prior time was) provided under section

21 4(g) of the Individual Development Account Dem22 onstration Act.

23 ‘‘(3) INDIVIDUAL DEVELOPMENT ACCOUNT.—

24 The term ‘individual development account’ means a

25 trust created or organized in the United States ex-
14

•HR 456 IH

1 clusively for the purpose of paying the qualified ex2 penses of an eligible individual, but only if the writ3 ten governing instrument creating the trust meets

4 the following requirements:

5 ‘‘(A) No contribution will be accepted un6 less it is in cash.

7 ‘‘(B) The trustee is a federally insured fi8 nancial institution.

9 ‘‘(C) The assets of the account will be in10 vested in accordance with the direction of the

11 eligible individual, within the guidelines estab12 lished pursuant to section 4(j)(1)(A)(ii) of the

13 Individual Development Account Demonstration

14 Act.

15 ‘‘(D) The assets of the trust will not be

16 commingled with other property except in a

17 common trust fund or common investment

18 fund.

19 ‘‘(E) Except as provided in subparagraph

20 (F), any amount in the account which is attrib21 utable to assistance provided under section 4(g)

22 of the Individual Development Account Dem23 onstration Act may be paid or distributed out

24 of the account only for the purpose of paying

25 the qualified expenses of the eligible individual.
15

•HR 456 IH

1 ‘‘(F) Any balance in the account on the

2 day after the date on which the individual for

3 whose benefit the trust is established dies will

4 be distributed within 30 days of such date as

5 directed by such individual to another individual

6 development account established for the benefit

7 of an eligible individual.

8 ‘‘(4) TIME WHEN CONTRIBUTIONS DEEMED

9 MADE.—A taxpayer shall be deemed to have made a

10 contribution on the last day of the preceding taxable

11 year if the contribution is made on account of such

12 taxable year and is made not later than the time

13 prescribed by law for filing the return for such tax14 able year (including extensions thereof).

15 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—

16 ‘‘(1) IN GENERAL.—Except as otherwise pro17 vided in this subsection, any amount paid or distrib18 uted out of an individual development account shall

19 be included in gross income of the payee or distribu20 tee for the taxable year in which the payment or dis21 tribution is received to the extent such amount is

22 not the return of a contribution for which no deduc23 tion was allowed under subsection (a).

24 ‘‘(2) DISTRIBUTION USED TO PAY QUALIFIED

25 EXPENSES.—Paragraph (1) shall not apply to any
16

•HR 456 IH

1 payment or distribution out of an individual develop2 ment account to the extent such payment or dis3 tribution is used exclusively to pay the qualified ex4 penses incurred by the eligible individual for whose

5 benefit the account is established.

6 ‘‘(e) TAX TREATMENT OF ACCOUNTS.—

7 ‘‘(1) EXEMPTION FROM TAX.—An individual

8 development account is exempt from taxation under

9 this subtitle unless such account has ceased to be an

10 individual development account by reason of para11 graph (2). Notwithstanding the preceding sentence,

12 any such account is subject to the taxes imposed by

13 section 511 (relating to imposition of tax on unre14 lated business income of charitable, etc. organiza15 tions).

16 ‘‘(2) LOSS OF EXEMPTION OF ACCOUNT WHERE

17 INDIVIDUAL ENGAGES IN PROHIBITED TRANS18 ACTION.—

19 ‘‘(A) IN GENERAL.—If the individual for

20 whose benefit an individual development ac21 count is established or any individual who con22 tributes to such account engages in any trans23 action prohibited by section 4975 with respect

24 to the account, the account shall cease to be an

25 individual development account as of the 1st
17

•HR 456 IH

1 day of the taxable year (of the individual so en2 gaging in such transaction) during which such

3 transaction occurs.

4 ‘‘(B) ACCOUNT TREATED AS DISTRIBUTING

5 ALL ITS ASSETS.—In any case in which any ac6 count ceases to be an individual development

7 account by reason of subparagraph (A) as of

8 the 1st day of any taxable year—

9 ‘‘(i) all assets in the account on such

10 1st day which are attributable to assist11 ance provided under section 4(g) of the In12 dividual Development Account Demonstra13 tion Act shall be paid into the general fund

14 of the Treasury of the United States, and

15 ‘‘(ii) paragraph (1) of subsection (d)

16 shall apply as if there was a distribution

17 on such 1st day in an amount equal to the

18 fair market value of all other assets in the

19 account on such 1st day.

20 ‘‘(3) EFFECT OF PLEDGING ACCOUNT AS SECU21 RITY.—If, during any taxable year, the individual for

22 whose benefit an individual development account is

23 established, or any individual who contributes to

24 such account, uses the account or any portion there25 of as security for a loan—
18

•HR 456 IH

1 ‘‘(A) an amount equal to the part of the

2 portion so used which is attributable to assist3 ance provided under section 4(g) of the Individ4 ual Development Account Demonstration Act

5 shall be paid into the general fund of the Treas6 ury of the United States, and

7 ‘‘(B) the remaining part of the portion so

8 used shall be treated as distributed to the indi9 vidual so using such portion.

10 ‘‘(f) ADDITIONAL TAX ON CERTAIN AMOUNTS IN11 CLUDED IN GROSS INCOME.—

12 ‘‘(1) DISTRIBUTION NOT USED FOR QUALIFIED

13 EXPENSES.—In the case of any payment or distribu14 tion to which subsection (d)(1) applies, the tax li15 ability of each payee or distributee under this chap16 ter for the taxable year in which the payment or dis17 tribution is received shall be increased by an amount

18 equal to 10 percent of the amount of the distribution

19 which is includible in the gross income of such payee

20 or distributee for such taxable year.

21 ‘‘(2) DISQUALIFICATION CASES.—If an amount

22 is includible in the gross income of an individual for

23 a taxable year because such amount is required to

24 be treated as a distribution under paragraph (2) or

25 (3) of subsection (e), such individual’s tax liability
19

•HR 456 IH

1 under this chapter for such taxable year shall be in2 creased by an amount equal to 10 percent of such

3 amount required to be treated as a distribution and

4 included in such individual’s gross income.

5 ‘‘(3) DISABILITY OR DEATH CASES.—Para6 graphs (1) and (2) shall not apply if the payment

7 or distribution is made after the individual for whose

8 benefit the individual development account becomes

9 disabled within the meaning of section 72(m)(7) or

10 dies.

11 ‘‘(g) COMMUNITY PROPERTY LAWS.—This section

12 shall be applied without regard to any community property

13 laws.

14 ‘‘(h) CUSTODIAL ACCOUNTS.—For purposes of this

15 section, a custodial account shall be treated as a trust if

16 the assets of such account are held by a bank (as defined

17 in section 408(n)) or another person who demonstrates,

18 to the satisfaction of the Secretary, that the manner in

19 which he will administer the account will be consistent

20 with the requirements of this section, and if the custodial

21 account would, except for the fact that it is not a trust,

22 constitute an individual development account described in

23 subsection (c)(2). For purposes of this title, in the case

24 of a custodial account treated as a trust by reason of the
20

•HR 456 IH

1 preceding sentence, the custodian of such account shall be

2 treated as the trustee thereof.

3 ‘‘(i) REPORTS.—The trustee of an individual develop4 ment account shall—

5 ‘‘(1) prepare reports regarding the account with

6 respect to contributions, distributions, and any other

7 matter required by the Secretary under regulations,

8 and

9 ‘‘(2) submit such reports, at the time and in

10 the manner prescribed by the Secretary in regula11 tions, to—

12 ‘‘(A) the individual for whose benefit the

13 account is maintained,

14 ‘‘(B) the organization providing assistance

15 to the individual under section 4(g) of the Indi16 vidual Development Account Demonstration

17 Act, and

18 ‘‘(C) the Secretary.’’

19 (b) DEDUCTION ALLOWED IN ARRIVING AT AD20 JUSTED GROSS INCOME.—Paragraph (7) of section 62(a)

21 of such Code (relating to retirement savings) is amend22 ed—

23 (1) by inserting ‘‘OR INDIVIDUAL DEVELOP24 MENT’’ after ‘‘RETIREMENT’’ in the heading of such

25 paragraph, and
21

•HR 456 IH

1 (2) by inserting before the period at the end the

2 following: ‘‘and the deduction allowed by section 220

3 (relating to individual development accounts)’’.

4 (c) CONTRIBUTION NOT SUBJECT TO GIFT TAX.—

5 Section 2503 of such Code (relating to taxable gifts) is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(h) INDIVIDUAL DEVELOPMENT ACCOUNTS.—Any

9 contribution made by an individual to an individual devel10 opment account described in section 220(c)(3) which is al11 lowable as a deduction under section 220 shall not be

12 treated as a transfer of property by gift for purposes of

13 this chapter.’’

14 (d) TAX ON PROHIBITED TRANSACTIONS.—Section

15 4975 of such Code (relating to prohibited transactions)

16 is amended—

17 (1) by adding at the end of subsection (c) the

18 following new paragraph:

19 ‘‘(4) SPECIAL RULE FOR INDIVIDUAL DEVELOP20 MENT ACCOUNTS.—An individual for whose benefit

21 an individual development account is established and

22 any contributor to such account shall be exempt

23 from the tax imposed by this section with respect to

24 any transaction concerning such account (which

25 would otherwise be taxable under this section) if,
22

•HR 456 IH

1 with respect to such transaction, the account ceases

2 to be an individual development account by reason

3 of the application of section 220(e)(2)(A) to such ac4 count.’’, and

5 (2) by inserting ‘‘, an individual development

6 account described in section 220(c)(3),’’ in sub7 section (e)(1) after ‘‘described in section 408(a)’’.

8 (e) FAILURE TO PROVIDE REPORTS ON INDIVIDUAL

9 DEVELOPMENT ACCOUNTS.—Section 6693 of such Code

10 (relating to failure to provide reports on individual retire11 ment accounts or annuities) is amended—

12 (1) by inserting ‘‘OR ON INDIVIDUAL DEVEL13 OPMENT ACCOUNTS’’ after ‘‘ANNUITIES’’ in the

14 heading of such section, and

15 (2) by adding at the end of subsection (a) the

16 following new sentence: ‘‘The person required by sec17 tion 220(i) to file a report regarding an individual

18 development account at the time and in the manner

19 required by such section shall pay a penalty of $50

20 for each failure, unless it is shown that such failure

21 is due to reasonable cause.’’

22 (f) SPECIAL RULE FOR DETERMINING AMOUNTS OF

23 SUPPORT FOR DEPENDENT.—Subsection (b) of section

24 152 of such Code (relating to definition of dependent) is
23

•HR 456 IH

1 amended by adding at the end the following new para2 graph:

3 ‘‘(6) A distribution from an individual develop4 ment account described in section 220(c)(3) to the

5 individual for whose benefit such account has been

6 established shall not be taken into account in deter7 mining support for purposes of this section to the

8 extent such distribution is excluded from gross in9 come of such individual under section 220(d)(2).’’

10 (g) CLERICAL AMENDMENTS.—

11 (1) The table of sections for part VII of sub12 chapter B of chapter 1 of such Code is amended by

13 striking the item relating to section 220 and insert14 ing the following new items:

‘‘Sec. 220. Individual development accounts.

‘‘Sec. 221. Cross references.’’

15 (2) The table of sections for subchapter B of

16 chapter 68 of such Code is amended by striking the

17 item relating to section 6693 and inserting the fol18 lowing new item:

‘‘Sec. 6693. Failure to provide reports on individual retirement

accounts or annuities or on individual development

accounts.’’

19 (h) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to contributions made after June

21 30, 1992.
24

•HR 456 IH

1 SEC. 4. INDIVIDUAL DEVELOPMENT ACCOUNT DEM2 ONSTRATION PROJECTS.

3 (a) PURPOSE.—The purpose of this section is to pro4 vide for the establishment of demonstration projects de5 signed to determine—

6 (1) the social, psychological, and economic ef7 fects of providing to individuals with limited means

8 an opportunity to accumulate assets; and

9 (2) the extent to which an asset-based welfare

10 policy may be used to enable individuals with low in11 come to achieve economic self-sufficiency.

12 (b) APPLICATIONS.—

13 (1) SUBMISSION.—Not later than April 1,

14 1992, any organization may submit to the Secretary

15 of the Treasury (in this section referred to as the

16 ‘‘Secretary’’) an application to conduct a demonstra17 tion project under this section.

18 (2) CONTENTS.—The application shall con19 tain—

20 (A) a description of the demonstration

21 project;

22 (B) information about the ability of the or23 ganization to—

24 (i) assist project participants in

25 achieving economic self-sufficiency through

26 the project; and
25

•HR 456 IH

1 (ii) administer the project;

2 (C) a commitment made to the organiza3 tion by the State in which the project is to be

4 conducted that the State will provide a specified

5 amount of funds to the organization for the

6 project, and any similar commitment made to

7 the organization by any other non-Federal pub8 lic entity or by any private entity; and

9 (D) a plan to provide the organization

10 evaluating the project with such information

11 with respect to the project as may be required

12 for the evaluation.

13 (3) CRITERIA.—In considering whether or not

14 to approve any application to conduct a demonstra15 tion project under this section, the Secretary shall

16 assess the following:

17 (A) SUFFICIENCY OF PROJECT.—The de18 gree to which the project described in the appli19 cation appears likely to aid project participants

20 in achieving economic self-sufficiency through

21 activities requiring qualified expenses (as de22 fined in section 220(c)(1) of the Internal Reve23 nue Code of 1986). In making such assessment,

24 the Secretary shall consider the overall quality

25 of project activities and shall not consider aid
26

•HR 456 IH

1 in making any particular kind or combination

2 of qualified expenses (as so defined) to be an

3 essential feature of any project.

4 (B) ADMINISTRATIVE ABILITY.—The abil5 ity of the applicant to responsibly administer

6 the project.

7 (C) COMMITMENT OF NON-FEDERAL

8 FUNDS.—The aggregate amount of funds from

9 non-Federal sources that are committed to the

10 project.

11 (D) ADEQUACY OF PLAN FOR PROVIDING

12 INFORMATION FOR EVALUATION.—The ade13 quacy of the plan for providing information rel14 evant to an evaluation of the project.

15 (4) APPROVAL.—Not later than June 1, 1994,

16 the Secretary shall, on a competitive basis, approve

17 such applications to conduct demonstration projects

18 under this section as the Secretary deems appro19 priate, taking into account the assessment required

20 by paragraph (3).

21 (c) DEMONSTRATION AUTHORITY; ANNUAL

22 GRANTS.—

23 (1) DEMONSTRATION AUTHORITY.—If the Sec24 retary approves an application to conduct a dem25 onstration project under this section, the Secretary
27

•HR 456 IH

1 shall, not later than July 1, 1994, authorize the ap2 plicant to conduct the project for 5 project years in

3 accordance with the approved application therefor

4 and this section.

5 (2) GRANT AUTHORITY.—For each project year

6 of a demonstration project conducted under this sec7 tion, the Secretary shall make a grant to the organi8 zation authorized to conduct the project, on the first

9 day of the project year.

10 (3) LIMITATIONS ON GRANT AMOUNTS.—

11 (A) MAXIMUM.—The amount of each grant

12 under paragraph (2) shall be not more than

13 $20,000,000.

14 (B) FIRST YEAR GRANT LEVEL AS15 SURED.—The amount of each grant to an orga16 nization under paragraph (2) after the first

17 such grant shall be not less than the amount of

18 such first grant.

19 (C) GRANTS REDUCED, IF NECESSARY, IN

20 PROPORTION TO ANY REDUCTIONS IN APPRO21 PRIATIONS AFTER FIRST YEAR.—If the amount

22 appropriated to carry out this section for any

23 particular fiscal year after fiscal year 1994 is

24 less than the amount so appropriated for fiscal

25 year 1994, then the limitations of subpara-
28

•HR 456 IH

1 graphs (A) and (B) shall each be reduced for

2 the particular fiscal year in equal proportion to

3 the reduction of such appropriations, but only

4 to the extent that the reduction of such limita5 tions is made necessary by the reduction in

6 such appropriations.

7 (d) RESERVE FUND.—

8 (1) ESTABLISHMENT.—Each organization au9 thorized to conduct a demonstration project under

10 this section shall establish a Reserve Fund which

11 shall be used in accordance with this subsection.

12 (2) AMOUNTS IN RESERVE FUND.—

13 (A) IN GENERAL.—As soon after receipt as

14 is practicable, the organization shall place in

15 the Reserve Fund established under paragraph

16 (1)—

17 (i) all funds provided to the organiza18 tion by any public or private entity to con19 duct the demonstration project;

20 (ii) the proceeds of any investment

21 made under paragraph (3)(B).

22 (B) INDIVIDUAL DEVELOPMENT ACCOUNT

23 PENALTIES.—

24 (i) PENALTY AMOUNTS AUTHORIZED

25 TO BE APPROPRIATED FOR PAYMENT TO
29

•HR 456 IH

1 THE RESERVE FUND.—For payment to the

2 Reserve Fund established by an organiza3 tion that provides financial assistance

4 under subsection (g) of this section to any

5 individual who pays, or from whose individ6 ual development account is paid, a penalty

7 amount, there is authorized to be appro8 priated to the Secretary, without fiscal

9 year limitation, an amount equal to the

10 penalty amount.

11 (ii) PAYMENT TO RESERVE FUND OF

12 PENALTY AMOUNTS APPROPRIATED

13 THEREFOR.—The Secretary shall imme14 diately pay to the Reserve Fund any

15 amount appropriated pursuant to clause (i)

16 for payment to the Reserve Fund.

17 (C) UNIFORM ACCOUNTING REGULA18 TIONS.—The Secretary shall prescribe regula19 tions with respect to accounting for amounts in

20 Reserve Funds.

21 (3) USE OF RESERVE FUND.—

22 (A) IN GENERAL.—The organization shall

23 use the amounts in the Reserve Fund estab24 lished under paragraph (1) to—
30

•HR 456 IH

1 (i) assist participants in the dem2 onstration project in obtaining the skills

3 and information necessary to achieve eco4 nomic self-sufficiency through activities re5 quiring qualified expenses (as defined in

6 section 220(c)(1) of the Internal Revenue

7 Code of 1986);

8 (ii) provide financial assistance in ac9 cordance with subsection (g) to individuals

10 selected by the organization to participate

11 in the project;

12 (iii) administer the project; and

13 (iv) provide the organization evaluat14 ing the project under a contract entered

15 into under subsection (m) with such infor16 mation with respect to the project as may

17 be required for the evaluation.

18 (B) AUTHORITY TO INVEST FUNDS.—The

19 organization shall invest such amounts in the

20 Reserve Fund as are not immediately needed to

21 carry out subparagraph (A) of this paragraph,

22 in accordance with guidelines which shall—

23 (i) be developed by the panel estab24 lished pursuant to subsection (k); and
31

•HR 456 IH

1 (ii) require such investments to be

2 highly liquid and of low risk.

3 (C) LIMITATION ON ADMINISTRATIVE EX4 PENSES.—Not more than 10 percent of the

5 amounts provided to the organization under

6 subsection (c)(2) may be used to administer, or

7 notify the public about, the demonstration

8 project, without the approval of the panel estab9 lished pursuant to subsection (k).

10 (4) UNUSED FEDERAL GRANT FUNDS TRANS11 FERRED TO THE SECRETARY WHEN PROJECT TERMI12 NATES.—Notwithstanding paragraph (3), upon the

13 termination of any demonstration project authorized

14 under this section, the organization conducting the

15 project shall transfer to the Secretary an amount

16 equal to—

17 (A) the amounts in the Reserve Fund at

18 time of the termination; multiplied by

19 (B) a percentage equal to—

20 (i) the aggregate amount of grants

21 made to the organization under subsection

22 (c)(2); divided by

23 (ii) the aggregate of the amounts pro24 vided to the organization by all entities to

25 conduct the project.
32

•HR 456 IH

1 (e) ELIGIBILITY FOR ASSISTANCE.—Any individual

2 who is a member of a household that meets the following

3 requirements shall be eligible for assistance under a dem4 onstration project conducted under this section:

5 (1) INCOME TEST.—The income of the house6 hold for the immediately preceding calendar year is

7 not more than 200 percent of the poverty threshold

8 for such period.

9 (2) NET WORTH TEST.—The net worth of the

10 household, as of the close of such immediately pre11 ceding calendar year, is not more than $20,000.

12 (f) SELECTION OF INDIVIDUALS TO RECEIVE ASSIST13 ANCE.—From among the individuals eligible for assistance

14 under a demonstration project conducted under this sec15 tion, the organization authorized to conduct the project

16 shall select the individuals—

17 (1) whom the organization deems to be best

18 suited to receive such assistance; and

19 (2) to whom the organization will provide finan20 cial assistance in accordance with subsection (g).

21 (g) PROVISION OF FINANCIAL ASSISTANCE.—Each

22 organization to which a grant is made under subsection

23 (c)(2) of this section for a project year shall, during the

24 project year, deposit directly into the individual develop25 ment account of any individual selected by the organiza-
33

•HR 456 IH

1 tion under subsection (f) of this section an amount deter2 mined in accordance with the following table:

If the income of the individual for the applicable period

is the following percentage of

the poverty threshold:

The amount is not to exceed the lesser of:

The following percentage

of the qualified savings of

the individual for the period:

OR

The following

dollar

amount:

Not more than 50 percent .... 900 or .... $1,800

More than 50 percent but not

more than 85 percent.

500 or .... $1,650

More than 85 percent but not

more than 125 percent.

200 or .... $1,400

More than 125 percent but

not more than 160 percent.

50 or .... $700

More than 160 percent but

not more than 200 percent.

20 or .... $350.

3 (h) LOCAL CONTROL OVER DEMONSTRATION

4 PROJECTS.—Each organization authorized to conduct a

5 demonstration project under this section shall, subject to

6 subsections (j) and (l), have sole authority over the admin7 istration of the project. The Secretary may prescribe only

8 such regulations with respect to demonstration projects

9 under this section as are necessary to ensure compliance

10 with the approved applications therefor and this section.

11 (i) SEMIANNUAL PROGRESS REPORTS.—

12 (1) IN GENERAL.—Each organization author13 ized to conduct a demonstration project under this

14 section shall prepare 10 semiannual reports on the

15 progress of the project, including—

16 (A) information on participation of individ17 uals in the project;
34

•HR 456 IH

1 (B) information on amounts in the Reserve

2 Fund established with respect to the project;

3 (C) information on amounts in the individ4 ual development accounts of the individuals to

5 whom assistance is provided under the project;

6 and

7 (D) such other information as the panel

8 established pursuant to subsection (k) may re9 quire to assess the project.

10 (2) SUBMISSION OF REPORTS.—The organiza11 tion shall submit each report required to be prepared

12 under paragraph (1) with respect to a demonstration

13 project to—

14 (A) the panel established pursuant to sub15 section (k);

16 (B) the Secretary; and

17 (C) the Treasurer (or equivalent official) of

18 the State in which the project is conducted.

19 (3) TIMING.—The first report required by para20 graph (1) shall be submitted at the end of the 6-

21 month period beginning on the date the Secretary

22 authorized the organization to conduct the dem23 onstration project, and subsequent reports shall be

24 submitted 6 months apart.

25 (j) OVERSIGHT.—
35

•HR 456 IH

1 (1) ESTABLISHMENT OF PANEL.—The Sec2 retary shall establish a panel pursuant to subsection

3 (k) of this section to—

4 (A) develop guidelines governing the in5 vestment of—

6 (i) funds in the Reserve Funds estab7 lished under subsection (d) of this section;

8 and

9 (ii) funds in individual development

10 accounts established under section 220 of

11 the Internal Revenue Code of 1986;

12 (B) monitor the progress of the projects;

13 (C) make recommendations with respect to

14 projects that do not progress adequately or are

15 not conducted in substantial compliance with

16 the approved application therefor and this sec17 tion; and

18 (D) determine the percentage of the

19 amounts appropriated to carry out this section

20 that are to be used for evaluations under sub21 section (m) of this section, subject to the re22 quirement that such percentage shall be not less

23 than 3 percent nor more than 8 percent.

24 (2) RECOMMENDATIONS BY PANEL.—The panel

25 shall make recommendations to any organization
36

•HR 456 IH

1 conducting a demonstration project under this sec2 tion on measures to be taken to ensure that the

3 project progresses adequately and is conducted in

4 substantial compliance with the approved application

5 therefor and this section. The panel shall transmit

6 copies of such recommendations to the Secretary

7 and the Treasurer (or equivalent official) of the

8 State in which the project is conducted.

9 (3) PANEL TO REVIEW IMPLEMENTATION OF

10 RECOMMENDATIONS.—After a reasonable time has

11 elapsed since the organization conducting a dem12 onstration project under this section has been pro13 vided recommendations made by the panel, the panel

14 shall—

15 (A) determine whether or not the organiza16 tion has implemented the recommendations;

17 and

18 (B) if the panel finds that the organization

19 has failed to implement the recommendations,

20 immediately notify the Secretary of such fail21 ure.

22 (k) OVERSIGHT PANEL.—

23 (1) MEMBERSHIP.—

24 (A) IN GENERAL.—
37

•HR 456 IH

1 (i) 8 FEDERAL MEMBERS.—The Sec2 retary shall appoint to the panel 8 mem3 bers who shall be officers or employees of

4 the Federal Government. Such members

5 may vote on any matter before the panel.

6 (ii) 2 ROTATING STATE MEMBERS.—

7 The Secretary, in consultation with the

8 Treasurer (or equivalent official) of each

9 State in which a demonstration project is

10 conducted under this section, shall appoint

11 to the panel 2 members from each such

12 State who are representatives of the gov13 ernment of the State. The members ap14 pointed under this clause from a State may

15 vote only on the matters before the panel

16 relating to demonstration projects con17 ducted under this section in the State.

18 (iii) 5 PRIVATE MEMBERS.—The Sec19 retary shall appoint to the panel 5 mem20 bers who shall be business leaders and wel21 fare and social policy innovators. Such

22 members may vote on any matter before

23 the panel.

24 (B) QUALIFICATIONS.—Each member of

25 the panel shall be qualified to review the con-
38

•HR 456 IH

1 duct of demonstration projects conducted under

2 this section by virtue of the education, training,

3 or experience of the member.

4 (C) POLITICAL AFFILIATION.—Not more

5 than 50 percent of the members of the panel

6 may be of the same political party.

7 (2) TERMS.—

8 (A) GENERAL RULE.—Except as provided

9 in subparagraph (B), each member of the panel

10 shall be appointed for the life of the panel.

11 (B) SPECIAL RULE.—Any individual who is

12 appointed to the panel because of the status of

13 the individual as an officer or employee of a

14 government or because of the status of the indi15 vidual as not an officer or employee of any gov16 ernment, and whose status changes, may not

17 continue as a member of the panel.

18 (C) VACANCIES.—A vacancy in the panel

19 shall be filled in the manner in which the origi20 nal appointment was made.

21 (3) COMPENSATION.—

22 (A) BASIC PAY.—

23 (i) GENERAL RULE.—Except as pro24 vided in clause (ii), each member of the

25 panel shall be entitled to receive not more
39

•HR 456 IH

1 than the daily equivalent of the maximum

2 annual rate of basic pay payable for grade

3 GS-18 of the General Schedule for each

4 day (including travel time) during which

5 the member is engaged in the actual per6 formance of duties of the panel.

7 (ii) PROHIBITION AGAINST COMPENSA8 TION OF FEDERAL OFFICERS OR EMPLOY9 EES.—Members of the panel who are full10 time officers or employees of the United

11 States may not receive additional pay, al12 lowances, or benefits by reason of their

13 service on the panel.

14 (B) TRAVEL EXPENSES.—Each member of

15 the panel shall receive travel expenses, including

16 per diem in lieu of subsistence, in accordance

17 with sections 5702 and 5703 of title 5, United

18 States Code.

19 (4) PROCEDURE.—

20 (A) QUORUM.—51 percent of the members

21 of the panel who may vote on a matter shall

22 constitute a quorum with respect to the matter

23 but a lesser number may hold hearings.
40

•HR 456 IH

1 (B) CHAIRPERSON.—The Chairperson of

2 the panel shall be elected by the members of the

3 panel appointed under paragraph (1)(A)(i).

4 (C) MEETINGS.—

5 (i) HOW CALLED.—The panel shall

6 meet on a matter relating to a demonstra7 tion project conducted under this section in

8 a State, at the call of the Chairperson or

9 of a majority of the members of the panel

10 who may vote on the matter.

11 (ii) FREQUENCY.—

12 (I) GENERAL OVERSIGHT.—The

13 panel shall meet not less frequently

14 than twice yearly with respect to the

15 monitoring of the progress of dem16 onstration projects conducted under

17 this section.

18 (II) REVIEW OF PROBLEM

19 PROJECTS.—The panel shall meet as

20 necessary with respect to projects that

21 do not progress adequately or are not

22 conducted in substantial compliance

23 with the approved application therefor

24 and this section.

25 (5) POWERS.—
41

•HR 456 IH

1 (A) HEARINGS AND SESSIONS.—The panel

2 may, for the purpose of carrying out this sub3 section, hold hearings, sit and act at times and

4 places, take testimony, and receive evidence as

5 the panel considers appropriate. The panel may

6 administer oaths or affirmations to witnesses

7 appearing before it.

8 (B) POWERS OF MEMBERS AND AGENTS.—

9 Any member or agent of the panel who is not

10 an officer or employee of a State government

11 may, if authorized by the panel, take any action

12 which the panel is authorized to take by this

13 section.

14 (C) OBTAINING OFFICIAL DATA.—Subject

15 to other law, the panel may secure directly from

16 any department or agency of the United States

17 information necessary to enable it to carry out

18 any duty of the panel under this section. Upon

19 request of the Chairperson of the panel, the

20 head of that department or agency shall furnish

21 that information to the panel.

22 (D) MAIL.—The panel may use the United

23 States mail in the same manner and under the

24 same conditions as other departments and

25 agencies of the United States.
42

•HR 456 IH

1 (6) ADMINISTRATIVE SUPPORT.—Upon request

2 of the panel, the Secretary may detail any of the

3 personnel of the Department of the Treasury to the

4 panel to assist it in carrying out its duties under

5 this section.

6 (7) TERMINATION.—The panel shall terminate

7 on a date designated by the Secretary.

8 (l) SANCTIONS.—

9 (1) AUTHORITY TO REVOKE DEMONSTRATION

10 AUTHORITY.—If the Secretary receives a notice

11 under subsection (j)(3)(B) with respect to a dem12 onstration project, the Secretary may revoke the

13 original authorization to conduct the project.

14 (2) ACTIONS REQUIRED UPON REVOCATION.—If

15 the Secretary revokes the original authorization to

16 conduct a demonstration project, the Secretary—

17 (A) shall suspend the project;

18 (B) shall take control of the Reserve Fund

19 established pursuant to subsection (d) as part

20 of the project;

21 (C) shall make every effort to find another

22 organization willing and able to conduct the

23 project in accordance with the approved appli24 cation therefor (as modified, if necessary, to
43

•HR 456 IH

1 incorporate the recommendations) and this

2 section;

3 (D) may obtain the assistance of the panel

4 to find such an organization;

5 (E) if the Secretary finds such an organi6 zation, shall—

7 (i) authorize the organization to con8 duct the project in accordance with the ap9 proved application therefor (as modified, if

10 necessary, to incorporate the recommenda11 tions) and this section;

12 (ii) transfer to the organization con13 trol over the Reserve Fund established

14 pursuant to subsection (d) as part of the

15 project; and

16 (iii) for purposes of this section, con17 sider—

18 (I) such other organization to be

19 the organization originally authorized

20 to conduct the project; and

21 (II) the date of such authoriza22 tion to be the date of the original au23 thorization; and

24 (F) if, by the end of the 1-year period be25 ginning on the date of such revocation, the Sec-
44

•HR 456 IH

1 retary has not found such an organization,

2 shall—

3 (i) terminate the project; and

4 (ii) from the Reserve Fund estab5 lished as part of the project, remit to each

6 entity that has provided amounts to the or7 ganization originally authorized to conduct

8 the project, an amount equal to that per9 centage of the aggregate of the amounts so

10 provided by all entities that is represented

11 by the amount so provided by such entity.

12 (m) EVALUATIONS.—

13 (1) IN GENERAL.—Not later than July 1, 1994,

14 the panel established pursuant to subsection (k)

15 shall enter into a contract with an independent re16 search organization that requires the organization,

17 in accordance with this subsection, to evaluate the

18 demonstration projects conducted under this section,

19 individually and as a group.

20 (2) RESEARCH QUESTIONS.—In evaluating any

21 demonstration project conducted under this section,

22 the research organization shall address the following

23 questions:
45

•HR 456 IH

1 (A) What types of information and public

2 education efforts are successful in attracting

3 project participants?

4 (B) How can participation in the dem5 onstration project be made as easy and acces6 sible as possible for participants?

7 (C) What level of financial incentives is re8 quired to stimulate participation in the dem9 onstration project, and does this vary among

10 different populations?

11 (D) What program features in conjunction

12 with individual development accounts (such as

13 peer support, structured planning exercises,

14 mentoring, and case management) increase the

15 rate and consistency of participation in the

16 demonstration project?

17 (E) What are the economic, psychological,

18 and social effects of asset accumulation, and for

19 whom? To what extent, under what cir20 cumstances, and for whom does asset accumula21 tion under the demonstration project lead to

22 any or all of the following:

23 (i) A greater sense of security and

24 control?

25 (ii) Greater stability in the household?
46

•HR 456 IH

1 (iii) A more positive future outlook?

2 (iv) More long-term planning?

3 (v) Increased efforts to maintain and

4 develop assets?

5 (vi) Greater knowledge about savings,

6 investments, and other financial matters?

7 (vii) Increased effort and success in

8 educational achievement (including those

9 of parents working to provide for the edu10 cation of their children)?

11 (viii) Increased specialization in career

12 development?

13 (ix) Greater self-esteem and personal

14 efficacy?

15 (x) Improved social status?

16 (xi) Increased political participation?

17 (xii) Increased community involve18 ment?

19 (xiii) Increased labor earnings in the

20 long term?

21 (xiv) Decreased reliance on traditional

22 forms of public assistance in the long

23 term?
47

•HR 456 IH

1 (3) METHODOLOGICAL REQUIREMENTS.—In

2 evaluating any demonstration project conducted

3 under this section, the research organization shall—

4 (A) use control groups to compare partici5 pants with nonparticipants as much as possible;

6 (B) before, during, and after the project,

7 obtain such quantitative data as are necessary

8 to thoroughly evaluate the project; and

9 (C) develop a qualitative assessment, de10 rived from sources such as in depth interviews,

11 of how asset accumulation affects individuals

12 and families.

13 (4) STAFFING REQUIREMENTS.—In evaluating

14 any demonstration project conducted under this sec15 tion, the research organization shall use skilled, pro16 fessional, and independent staff.

17 (n) DEFINITIONS.—As used in this section:

18 (1) APPLICABLE PERIOD.—The term ‘‘applica19 ble period’’ means, with respect to amounts to be

20 paid from a grant made for a project year, the cal21 endar year immediately preceding the calendar year

22 in which the grant is made.

23 (2) HOUSEHOLD.—The term ‘‘household’’

24 means all individuals who share use of a dwelling
48

•HR 456 IH

1 unit as primary quarters for living and eating sepa2 rate from other individuals.

3 (3) HOUSEHOLD NET WORTH.—

4 (A) IN GENERAL.—The term ‘‘net worth’’

5 means, with respect to a household, the aggre6 gate market value of all assets not excluded

7 under subparagraph (B) that are owned in

8 whole or in part by any member of the house9 hold, minus the obligations or debts of any

10 member of the household.

11 (B) ASSETS EXCLUDED.—The following

12 assets (and obligations or debts with respect

13 thereto) shall be excluded in determining the

14 net worth of any household:

15 (i) $35,000 OF HOME EQUITY.—The

16 lesser of—

17 (I) the equity of the members of

18 the household in the dwelling unit in

19 which the members reside; or

20 (II) $35,000.

21 (ii) MOTOR VEHICLE.—The most val22 uable motor vehicle owned by any member

23 of the household.

24 (iii) FURNITURE; APPLIANCES;

25 CLOTHING.—All furniture, appliances, and
49

•HR 456 IH

1 clothing used by any member of the house2 hold in the course of daily living.

3 (iv) ART OBJECTS.—All art objects

4 displayed in the dwelling unit in which the

5 members of the household reside.

6 (v) JEWELRY.—All jewelry owned by

7 any member of the household.

8 (4) INDIVIDUAL DEVELOPMENT ACCOUNT.—

9 The term ‘‘individual development account’’ has the

10 same meaning given such term in section 220 of the

11 Internal Revenue Code of 1986.

12 (5) PENALTY AMOUNT.—The term ‘‘penalty

13 amount’’ means any of the following:

14 (A) FINANCIAL ASSISTANCE FORFEITED.—

15 Any amount paid into the general fund of the

16 Treasury of the United States under section

17 220(e) of the Internal Revenue Code of 1986.

18 (B) 10 PERCENT ADDITION TO TAX.—Any

19 additional tax imposed by section 220(f) of the

20 Internal Revenue Code of 1986.

21 (C) OTHER PENALTY TAXES.—Any tax im22 posed with respect to an individual development

23 account by section 4973, 4975, or 6693 of the

24 Internal Revenue Code of 1986.
50

•HR 456 IH

1 (6) POVERTY THRESHOLD.—The term ‘‘poverty

2 threshold’’ means, with respect to a calendar year,

3 the Federal poverty line for the calendar year for the

4 relevant family size, as defined annually by the Bu5 reau of the Census.

6 (7) PROJECT YEAR.—The term ‘‘project year’’

7 means, with respect to a demonstration project, any

8 of the 5 consecutive 12-month periods beginning on

9 the date the project is originally authorized to be

10 conducted.

11 (8) QUALIFIED SAVINGS OF THE INDIVIDUAL

12 FOR THE PERIOD.—The term ‘‘qualified savings of

13 the individual for the period’’ means the aggregate

14 of the amounts contributed by the individual to the

15 individual development account of the individual

16 during the period.

17 (o) LIMITATIONS ON AUTHORIZATION OF APPRO18 PRIATIONS.—

19 (1) IN GENERAL.—To carry out this section,

20 there are authorized to be appropriated to the Sec21 retary of the Treasury not to exceed $100,000,000

22 for each of fiscal years 1994, 1995, 1996, 1997, and

23 1998.

24 (2) CERTAIN AMOUNTS TO BE USED FOR EVAL25 UATIONS.—To obtain evaluations of the projects in
51

•HR 456 IH

1 accordance with subsection (m), the Secretary shall

2 expend an amount equal to the amounts appro3 priated pursuant to paragraph (1) of this subsection

4 for any fiscal year, multiplied by the percentage de5 termined by the panel established pursuant to sub6 section (k).

7 SEC. 5. FUNDS IN INDIVIDUAL DEVELOPMENT ACCOUNTS

8 OF DEMONSTRATION PROJECT PARTICI9 PANTS DISREGARDED FOR PURPOSES OF ALL

10 MEANS-TESTED FEDERAL PROGRAMS.

11 Notwithstanding any Federal law (other than the In12 ternal Revenue Code of 1986) that requires consideration

13 of 1 or more financial circumstances of an individual, for

14 the purpose of determining eligibility to receive, or the

15 amount of, any assistance or benefit authorized by such

16 law to be provided to or for the benefit of such individual,

17 funds (including interest accruing) in an individual devel18 opment account (as defined in section 220 of the Internal

19 Revenue Code of 1986) shall be disregarded for such pur20 pose with respect to any period during which such individ21 ual participates in a demonstration project conducted

22 under section 4 of this Act (or would be participating in

23 such a project but for the suspension of the project).

Æ

HR 456 IH——2
52

•HR 456 IH

HR 456 IH——3

HR 456 IH——4