II

107TH CONGRESS

1ST SESSION S. 1025

To provide for savings for working families.

IN THE SENATE OF THE UNITED STATES

JUNE 13, 2001

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

referred to the Committee on Finance

A BILL

To provide for savings for working families.

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 ‘‘Savings for Working

5 Families Act of 2001’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress makes the following find8 ings:

9 (1) For the vast majority of households the

10 pathway to the economic mainstream and financial

11 security is not through spending and consumption,

12 but through saving, investing, and the accumulation
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1 of assets. Assets promote economic household sta2 bility, decrease economic strain on households, pro3 mote educational attainment, decrease marital dis4 solution, decrease the risk of intergenerational pov5 erty transmission, increase health and satisfaction

6 among adults, increase property values, decrease res7 idential mobility, increase property maintenance, and

8 increase local civic involvement.

9 (2) One-third of all Americans have no assets

10 available for investment and another 20 percent

11 have only negligible assets. Assets are distributed far

12 more unevenly than income. Whereas the top 20 per13 cent of American households earn over 43 percent of

14 all income, such households hold over 68 percent of

15 net worth and almost 87 percent of net financial as16 sets. Moreover, asset poverty and wealth gaps are

17 even higher among minority households by a ratio of

18 more than 11 to 1. Up to 20 percent of all house19 holds are unbanked and do not have access to the

20 basic financial tools that make asset accumulation

21 possible.

22 (3) Public policy has contributed to large asset

23 gaps in the United States. Traditional public assist24 ance programs based on income and consumption

25 have rarely been successful in supporting the transi-
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1 tion to economic self-sufficiency. Tax policy, through

2 $288,000,000,000 in annual tax incentives, has

3 helped lay the foundation for the great American

4 middle class, but only for some citizens. Fully 90

5 percent of such current tax benefits accrue to house6 holds earning more than $50,000 per year, roughly

7 half of all American households. Lacking an income

8 tax liability, low-income working families cannot

9 take advantage of asset development incentives.

10 Moreover, low-income families seeking public assist11 ance must first spend down their assets and face se12 vere asset limits once on assistance.

13 (4) Individual Development Accounts, or IDAs,

14 have proven to be successful in helping low-income

15 working families save and accumulate assets. In one

16 national demonstration project, 2,378 low-income

17 families saved a total of $834,442 in one year which

18 generated another $1,644,510 in private matching

19 funds. Thus far, IDA savings have been used to pur20 chase long-term, high-return assets, including

21 homes, post-secondary education and training, and

22 small businesses. Presently, about 10,000 IDAs are

23 in existence in the United States, held by a very

24 small fraction of the at least 70 million Americans

25 who are asset poor.
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1 (5) Therefore, the Federal Government should

2 support, through the tax code, a significant expan3 sion of Individual Development Accounts so that

4 millions of low-income working families across the

5 country can save, accumulate assets, and move their

6 lives forward, and thus make positive contributions

7 to the economic and social well-being of the United

8 States, as well as to its future.

9 (b) PURPOSES.—The purposes of this Act are to pro10 vide for the establishment of individual development ac11 count programs that will—

12 (1) provide individuals and families with limited

13 means an opportunity to accumulate assets and to

14 enter the financial mainstream;

15 (2) promote education, homeownership, and the

16 development of small businesses;

17 (3) stabilize families and build communities;

18 and

19 (4) support continued United States economic

20 expansion.

21 SEC. 3. DEFINITIONS.

22 As used in this Act:

23 (1) ELIGIBLE INDIVIDUAL.—

24 (A) IN GENERAL.—The term ‘‘eligible indi25 vidual’’ means an individual who—
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1 (i) has attained the age of 18 years

2 but not the age of 61;

3 (ii) is a citizen or legal resident of the

4 United States;

5 (iii) is not a student (as defined in

6 section 151(c)(4)); and

7 (iv) is a taxpayer the adjusted gross

8 income of whom for the preceding taxable

9 year does not exceed—

10 (I) $20,000, in the case of a tax11 payer described in section 1(c) or 1(d)

12 of the Internal Revenue Code of 1986;

13 (II) $25,000, in the case of a

14 taxpayer described in section 1(b) of

15 such Code; and

16 (III) $40,000, in the case of a

17 taxpayer described in section 1(a) of

18 such Code.

19 (B) INFLATION ADJUSTMENT.—

20 (i) IN GENERAL.—In the case of any

21 taxable year beginning after 2002, each

22 dollar amount referred to in subparagraph

23 (A)(iv) shall be increased by an amount

24 equal to—
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1 (I) such dollar amount, multi2 plied by

3 (II) the cost-of-living adjustment

4 determined under section (1)(f)(3) of

5 the Internal Revenue Code of 1986

6 for the calendar year in which the tax7 able year begins, by substituting

8 ‘‘2001’’ for ‘‘1992’’.

9 (ii) ROUNDING.—If any amount as

10 adjusted under clause (i) is not a multiple

11 of $50, such amount shall be rounded to

12 the nearest multiple of $50.

13 (2) INDIVIDUAL DEVELOPMENT ACCOUNT.—

14 The term ‘‘Individual Development Account’’ means

15 an account established for an eligible individual as

16 part of a qualified individual development account

17 program, but only if the written governing instru18 ment creating the account meets the following re19 quirements:

20 (A) The sole owner of the account is the

21 individual for whom the account was estab22 lished.

23 (B) No contribution will be accepted unless

24 it is in cash.
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1 (C) The holder of the account is a quali2 fied financial institution.

3 (D) The assets of the account will not be

4 commingled with other property except in a

5 common trust fund or common investment

6 fund.

7 (E) Except as provided in section 7(b), any

8 amount in the account may be paid out only for

9 the purpose of paying the qualified expenses of

10 the account owner.

11 (3) PARALLEL ACCOUNT.—The term ‘‘parallel

12 account’’ means a separate, parallel individual or

13 pooled account for all matching funds and earnings

14 dedicated to an Individual Development Account

15 owner as part of a qualified individual development

16 account program, the sole owner of which is a quali17 fied financial institution, a qualified nonprofit orga18 nization, or an Indian tribe.

19 (4) QUALIFIED FINANCIAL INSTITUTION.—

20 (A) IN GENERAL.—The term ‘‘qualified fi21 nancial institution’’ means any person author22 ized to be a trustee of any individual retirement

23 account under section 408(a)(2) of the Internal

24 Revenue Code of 1986.
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1 (B) RULE OF CONSTRUCTION.—Nothing in

2 this paragraph shall be construed as preventing

3 a person described in subparagraph (A) from

4 collaborating with 1 or more contractual affili5 ates, qualified nonprofit organizations, or In6 dian tribes to carry out an individual develop7 ment account program established under sec8 tion 4.

9 (5) QUALIFIED NONPROFIT ORGANIZATION.—

10 The term ‘‘qualified nonprofit organization’’

11 means—

12 (A) any organization described in section

13 501(c)(3) of the Internal Revenue Code of 1986

14 and exempt from taxation under section 501(a)

15 of such Code;

16 (B) any community development financial

17 institution certified by the Community Develop18 ment Financial Institution Fund; or

19 (C) any credit union chartered under Fed20 eral or State law.

21 (6) INDIAN TRIBE.—The term ‘‘Indian tribe’’

22 means any Indian tribe as defined in section 4(12)

23 of the Native American Housing Assistance and

24 Self-Determination Act of 1996 (25 U.S.C.
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1 4103(12), and includes any tribal subsidiary, sub2 division, or other wholly owned tribal entity.

3 (7) QUALIFIED INDIVIDUAL DEVELOPMENT AC4 COUNT PROGRAM.—The term ‘‘qualified individual

5 development account program’’ means a program es6 tablished under section 4 under which—

7 (A) Individual Development Accounts and

8 parallel accounts are held by a qualified finan9 cial institution; and

10 (B) additional activities determined by the

11 Secretary as necessary to responsibly develop

12 and administer accounts, including recruiting,

13 providing financial education and other training

14 to account owners, and regular program moni15 toring, are carried out by the qualified financial

16 institution, a qualified nonprofit organization,

17 or an Indian tribe.

18 (8) QUALIFIED EXPENSE DISTRIBUTION.—

19 (A) IN GENERAL.—The term ‘‘qualified ex20 pense distribution’’ means any amount paid (in21 cluding through electronic payments) or distrib22 uted out of an Individual Development Account

23 and a parallel account established for an eligible

24 individual if such amount—
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1 (i) is used exclusively to pay the quali2 fied expenses of the Individual Develop3 ment Account owner or such owner’s

4 spouse or dependents, as approved by the

5 qualified financial institution, qualified

6 nonprofit organization, or Indian tribe;

7 (ii) is paid by the qualified financial

8 institution, qualified nonprofit organiza9 tion, or Indian tribe—

10 (I) except as otherwise provided

11 in this clause, directly to the unre12 lated third party to whom the amount

13 is due;

14 (II) in the case of distributions

15 for working capital under a qualified

16 business plan (as defined in subpara17 graph (B)(iv)(IV)), directly to the ac18 count owner;

19 (III) in the case of any qualified

20 rollover, directly to another Individual

21 Development Account and parallel ac22 count; or

23 (IV) in the case of a qualified

24 final distribution, directly to the

25 spouse, dependent, or other named
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1 beneficiary of the deceased account

2 owner; and

3 (iii) is paid after the account owner

4 has completed a financial education course

5 as required under section 5(b).

6 (B) QUALIFIED EXPENSES.—

7 (i) IN GENERAL.—The term ‘‘qualified

8 expenses’’ means any of the following:

9 (I) Qualified higher education ex10 penses.

11 (II) Qualified first-time home12 buyer costs.

13 (III) Qualified business capital14 ization or expansion costs.

15 (IV) Qualified rollovers.

16 (V) Qualified final distribution.

17 (ii) QUALIFIED HIGHER EDUCATION

18 EXPENSES.—

19 (I) IN GENERAL.—The term

20 ‘‘qualified higher education expenses’’

21 has the meaning given such term by

22 section 72(t)(7) of the Internal Rev23 enue Code of 1986, determined by

24 treating postsecondary vocational edu-
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1 cational schools as eligible educational

2 institutions.

3 (II) POSTSECONDARY VOCA4 TIONAL EDUCATION SCHOOL.—The

5 term ‘‘postsecondary vocational edu6 cational school’’ means an area voca7 tional education school (as defined in

8 subparagraph (C) or (D) of section

9 521(4) of the Carl D. Perkins Voca10 tional and Applied Technology Edu11 cation Act (20 U.S.C. 2471(4)))

12 which is in any State (as defined in

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

14 sections are in effect on the date of

15 the enactment of this Act.

16 (III) COORDINATION WITH

17 OTHER BENEFITS.—The amount of

18 qualified higher education expenses

19 for any taxable year shall be reduced

20 as provided in section 25A(g)(2) of

21 the Internal Revenue Code of 1986

22 and may not be taken into account for

23 purposes of determining qualified

24 higher education expenses under sec25 tion 135, 529, or 530 of such Code.
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1 (iii) QUALIFIED FIRST-TIME HOME2 BUYER COSTS.—The term ‘‘qualified first3 time homebuyer costs’’ means qualified ac4 quisition costs (as defined in section

5 72(t)(8) of such Code without regard to

6 subparagraph (B) thereof) with respect to

7 a principal residence (within the meaning

8 of section 121 of such Code) for a qualified

9 first-time homebuyer (as defined in section

10 72(t)(8) of such Code).

11 (iv) QUALIFIED BUSINESS CAPITAL12 IZATION OR EXPANSION COSTS.—

13 (I) IN GENERAL.—The term

14 ‘‘qualified business capitalization or

15 expansion costs’’ means qualified ex16 penditures for the capitalization or ex17 pansion of a qualified business pursu18 ant to a qualified business plan.

19 (II) QUALIFIED EXPENDI20 TURES.—The term ‘‘qualified expendi21 tures’’ means expenditures included in

22 a qualified business plan, including

23 capital, plant, equipment, working

24 capital, inventory expenses, attorney

25 and accounting fees, and other costs
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1 normally associated with starting or

2 expanding a business.

3 (III) QUALIFIED BUSINESS.—

4 The term ‘‘qualified business’’ means

5 any business that does not contravene

6 any law.

7 (IV) QUALIFIED BUSINESS

8 PLAN.—The term ‘‘qualified business

9 plan’’ means a business plan which

10 has been approved by the qualified fi11 nancial institution, qualified nonprofit

12 organization, or Indian tribe and

13 which meets such requirements as the

14 Secretary may specify.

15 (v) QUALIFIED ROLLOVERS.—The

16 term ‘‘qualified rollover’’ means the com17 plete distribution of the amounts in an In18 dividual Development Account and parallel

19 account to another Individual Development

20 Account and parallel account established in

21 another qualified financial institution,

22 qualified nonprofit organization, or Indian

23 tribe for the benefit of the account owner.

24 (vi) QUALIFIED FINAL DISTRIBU25 TION.—The term ‘‘qualified final distribu-
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1 tion’’ means, in the case of a deceased ac2 count owner, the complete distribution of

3 the amounts in an Individual Development

4 Account and parallel account directly to

5 the spouse, any dependent, or other named

6 beneficiary of the deceased.

7 (9) SECRETARY.—The term ‘‘Secretary’’ means

8 the Secretary of the Treasury.

9 SEC. 4. STRUCTURE AND ADMINISTRATION OF QUALIFIED

10 INDIVIDUAL DEVELOPMENT ACCOUNT PRO11 GRAMS.

12 (a) ESTABLISHMENT OF QUALIFIED INDIVIDUAL DE13 VELOPMENT ACCOUNT PROGRAMS.—Any qualified finan14 cial institution, qualified nonprofit organization, or Indian

15 tribe may establish 1 or more qualified individual develop16 ment account programs which meet the requirements of

17 this Act.

18 (b) BASIC PROGRAM STRUCTURE.—

19 (1) IN GENERAL.—All qualified individual de20 velopment account programs shall consist of the fol21 lowing 2 components:

22 (A) An Individual Development Account to

23 which an eligible individual may contribute cash

24 in accordance with section 5.
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1 (B) A parallel account to which all match2 ing funds shall be deposited in accordance with

3 section 6.

4 (2) TAILORED IDA PROGRAMS.—A qualified fi5 nancial institution, a qualified nonprofit organiza6 tion, or an Indian tribe may tailor its qualified indi7 vidual development account program to allow match8 ing funds to be spent on 1 or more of the categories

9 of qualified expenses.

10 (c) TAX TREATMENT OF PARALLEL ACCOUNTS.—

11 Any account described in subparagraph (B) of subsection

12 (b)(1) is exempt from taxation under the Internal Revenue

13 Code of 1986.

14 SEC. 5. PROCEDURES FOR OPENING AND MAINTAINING AN

15 INDIVIDUAL DEVELOPMENT ACCOUNT AND

16 QUALIFYING FOR MATCHING FUNDS.

17 (a) OPENING AN ACCOUNT.—An eligible individual

18 may open an Individual Development Account with a

19 qualified financial institution, a qualified nonprofit organi20 zation, or an Indian tribe upon certification that such indi21 vidual maintains no other Individual Development Ac22 count (other than an Individual Development Account to

23 be terminated by a qualified rollover).

24 (b) REQUIRED COMPLETION OF FINANCIAL EDU25 CATION COURSE.—
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1 (1) IN GENERAL.—Before becoming eligible to

2 withdraw matching funds to pay for qualified ex3 penses, owners of Individual Development Accounts

4 must complete a financial education course offered

5 by a qualified financial institution, a qualified non6 profit organization, an Indian tribe, or a government

7 entity.

8 (2) STANDARD AND APPLICABILITY OF

9 COURSE.—The Secretary, in consultation with rep10 resentatives of qualified individual development ac11 count programs and financial educators, shall estab12 lish minimum quality standards for the contents of

13 financial education courses and providers of such

14 courses offered under paragraph (1) and a protocol

15 to exempt individuals from the requirement under

16 paragraph (1) because of hardship or lack of need.

17 (c) PROOF OF STATUS AS AN ELIGIBLE INDI18 VIDUAL.—Federal income tax forms from the preceding

19 taxable year (or in the absence of such forms, such docu20 mentation as specified by the Secretary proving the eligi21 ble individual’s adjusted gross income and the status of

22 the individual as an eligible individual) shall be presented

23 to the qualified financial institution, qualified nonprofit

24 organization, or Indian tribe at the time of the establish25 ment of the Individual Development Account and in any
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1 taxable year in which contributions are made to the Ac2 count to qualify for matching funds under section

3 6(b)(1)(A).

4 (d) DIRECT DEPOSITS.—The Secretary may, under

5 regulations, provide for the direct deposit of any portion

6 (not less than $1) of any overpayment of Federal tax of

7 an individual as a contribution to the Individual Develop8 ment Account of such individual.

9 SEC. 6. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOP10 MENT ACCOUNT PROGRAMS.

11 (a) PARALLEL ACCOUNTS.—The qualified financial

12 institution, qualified nonprofit organization, or Indian

13 tribe shall deposit all matching funds for each Individual

14 Development Account into a parallel account at a qualified

15 financial institution, a qualified nonprofit organization, or

16 an Indian tribe.

17 (b) REGULAR DEPOSITS OF MATCHING FUNDS.—

18 (1) IN GENERAL.—Subject to paragraph (2),

19 the qualified financial institution, qualified nonprofit

20 organization, or Indian tribe shall not less than

21 quarterly (or upon a proper withdrawal request

22 under section 7, if necessary) deposit into the par23 allel account with respect to each eligible individual

24 the following:
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1 (A) A dollar-for-dollar match for the first

2 $500 contributed by the eligible individual into

3 an Individual Development Account with re4 spect to any taxable year.

5 (B) Any matching funds provided by State,

6 local, or private sources in accordance to the

7 matching ratio set by those sources.

8 (2) INFLATION ADJUSTMENT.—

9 (A) IN GENERAL.—In the case of any tax10 able year beginning after 2002, the dollar

11 amount referred to in paragraph (1)(A) shall be

12 increased by an amount equal to—

13 (i) such dollar amount, multiplied by

14 (ii) the cost-of-living adjustment de15 termined under section (1)(f)(3) of the In16 ternal Revenue Code of 1986 for the cal17 endar year in which the taxable year be18 gins, by substituting ‘‘2001’’ for ‘‘1992’’.

19 (B) ROUNDING.—If any amount as ad20 justed under subparagraph (A) is not a multiple

21 of $20, such amount shall be rounded to the

22 nearest multiple of $20.
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1 (3) CROSS REFERENCE.—

For allowance of tax credit for Individual Development Account subsidies, including matching

funds, see section 30B of the Internal Revenue Code

of 1986.

2 (c) DEPOSIT OF MATCHING FUNDS INTO INDI3 VIDUAL DEVELOPMENT ACCOUNT OF INDIVIDUAL WHO

4 HAS ATTAINED AGE 61.—In the case of an Individual De5 velopment Account owner who attains the age of 61, the

6 qualified financial institution, qualified nonprofit organi7 zation, or Indian tribe which holds the parallel account

8 for such individual shall deposit the funds in such parallel

9 account into the Individual Development Account of such

10 individual on the first day of the succeeding taxable year

11 of such individual.

12 (d) UNIFORM ACCOUNTING REGULATIONS.—To en13 sure proper recordkeeping and determination of the tax

14 credit under section 30B of the Internal Revenue Code

15 of 1986, the Secretary shall prescribe regulations with re16 spect to accounting for matching funds in the parallel ac17 counts.

18 (e) REGULAR REPORTING OF ACCOUNTS.—Any

19 qualified financial institution, qualified nonprofit organi20 zation, or Indian tribe shall report the balances in any

21 Individual Development Account and parallel account of

22 an individual on not less than an annual basis to such

23 individual.
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1 SEC. 7. WITHDRAWAL PROCEDURES.

2 (a) WITHDRAWALS FOR QUALIFIED EXPENSES.—To

3 withdraw money from an individual’s Individual Develop4 ment Account to pay qualified expenses of such individual

5 or such individual’s spouse or dependents, the qualified

6 financial institution, qualified nonprofit organization, or

7 Indian tribe shall directly transfer such funds from the

8 Individual Development Account, and, if applicable, from

9 the parallel account electronically to the distributees de10 scribed in section 3(8)(A)(ii). If the distributee is not

11 equipped to receive funds electronically, the qualified fi12 nancial institution, qualified nonprofit organization, or In13 dian tribe may issue such funds by paper check to the

14 distributee.

15 (b) WITHDRAWALS FOR NONQUALIFIED EX16 PENSES.—An Individual Development Account owner may

17 unilaterally withdraw any amount of funds from the Indi18 vidual Development Account for purposes other than to

19 pay qualified expenses, but shall forfeit a proportionate

20 amount of matching funds from the individual’s parallel

21 account by doing so, unless such withdrawn funds are re22 contributed to such Account by September 30 following

23 the withdrawal.

24 (c) WITHDRAWALS FROM ACCOUNTS OF NON25 ELIGIBLE INDIVIDUALS.—If the individual for whose ben26 efit an Individual Development Account is established
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1 ceases to be an eligible individual, such account shall re2 main an Individual Development Account, but such indi3 vidual shall not be eligible for any further matching funds

4 under section 6(b)(1)(A) during the period—

5 (1) beginning on the first day of the taxable

6 year of such individual following the beginning of

7 such ineligibility, and

8 (2) ending on the last day of the taxable year

9 of such individual in which such ineligibility ceases.

10 (d) TAX TREATMENT OF MATCHING FUNDS.—Any

11 amount withdrawn from a parallel account shall not be

12 includible in an eligible individual’s gross income.

13 (e) WITHDRAWAL LIABILITY RESTS ONLY WITH EL14 IGIBLE INDIVIDUALS.—Nothing in this Act may be con15 strued to impose liability on a qualified financial institu16 tion, a qualified nonprofit organization, or an Indian tribe

17 for non-compliance with the requirements of this Act re18 lated to withdrawals from Individual Development Ac19 counts.

20 SEC. 8. CERTIFICATION AND TERMINATION OF QUALIFIED

21 INDIVIDUAL DEVELOPMENT ACCOUNT PRO22 GRAMS.

23 (a) CERTIFICATION PROCEDURES.—Upon estab24 lishing a qualified individual development account pro25 gram under section 4, a qualified financial institution, a
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1 qualified nonprofit organization, or an Indian tribe shall

2 certify to the Secretary on forms prescribed by the Sec3 retary and accompanied by any documentation required

4 by the Secretary, that—

5 (1) the accounts described in subparagraphs

6 (A) and (B) of section 4(b)(1) are operating pursu7 ant to all the provisions of this Act; and

8 (2) the qualified financial institution, qualified

9 nonprofit organization, or Indian tribe agrees to im10 plement an information system necessary to monitor

11 the cost and outcomes of the qualified individual de12 velopment account program.

13 (b) AUTHORITY TO TERMINATE QUALIFIED IDA

14 PROGRAM.—If the Secretary determines that a qualified

15 financial institution, a qualified nonprofit organization, or

16 an Indian tribe under this Act is not operating a qualified

17 individual development account program in accordance

18 with the requirements of this Act (and has not imple19 mented any corrective recommendations directed by the

20 Secretary), the Secretary shall terminate such institu21 tion’s, nonprofit organization’s, or Indian tribe’s authority

22 to conduct the program. If the Secretary is unable to iden23 tify a qualified financial institution, a qualified nonprofit

24 organization, or an Indian tribe to assume the authority

25 to conduct such program, then any funds in a parallel ac-
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1 count established for the benefit of any individual under

2 such program shall be deposited into the Individual Devel3 opment Account of such individual as of the first day of

4 such termination.

5 SEC. 9. REPORTING, MONITORING, AND EVALUATION.

6 (a) RESPONSIBILITIES OF QUALIFIED FINANCIAL IN7 STITUTIONS, QUALIFIED NONPROFIT ORGANIZATIONS,

8 AND INDIAN TRIBES.—Each qualified financial institu9 tion, qualified nonprofit organization, or Indian tribe that

10 operates a qualified individual development account pro11 gram under section 4 shall report annually to the Sec12 retary within 90 days after the end of each calendar year

13 on—

14 (1) the number of eligible individuals making

15 contributions into Individual Development Accounts;

16 (2) the amounts contributed into Individual De17 velopment Accounts and deposited into parallel ac18 counts for matching funds;

19 (3) the amounts withdrawn from Individual De20 velopment Accounts and parallel accounts, and the

21 purposes for which such amounts were withdrawn;

22 (4) the balances remaining in Individual Devel23 opment Accounts and parallel accounts; and

24 (5) such other information needed to help the

25 Secretary monitor the cost and outcomes of the
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1 qualified individual development account program

2 (provided in a non-individually-identifiable manner).

3 (b) RESPONSIBILITIES OF THE SECRETARY.—

4 (1) MONITORING PROTOCOL.—Not later than

5 12 months after the date of the enactment of this

6 Act, the Secretary shall develop and implement a

7 protocol and process to monitor the cost and out8 comes of the qualified individual development ac9 count programs established under section 4.

10 (2) ANNUAL REPORTS.—In each year after the

11 date of the enactment of this Act, the Secretary

12 shall submit a progress report to Congress on the

13 status of such qualified individual development ac14 count programs. Such report shall include from a

15 representative sample of qualified individual develop16 ment account programs information on—

17 (A) the characteristics of participants, in18 cluding age, gender, race or ethnicity, marital

19 status, number of children, employment status,

20 and monthly income;

21 (B) deposits, withdrawals, balances, uses

22 of Individual Development Accounts, and par23 ticipant characteristics;

24 (C) the characteristics of qualified indi25 vidual development account programs, including
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1 match rate, economic education requirements,

2 permissible uses of accounts, staffing of pro3 grams in full time employees, and the total

4 costs of programs; and

5 (D) process information on program imple6 mentation and administration, especially on

7 problems encountered and how problems were

8 solved.

9 SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

10 There is authorized to be appropriated to the Sec11 retary $1,000,000 for fiscal year 2002 and for each fiscal

12 year through 2008, for the purposes of implementing this

13 Act, including the reporting, monitoring, and evaluation

14 required under section 9, to remain available until ex15 pended.

16 SEC. 11. ACCOUNT FUNDS DISREGARDED FOR PURPOSES

17 OF CERTAIN MEANS-TESTED FEDERAL PRO18 GRAMS.

19 Notwithstanding any other provision of Federal law

20 that requires consideration of 1 or more financial cir21 cumstances of an individual, for the purposes of deter22 mining eligibility to receive, or the amount of, any assist23 ance or benefit authorized by such provision to be provided

24 to or for the benefit of such individual, an amount equal

25 to the sum of—
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1 (1) all amounts (including earnings thereon) in

2 any Individual Development Account; plus

3 (2) the matching deposits made on behalf of

4 such individual (including earnings thereon) in any

5 parallel account,

6 shall be disregarded for such purposes.

7 SEC. 12. MATCHING FUNDS FOR INDIVIDUAL DEVELOP8 MENT ACCOUNTS PROVIDED THROUGH A TAX

9 CREDIT FOR QUALIFIED FINANCIAL INSTITU10 TIONS.

11 (a) IN GENERAL.—Subpart B of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of

13 1986 (relating to other credits) is amended by inserting

14 after section 30A the following new section:

15 ‘‘SEC. 30B. INDIVIDUAL DEVELOPMENT ACCOUNT INVEST16 MENT CREDIT FOR QUALIFIED FINANCIAL IN17 STITUTIONS.

18 ‘‘(a) DETERMINATION OF AMOUNT.—There shall be

19 allowed as a credit against the applicable tax for the tax20 able year an amount equal to the individual development

21 account investment provided by an eligible entity during

22 the taxable year under an individual development account

23 program established under section 4 of the Savings for

24 Working Families Act of 2001.
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1 ‘‘(b) APPLICABLE TAX.—For the purposes of this

2 section, the term ‘applicable tax’ means the excess (if any)

3 of—

4 ‘‘(1) the tax imposed under this chapter (other

5 than the taxes imposed under the provisions de6 scribed in subparagraphs (C) through (Q) of section

7 26(b)(2)), over

8 ‘‘(2) the credits allowable under subpart B

9 (other than this section) and subpart D of this part.

10 ‘‘(c) INDIVIDUAL DEVELOPMENT ACCOUNT INVEST11 MENT.—

12 ‘‘(1) IN GENERAL.—For purposes of this sec13 tion, the term ‘individual development account in14 vestment’ means, with respect to an individual devel15 opment account program of a qualified financial in16 stitution in any taxable year, an amount equal to the

17 sum of—

18 ‘‘(A) the aggregate amount of dollar-for19 dollar matches under such program under sec20 tion 6(b)(1)(A) of the Savings for Working

21 Families Act of 2001 for such taxable year,

22 plus

23 ‘‘(B) an amount equal to the sum of—
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1 ‘‘(i) with respect to each Individual

2 Development Account opened during such

3 taxable year, $100, plus

4 ‘‘(ii) with respect to each Individual

5 Development Account maintained during

6 such taxable year, $30.

7 ‘‘(2) INFLATION ADJUSTMENT.—

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

9 taxable year beginning after 2002, each dollar

10 amount referred to in paragraph (1)(B) shall be

11 increased by an amount equal to—

12 ‘‘(i) such dollar amount, multiplied by

13 ‘‘(ii) the cost-of-living adjustment de14 termined under section (1)(f)(3) for the

15 calendar year in which the taxable year be16 gins, by substituting ‘2001’ for ‘1992’.

17 ‘‘(B) ROUNDING.—If any amount as ad18 justed under subparagraph (A) is not a multiple

19 of $5, such amount shall be rounded to the

20 nearest multiple of $5.

21 ‘‘(d) ELIGIBLE ENTITY.—For purposes of this sec22 tion, the term ‘eligible entity’ means a qualified financial

23 institution, or 1 or more contractual affiliates of such an

24 institution as defined by the Secretary in regulations.
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1 ‘‘(e) OTHER DEFINITIONS.—For purposes of this

2 section, any term used in this section and also in the Sav3 ings for Working Families Act of 2001 shall have the

4 meaning given such term by such Act.

5 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—No deduction

6 or credit (other than under this section) shall be allowed

7 under this chapter with respect to any expense which is

8 taken into account under subsection (c)(1)(A) in deter9 mining the credit under this section.

10 ‘‘(g) REGULATIONS.—The Secretary may prescribe

11 such regulations as may be necessary or appropriate to

12 carry out this section, including regulations providing for

13 a recapture of the credit allowed under this section (not14 withstanding any termination date described in subsection

15 (h)) in cases where there is a forfeiture under section 7(b)

16 of the Savings for Working Families Act of 2001 in a sub17 sequent taxable year of any amount which was taken into

18 account in determining the amount of such credit.

19 ‘‘(h) APPLICATION OF SECTION.—This section shall

20 apply to any expenditure made in any taxable year begin21 ning after December 31, 2001, and before January 1,

22 2009, with respect to any Individual Development Account

23 opened before January 1, 2007.’’.

24 (b) CONFORMING AMENDMENT.—The table of sec25 tions for subpart B of part IV of subchapter A of chapter
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1 1 of the Internal Revenue Code of 1986 is amended by

2 inserting after the item relating to section 30A the fol3 lowing new item:

‘‘Sec. 30B. Individual development account investment credit for qualified financial institutions.’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after

6 December 31, 2001.

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