II

106TH CONGRESS

2D SESSION S. 2740

To provide for the establishment of Individual Development Accounts (IDAs)

that will allow individuals and families with limited means an opportunity

to accumulate assets, to access education, to own their own homes

and businesses, and ultimately to achieve economic self-sufficiency, and

to increase the limit on deductible IRA contributions, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 15, 2000

Ms. LANDRIEU introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To provide for the establishment of Individual Development

Accounts (IDAs) that will allow individuals and families

with limited means an opportunity to accumulate assets,

to access education, to own their own homes and businesses, and ultimately to achieve economic self-sufficiency, and to increase the limit on deductible IRA contributions, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Savings Accounts Are Valuable for Everyone Act of

4 2000’’.

5 (b) TABLE OF CONTENTS.—The table of contents of

6 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.

TITLE I—QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNTS FOR

LOW-INCOME WORKERS

Sec. 101. Structure and administration of qualified individual development

account programs.

Sec. 102. Procedures for opening an Individual Development Account and

qualifying for matching funds.

Sec. 103. Contributions to Individual Development Accounts.

Sec. 104. Deposits by qualified individual development account programs.

Sec. 105. Withdrawal procedures.

Sec. 106. Certification and termination of qualified individual development

account programs.

Sec. 107. Reporting, monitoring, and evaluation.

Sec. 108. Funds in parallel accounts of program participants disregarded for

purposes of certain means-tested Federal programs.

TITLE II—QUALIFIED INDIVIDUAL DEVELOPMENT ACCOUNT

PROGRAM INVESTMENT CREDITS

Sec. 201. Qualified individual development account program investment credits.

Sec. 202. CRA credit treatment for qualified individual development account

program investments.

Sec. 203. Designation of earned income tax credit payments for deposit to

Individual Development Accounts.

TITLE III—MODIFICATION OF IRA CONTRIBUTION LIMIT

Sec. 301. Modification of limit on deductible IRA contributions.

7 SEC. 2. FINDINGS.

8 Congress makes the following findings:

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

10 available for investment, and another 20 percent

11 have only negligible assets. The household savings
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1 rate of the United States lags far behind other in2 dustrial nations, presenting a barrier to national

3 economic growth and preventing many Americans

4 from entering the economic mainstream by buying a

5 house, obtaining an adequate education, or starting

6 a business.

7 (2) By building assets, Americans can improve

8 their economic independence and stability, stimulate

9 the development of human and other capital, and

10 work toward a viable and hopeful future for them11 selves and their children. Thus, economic well-being

12 does not come solely from income, spending, and

13 consumption, but also requires savings, investment,

14 and accumulation of assets.

15 (3) Traditional public assistance programs

16 based on income and consumption have rarely been

17 successful in promoting and supporting the transi18 tion to increased economic self-sufficiency. Income19 based social policies that meet consumption needs

20 (including food, child care, rent, clothing, and health

21 care) should be complemented by asset-based policies

22 that can provide the means to achieve long-term

23 independence and economic well-being.

24 (4) Individual Development Accounts (IDAs)

25 can provide working Americans with strong incen-
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1 tives to build assets, basic financial management

2 training, and access to secure and relatively inexpen3 sive banking services.

4 (5) There is reason to believe that Individual

5 Development Accounts would also foster greater par6 ticipation in electric fund transfers (EFT), generate

7 financial returns, including increased income, tax

8 revenue, and decreased welfare cash assistance, that

9 will far exceed the cost of public investment in the

10 program.

11 SEC. 3. PURPOSES.

12 The purposes of this Act are to provide for the estab13 lishment of individual development account programs that

14 will—

15 (1) provide individuals and families with limited

16 means an opportunity to accumulate assets and to

17 enter the financial mainstream;

18 (2) promote education, homeownership, and the

19 development of small businesses;

20 (3) stabilize families and build communities;

21 and

22 (4) support continued United States economic

23 expansion.

24 SEC. 4. DEFINITIONS.

25 As used in this Act:
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1 (1) ELIGIBLE INDIVIDUAL.—

2 (A) IN GENERAL.—The term ‘‘eligible indi3 vidual’’ means an individual who—

4 (i) has attained the age of 18 years;

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

6 United States; and

7 (iii) is a member of a household the

8 gross income of which does not exceed 80

9 percent of the area median income (as

10 published by the Department of Housing

11 and Urban Affairs).

12 (B) HOUSEHOLD.—The term ‘‘household’’

13 means all individuals who share use of a dwell14 ing unit as primary quarters for living and eat15 ing separate from other individuals.

16 (2) INDIVIDUAL DEVELOPMENT ACCOUNT.—

17 The term ‘‘Individual Development Account’’ means

18 a regular interest bearing savings account estab19 lished for an eligible individual as part of a qualified

20 individual development account program, but only if

21 the written governing instrument creating the ac22 count meets the following requirements:

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

24 eligible individual.
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1 (B) No contribution will be accepted unless

2 it is in cash, by check, or by electronic fund

3 transfer.

4 (C) The holder of the account is a quali5 fied financial institution or a qualified nonprofit

6 organization.

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

8 commingled with other property except in a

9 common trust fund or common investment

10 fund.

11 (E) Except as provided in section 105(b),

12 any amount in the account may be paid out

13 only for the purpose of paying the qualified ex14 penses of the eligible individual.

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

16 account’’ means a separate, parallel individual or

17 pooled account for all matching funds and earnings

18 dedicated to an eligible individual as part of a quali19 fied individual account program, the sole owner of

20 which is a qualified financial institution or a quali21 fied nonprofit organization

22 (4) QUALIFIED FINANCIAL INSTITUTION.—

23 (A) IN GENERAL.—The term ‘‘qualified fi24 nancial institution’’ means any person author-
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1 ized to be a trustee of any individual retirement

2 account under section 408(a)(2).

3 (B) RULE OF CONSTRUCTION.—Nothing in

4 this paragraph shall be construed as preventing

5 a person described in subparagraph (A) from

6 collaborating with 1 or more qualified nonprofit

7 organizations to carry out an individual devel8 opment account program established under sec9 tion 101.

10 (5) QUALIFIED NONPROFIT ORGANIZATION.—

11 The term ‘‘qualified nonprofit organization’’

12 means—

13 (A) any organization described in section

14 501(c)(3) of the Internal Revenue Code of 1986

15 and exempt from taxation under section 501(a)

16 of such Code;

17 (B) any community development financial

18 institution as certified by the Community De19 velopment Financial Institution Fund; or

20 (C) any credit union certified by the Na21 tional Credit Union Administration,

22 that meets standards for financial management and

23 fiduciary responsibility as defined by the Secretary

24 or an organization designated by the Secretary.
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1 (6) QUALIFIED INDIVIDUAL DEVELOPMENT AC2 COUNT PROGRAM.—The term ‘‘qualified individual

3 development account program’’ means a program es4 tablished under section 101 under which—

5 (A) individual development accounts and

6 parallel accounts are held by a qualified finan7 cial institution or a qualified nonprofit organi8 zation; and

9 (B) additional activities determined by the

10 Secretary, or an organization designated 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 holders, and regular program moni15 toring, are carried out by such institution or

16 nonprofit organization.

17 (7) QUALIFIED EXPENSE DISTRIBUTION.—

18 (A) IN GENERAL.—The term ‘‘qualified ex19 pense distribution’’ means any amount paid or

20 distributed out of an Individual Development

21 Account and a parallel account established for

22 an eligible individual if such amount—

23 (i) is used exclusively to pay the quali24 fied expenses of such individual or such in25 dividual’s spouse or dependents,
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1 (ii) is paid by the qualified financial

2 institution or qualified nonprofit organiza3 tion directly to the person to whom the

4 amount is due or to another Individual De5 velopment Account, and

6 (iii) is paid after the holder of the In7 dividual Development Account has com8 pleted a financial education course as re9 quired under section 102(b).

10 (B) QUALIFIED EXPENSES.—

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

12 expenses’’ means any of the following:

13 (I) Qualified higher education ex14 penses.

15 (II) Qualified first-time home16 buyer costs.

17 (III) Qualified business capital18 ization costs.

19 (IV) Qualified rollovers.

20 (ii) QUALIFIED HIGHER EDUCATION

21 EXPENSES.—

22 (I) IN GENERAL.—The term

23 ‘‘qualified higher education expenses’’

24 has the meaning given such term by

25 section 72(t)(7) of the Internal Rev-
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1 enue Code of 1986, determined by

2 treating postsecondary vocational edu3 cational schools as eligible educational

4 institutions.

5 (II) POSTSECONDARY VOCA6 TIONAL EDUCATION SCHOOL.—The

7 term ‘‘postsecondary vocational edu8 cational school’’ means an area voca9 tional education school (as defined in

10 subparagraph (C) or (D) of section

11 521(4) of the Carl D. Perkins Voca12 tional and Applied Technology Edu13 cation Act (20 U.S.C. 2471(4)))

14 which is in any State (as defined in

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

16 sections are in effect on the date of

17 enactment of this Act.

18 (III) COORDINATION WITH

19 OTHER BENEFITS.—The amount of

20 qualified higher education expenses

21 for any taxable year shall be reduced

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

23 such Code and by the amount of such

24 expenses for which a credit or exclu-
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1 sion is allowed under chapter 1 of

2 such Code for such taxable year.

3 (iii) QUALIFIED FIRST-TIME HOME4 BUYER COSTS.—The term ‘‘qualified first5 time homebuyer costs’’ means qualified ac6 quisition costs (as defined in section

7 72(t)(8) of such Code without regard to

8 subparagraph (B) thereof) with respect to

9 a principal residence (within the meaning

10 of section 121 of such Code) for a qualified

11 first-time homebuyer (as defined in section

12 72(t)(8) of such Code).

13 (iv) QUALIFIED BUSINESS CAPITAL14 IZATION COSTS.—

15 (I) IN GENERAL.—The term

16 ‘‘qualified business capitalization

17 costs’’ means qualified expenditures

18 for the capitalization of a qualified

19 business pursuant to a qualified busi20 ness plan.

21 (II) QUALIFIED EXPENDI22 TURES.—The term ‘‘qualified expendi23 tures’’ means expenditures included in

24 a qualified business plan, including
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1 capital, plant, equipment, working

2 capital and inventory expenses.

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 meets such requirements as the Sec11 retary or an organization designated

12 by the Secretary may specify.

13 (v) QUALIFIED ROLLOVERS.—The

14 term ‘‘qualified rollover’’ means, with re15 spect to any distribution from an Indi16 vidual Development Account, the payment,

17 within 120 days of such distribution, of all

18 or a portion of such distribution to such

19 account or to another Individual Develop20 ment Account established in another quali21 fied financial institution or qualified non22 profit organization for the benefit of the el23 igible individual. Rules similar to the rules

24 of section 408(d)(3) of such Code (other
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1 than subparagraph (C) thereof) shall apply

2 for purposes of this clause.

3 (8) SECRETARY.—The term ‘‘Secretary’’ means

4 the Secretary of the Treasury.

5 TITLE I—INDIVIDUAL DEVELOP6 MENT ACCOUNTS FOR LOW7 INCOME WORKERS

8 SEC. 101. STRUCTURE AND ADMINISTRATION OF QUALI9 FIED INDIVIDUAL DEVELOPMENT ACCOUNT

10 PROGRAMS.

11 (a) ESTABLISHMENT OF QUALIFIED INDIVIDUAL DE12 VELOPMENT ACCOUNT PROGRAMS.—Any qualified finan13 cial institution or qualified nonprofit organization may es14 tablish 1 or more qualified individual development account

15 programs which meet the requirements of this Act.

16 (b) BASIC PROGRAM STRUCTURE.—

17 (1) IN GENERAL.—All qualified individual de18 velopment account programs shall consist of the fol19 lowing 2 components:

20 (A) An Individual Development Account to

21 which an eligible individual may contribute

22 money in accordance with section 103.

23 (B) A parallel account to which all match24 ing funds shall be deposited in accordance with

25 section 104.
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1 (2) TAILORED IDA PROGRAMS.—A qualified fi2 nancial institution or qualified nonprofit organiza3 tion may tailor its qualified individual development

4 account program to allow matching funds to be

5 spent on 1 or more of the categories of qualified

6 expenses.

7 (c) ACCOUNT POPULATION DISTRIBUTION REQUIRE8 MENT.—An individual development account program shall

9 be treated as qualified under this Act only if not less than

10 one third of the Individual Development Accounts under

11 such program are owned by eligible individuals each of

12 whom is a member of a household the gross income of

13 which does not exceed 50 percent of the area median in14 come (as published by the Department of Housing and

15 Urban Affairs).

16 (d) TAX TREATMENT OF ACCOUNTS.—Any account

17 described in subparagraph (B) of subsection (b)(1) is ex18 empt from taxation under the Internal Revenue Code of

19 1986 unless such account has ceased to be such an ac20 count by reason of section 105(c) or the termination of

21 the qualified individual development account program

22 under section 106(b).
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1 SEC. 102. PROCEDURES FOR OPENING AN INDIVIDUAL

2 DEVELOPMENT ACCOUNT AND QUALIFYING

3 FOR MATCHING FUNDS.

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

5 must open an Individual Development Account with a

6 qualified financial institution or qualified nonprofit orga7 nization and contribute money in accordance with section

8 103 to qualify for matching funds in a parallel account.

9 (b) REQUIRED COMPLETION OF FINANCIAL EDU10 CATION COURSE.—

11 (1) IN GENERAL.—Before becoming eligible to

12 withdraw matching funds to pay for qualified ex13 penses, holders of Individual Development Accounts

14 must complete a financial education course offered

15 by a qualified financial institution, a qualified non16 profit organization, or a government entity.

17 (2) STANDARD AND APPLICABILITY OF

18 COURSE.—The Secretary or an organization des19 ignated by the Secretary, in consultation with rep20 resentatives of qualified individual development ac21 count programs and financial educators, shall estab22 lish minimum performance standards for financial

23 education courses offered under paragraph (1) and

24 a protocol to exempt eligible individuals from the re25 quirement under paragraph (1) because of hardship

26 or lack of need.
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1 SEC. 103. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT

2 ACCOUNTS.

3 (a) IN GENERAL.—Except in the case of a qualified

4 rollover, individual contributions to an Individual Develop5 ment Account will not be accepted for the taxable year

6 in excess of the lesser of—

7 (1) $2,000; or

8 (2) an amount equal to the compensation (as

9 defined in section 219(f)(1) of the Internal Revenue

10 Code of 1986) includible in the individual’s gross in11 come for such taxable year.

12 (b) PROOF OF COMPENSATION AND STATUS AS AN

13 ELIGIBLE INDIVIDUAL.—Federal W–2 forms and other

14 forms specified by the Secretary proving the eligible indi15 vidual’s wages and other compensation and the status of

16 the individual as an eligible individual shall be presented

17 at the time of the establishment of the Individual Develop18 ment Account and at least once annually thereafter.

19 (c) TIME WHEN CONTRIBUTIONS DEEMED MADE.—

20 For purposes of this section, a taxpayer shall be deemed

21 to have made a contribution to an Individual Development

22 Account on the last day of the preceding taxable year if

23 the contribution is made on account of such taxable year

24 and is made not later than the time prescribed by law for

25 filing the Federal income tax return for such taxable year

26 (not including extensions thereof).
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1 (d) CROSS REFERENCE.—

For designation of earned income tax credit payments for deposit to an Individual Development Account, see section 32(o) of the Internal Revenue

Code of 1986.

2 SEC. 104. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOP3 MENT ACCOUNT PROGRAMS.

4 (a) PARALLEL ACCOUNTS.—The qualified financial

5 institution or qualified nonprofit organization shall deposit

6 all matching funds for each Individual Development Ac7 count into a parallel account at a qualified financial insti8 tution or qualified nonprofit organization. The parallel ac9 count or accounts shall earn not less than the market rate

10 of interest.

11 (b) REGULAR DEPOSITS OF MATCHING FUNDS.—

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

13 the qualified financial institution or qualified non14 profit organization shall deposit not less than quar15 terly into the parallel account with respect to each

16 eligible individual the following:

17 (A) A dollar-for-dollar match for the first

18 $500 contributed by the eligible individual into

19 an Individual Development Account with re20 spect to any taxable year.

21 (B) Any matching funds provided by State,

22 local, or private sources in accordance to the

23 matching ratio set by those sources.
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1 (2) CROSS REFERENCE.—

For allowance of tax credit to qualified financial

institutions for Individual Development Account

subsidies, including matching funds, see section 30B

of the Internal Revenue Code of 1986.

2 (c) FORFEITURE OF MATCHING FUNDS.—Matching

3 funds that are forfeited under section 105(b) shall be used

4 by the qualified financial institution or qualified nonprofit

5 organization to pay matches for other Individual Develop6 ment Account contributions by eligible individuals.

7 (d) UNIFORM ACCOUNTING REGULATIONS.—The

8 Secretary shall prescribe regulations with respect to ac9 counting for matching funds from all possible sources in

10 the parallel accounts.

11 (e) REGULAR REPORTING OF ACCOUNTS.—Any

12 qualified financial institution or qualified nonprofit orga13 nization shall report the balances in any Individual Devel14 opment Account and parallel account of an eligible indi15 vidual on not less than a quarterly basis.

16 SEC. 105. WITHDRAWAL PROCEDURES.

17 (a) WITHDRAWALS FOR QUALIFIED EXPENSES.—To

18 withdraw money from an eligible individual’s Individual

19 Development Account to pay qualified expenses of such

20 individual or such individual’s spouse or dependents, the

21 qualified financial institution or qualified nonprofit orga22 nization shall directly transfer such funds from the Indi23 vidual Development Account, and, if applicable, from the
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1 parallel account electronically to the vendor or other Indi2 vidual Development Account. If the vendor is not equipped

3 to receive funds electronically, the qualified financial insti4 tution or qualified nonprofit organization may issue such

5 funds by paper check to the vendor.

6 (b) WITHDRAWALS FOR NONQUALIFIED EX7 PENSES.—An Individual Development Account holder may

8 unilaterally withdraw funds from the Individual Develop9 ment Account for purposes other than to pay qualified ex10 penses, but shall forfeit the corresponding matching funds

11 and interest earned on the matching funds by doing so,

12 unless such withdrawn funds are recontributed to such Ac13 count within 1 year of withdrawal.

14 (c) DEEMED WITHDRAWALS FROM ACCOUNTS OF

15 NONELIGIBLE INDIVIDUALS.—If the individual for whose

16 benefit an Individual Development Account is established

17 ceases to be an eligible individual, such account shall cease

18 to be an Individual Development Account as of the first

19 day of the taxable year of such individual and any balance

20 in such account shall be deemed to have been withdrawn

21 on such first day by such individual for purposes other

22 than to pay qualified expenses.

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

24 amount withdrawn from a parallel account shall not be

25 includible in an eligible individual’s gross income.
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1 SEC. 106. CERTIFICATION AND TERMINATION OF QUALI2 FIED INDIVIDUAL DEVELOPMENT ACCOUNT

3 PROGRAMS.

4 (a) CERTIFICATION PROCEDURES.—Upon estab5 lishing a qualified individual development account pro6 gram under section 101, a qualified financial institution

7 or qualified nonprofit organization shall certify to the Sec8 retary, or an organization designated by the Secretary, on

9 forms prescribed by the Secretary or such organization

10 and accompanied by any documentation required by the

11 Secretary or such organization, that—

12 (1) the accounts described in subparagraphs

13 (A) and (B) of section 101(b)(1) are operating pur14 suant to all the provisions of this Act; and

15 (2) the qualified financial institution or quali16 fied nonprofit organization agrees to implement an

17 information system necessary to monitor the cost

18 and outcomes of the qualified individual development

19 account program.

20 (b) AUTHORITY TO TERMINATE QUALIFIED IDA

21 PROGRAM.—If the Secretary, or an organization des22 ignated by the Secretary, determines that a qualified fi23 nancial institution or qualified nonprofit organization

24 under this Act is not operating a qualified individual devel25 opment account program in accordance with the require26 ments of this Act (and has not implemented any corrective
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1 recommendations directed by the Secretary or such orga2 nization), the Secretary or such organization shall termi3 nate such institution’s or nonprofit organization’s author4 ity to conduct the program. If the Secretary, or an organi5 zation designated by the Secretary, is unable to identify

6 a qualified financial institution or qualified nonprofit orga7 nization to assume the authority to conduct such program,

8 then any account established for the benefit of any eligible

9 individual under such program shall cease to be an Indi10 vidual Development Account as of the first day of such

11 termination and any balance in such account shall be

12 deemed to have been withdrawn on such first day by such

13 individual for purposes other than to pay qualified

14 expenses.

15 SEC. 107. REPORTING, MONITORING, AND EVALUATION.

16 (a) RESPONSIBILITIES OF QUALIFIED FINANCIAL IN17 STITUTIONS AND QUALIFIED NONPROFIT ORGANIZA18 TIONS.—Each qualified financial institution or qualified

19 nonprofit organization that establishes a qualified indi20 vidual development account program under section 101

21 shall report annually to the Secretary, directly or through

22 an organization designated by the Secretary, within 90

23 days after the end of each calendar year on—

24 (1) the number of eligible individuals making

25 contributions into Individual Development Accounts;
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1 (2) the amounts contributed into Individual De2 velopment Accounts and deposited into parallel ac3 counts for matching funds;

4 (3) the amounts withdrawn from Individual De5 velopment Accounts and parallel accounts, and the

6 purposes for which such amounts were withdrawn;

7 (4) the balances remaining in Individual Devel8 opment Accounts and parallel accounts; and

9 (5) such other information needed to help the

10 Secretary, or an organization designated by the Sec11 retary, monitor the cost and outcomes of the quali12 fied individual development account program.

13 (b) RESPONSIBILITIES OF THE SECRETARY OR DES14 IGNATED ORGANIZATION.—

15 (1) MONITORING PROTOCOL.—Not later than

16 12 months after the date of enactment of this Act,

17 the Secretary, or an organization designated by the

18 Secretary, shall develop and implement a protocol

19 and process to continually monitor the cost and out20 comes of the qualified individual development ac21 count programs established under section 101.

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

23 date of enactment of this Act, the Secretary, or an

24 organization designated by the Secretary, shall issue
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1 a progress report on the status of such qualified in2 dividual development account programs.

3 (3) APPROPRIATIONS FOR MONITORING.—There

4 is authorized to be appropriated $5,000,000 for the

5 purposes of monitoring qualified individual develop6 ment account programs established under section

7 101, to remain available until expended.

8 SEC. 108. FUNDS IN PARALLEL ACCOUNTS OF PROGRAM

9 PARTICIPANTS DISREGARDED FOR PUR10 POSES OF CERTAIN MEANS-TESTED FEDERAL

11 PROGRAMS.

12 Notwithstanding any provision of the Internal Rev13 enue Code of 1986 or the Social Security Act that requires

14 consideration of 1 or more financial circumstances of an

15 individual, for the purposes of determining eligibility to

16 receive, or the amount of, any assistance or benefit author17 ized by such provision to be provided to or for the benefit

18 of such individual, the lesser of—

19 (1) the sum of all contributions by an eligible

20 individual (including earnings thereon) to any Indi21 vidual Development Account and matching deposits

22 made on behalf of such individual (including earn23 ings thereon) in any parallel account; or

24 (2) $10,000,
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1 shall be disregarded for such purpose with respect to any

2 period during which the individual participates in a quali3 fied individual development account program established

4 under section 101.

5 TITLE II—QUALIFIED INDI6 VIDUAL DEVELOPMENT AC7 COUNT PROGRAM INVEST8 MENT CREDITS

9 SEC. 201. QUALIFIED INDIVIDUAL DEVELOPMENT

10 ACCOUNT PROGRAM INVESTMENT CREDITS.

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:

15 ‘‘SEC. 30B. QUALIFIED INDIVIDUAL DEVELOPMENT

16 ACCOUNT PROGRAM INVESTMENT CREDIT.

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

18 allowed as a credit against the applicable tax for the tax19 able year an amount equal to the qualified individual de20 velopment account program investment provided by an eli21 gible taxpayer during the taxable year under a qualified

22 individual development account program established under

23 section 101 of the Savings Accounts Are Valuable for Ev24 eryone Act of 2000.
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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 sum of—

5 ‘‘(A) the tax imposed under this chapter

6 (other than the taxes imposed under the provi7 sions described in subparagraphs (C) through

8 (Q) of section 26(b)(1)), plus

9 ‘‘(B) the tax imposed under section 3111,

10 over

11 ‘‘(2) the credits allowable under subparts B and

12 D of this part.

13 ‘‘(c) QUALIFIED INDIVIDUAL DEVELOPMENT AC14 COUNT PROGRAM INVESTMENT.—For purposes of this

15 section, the term ‘qualified individual development account

16 program investment’ means, with respect to a qualified in17 dividual development account program of an eligible tax18 payer in any taxable year, an amount equal to—

19 ‘‘(1) in the case of an eligible taxpayer which is

20 a qualified financial institution, the sum of—

21 ‘‘(A) the lesser of—

22 ‘‘(i) 90 percent of the aggregate

23 amount of dollar-for-dollar matches under

24 such program by such taxpayer under sec25 tion 104 of the Savings Accounts Are Val-
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1 uable for Everyone Act of 2000 for such

2 taxable year, or

3 ‘‘(ii) $90,000,000, plus

4 ‘‘(B) the lesser of—

5 ‘‘(i) 50 percent of the aggregate costs

6 paid or incurred under such program by

7 the eligible taxpayer during such taxable

8 year—

9 ‘‘(I) to provide financial edu10 cation courses to Individual Develop11 ment Account holders under section

12 102(b) of such Act, and

13 ‘‘(II) to underwrite program ac14 tivities described in section 4(6)(B) of

15 such Act), or

16 ‘‘(ii) $5,000,000, and

17 ‘‘(2) in the case of an eligible taxpayer which is

18 not a qualified financial institution, the lesser of—

19 ‘‘(A) the sum of—

20 ‘‘(i) 50 percent of the aggregate

21 amount of such dollar-for-dollar matches

22 by such taxpayer for such taxable year,

23 plus

24 ‘‘(ii) 50 percent of the aggregate costs

25 described in paragraph (1)(B)(i) paid or
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1 incurred under such program by the eligi2 ble taxpayer during such taxable year, or

3 ‘‘(B) $5,000,000.

4 ‘‘(d) ELIGIBLE TAXPAYER.—For purposes of this

5 section, a taxpayer shall be considered an eligible taxpayer

6 if at least 70 percent of the expenditures by such taxpayer

7 with respect to any qualified individual development ac8 count program for any taxable year are described in sub9 section (c)(1)(A).

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

11 ‘‘(1) OTHER DEFINITIONS.—For purposes of

12 this section, the terms ‘Individual Development Ac13 count’, ‘qualified individual development account

14 program’, and ‘qualified financial institution’ have

15 the meanings given such terms by section 4 of the

16 Savings Accounts Are Valuable for Everyone Act of

17 2000.

18 ‘‘(2) CERTAIN RULES MADE APPLICABLE.—

19 Rules similar to the rules of paragraphs (1) and (2)

20 of section 41(f) shall apply for purposes of this

21 section.

22 ‘‘(f) REGULATIONS.—The Secretary may prescribe

23 such regulations as may be necessary or appropriate to

24 carry out this section, including regulations providing for

25 a recapture of the credit allowed under this section in
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1 cases where there is a forfeiture under section 105(b) of

2 the Savings Accounts Are Valuable for Everyone Act of

3 2000 in a subsequent taxable year of any amount which

4 was taken into account in determining the amount of such

5 credit.

6 ‘‘(g) TERMINATION.—This section shall not apply to

7 any taxable year beginning after December 31, 2005.’’.

8 (b) TRANSFER TO TRUST FUNDS.—The Secretary of

9 the Treasury shall transfer from the general fund of the

10 United States Treasury to the Federal Old-Age and Sur11 vivors Insurance Trust Fund, the Federal Disability In12 surance Trust Fund, and the Federal Hospital Insurance

13 Trust Fund amounts equivalent to the amount of the re14 duction in taxes imposed by section 3111 of the Internal

15 Revenue Code of 1986 by reason of the credit determined

16 under section 30B (relating to the qualified individual de17 velopment account program investment credit). Any such

18 transfer shall be made at the same time that the reduced

19 taxes would have been deposited in such Trust Funds.

20 (c) CONFORMING AMENDMENT.—The table of sec21 tions for subpart B of part IV of subchapter A of chapter

22 1 of the Internal Revenue Code of 1986 is amended by

23 inserting after the item relating to section 30A the

24 following:

‘‘Sec. 30B. Qualified individual development account program investment

credit.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2000.

4 SEC. 202. CRA CREDIT TREATMENT FOR QUALIFIED INDI5 VIDUAL DEVELOPMENT ACCOUNT PROGRAM

6 INVESTMENTS.

7 Qualified financial institutions which establish quali8 fied individual development account programs under sec9 tion 101 shall not receive credit for funding, administra10 tion, and education expenses under any test contained in

11 regulations for the Community Reinvestment Act of 1977

12 for those activities and expenses related to such programs

13 and taken into account for purposes of the tax credit al14 lowed under section 30B of the Internal Revenue Code of

15 1986.

16 SEC. 203. DESIGNATION OF EARNED INCOME TAX CREDIT

17 PAYMENTS FOR DEPOSIT TO INDIVIDUAL

18 DEVELOPMENT ACCOUNTS.

19 (a) IN GENERAL.—Section 32 of the Internal Rev20 enue Code of 1986 (relating to earned income credit) is

21 amended by adding at the end the following:

22 ‘‘(o) DESIGNATION OF CREDIT FOR DEPOSIT TO IN23 DIVIDUAL DEVELOPMENT ACCOUNT.—

24 ‘‘(1) IN GENERAL.—With respect to the return

25 of any eligible individual (as defined in section 4(1)
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1 of the Savings Accounts Are Valuable for Everyone

2 Act of 2000) for the taxable year of the tax imposed

3 by this chapter, such individual may designate that

4 a specified portion (not less than $1) of any over5 payment of tax for such taxable year which is attrib6 utable to the credit allowed under this section shall

7 be deposited by the Secretary into an Individual De8 velopment Account (as defined in section 4(2) of

9 such Act) of such individual. The Secretary shall so

10 deposit such portion designated under this

11 paragraph.

12 ‘‘(2) MANNER AND TIME OF DESIGNATION.—A

13 designation under paragraph (1) may be made with

14 respect to any taxable year—

15 ‘‘(A) at the time of filing the return of the

16 tax imposed by this chapter for such taxable

17 year, or

18 ‘‘(B) at any other time (after the time of

19 filing the return of the tax imposed by this

20 chapter for such taxable year) specified in regu21 lations prescribed by the Secretary.

22 Such designation shall be made in such manner as

23 the Secretary prescribes by regulations.

24 ‘‘(3) PORTION ATTRIBUTABLE TO EARNED IN25 COME TAX CREDIT.—For purposes of paragraph (1),
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1 an overpayment for any taxable year shall be treated

2 as attributable to the credit allowed under this sec3 tion for such taxable year to the extent that such

4 overpayment does not exceed the credit so allowed.

5 ‘‘(4) OVERPAYMENTS TREATED AS RE6 FUNDED.—For purposes of this title, any portion of

7 an overpayment of tax designated under paragraph

8 (1) shall be treated as being refunded to the tax9 payer as of the last date prescribed for filing the re10 turn of tax imposed by this chapter (determined

11 without regard to extensions) or, if later, the date

12 the return is filed.

13 ‘‘(5) TERMINATION.—This subsection shall not

14 apply to any taxable year beginning after December

15 31, 2005.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to taxable years beginning after

18 December 31, 2000.

19 TITLE III—MODIFICATION OF

20 IRA CONTRIBUTION LIMIT

21 SEC. 301. MODIFICATION OF LIMIT ON DEDUCTIBLE IRA

22 CONTRIBUTIONS.

23 (a) INCREASE IN CONTRIBUTION LIMIT.—Paragraph

24 (1)(A) of section 219(b) of the Internal Revenue Code of
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1 1986 (relating to maximum amount of deduction) is

2 amended by striking ‘‘$2,000’’ and inserting ‘‘$3,500’’.

3 (b) CONFORMING AMENDMENTS.—

4 (1) Section 408(a)(1) of the Internal Revenue

5 Code of 1986 is amended by striking ‘‘$2,000’’ and

6 inserting ‘‘$3,500’’.

7 (2) Section 408(b)(2)(B) of such Code is

8 amended by striking ‘‘$2,000’’ and inserting

9 ‘‘$3,500’’.

10 (3) Section 408(b) of such Code is amended by

11 striking ‘‘$2,000’’ in the matter following paragraph

12 (4) and inserting ‘‘$3,500’’.

13 (4) Section 408( j) of such Code is amended by

14 striking ‘‘$2,000’’ and inserting ‘‘$3,500’’.

15 (5) Section 408(p)(8) of such Code is amended

16 by striking ‘‘$2,000’’ and inserting ‘‘$3,500’’.

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

18 this section shall apply to taxable years beginning after

19 December 31, 2000.

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