II

106TH CONGRESS

1ST SESSION S. 895

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

for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 28, 1999

Mr. LIEBERMAN (for himself, Mr. SANTORUM, Mr. DURBIN, Mr. ABRAHAM,

Mr. ROBB, and Mr. KERREY) 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 for other purposes.

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; TABLE OF CONTENTS.

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

5 ‘‘Savings for Working Families Act’’.
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1 (b) TABLE OF CONTENTS.—The table of contents of

2 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.

TITLE I—INDIVIDUAL DEVELOPMENT ACCOUNTS FOR LOWINCOME WORKERS

Sec. 101. Structure and administration of 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 financial institutions.

Sec. 105. Withdrawal procedures.

Sec. 106. Certification and termination of individual development account programs.

Sec. 107. Reporting and evaluation.

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

purposes of all means-tested Federal programs.

TITLE II—INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT

CREDITS

Sec. 201. Matching funds for Individual Development Accounts provided

through a tax credit for qualified financial institutions.

Sec. 202. CRA credit provided for individual development account programs.

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

3 SEC. 2. FINDINGS.

4 Congress makes the following findings:

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

6 available for investment, and another 20 percent

7 have only negligible assets. The household savings

8 rate of the United States lags far behind other in9 dustrial nations, presenting a barrier to national

10 economic growth and preventing many Americans

11 from entering the economic mainstream by buying a
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1 house, obtaining an adequate education, or starting

2 a business.

3 (2) By building assets, Americans can improve

4 their economic independence and stability, stimulate

5 the development of human and other capital, and

6 work toward a viable and hopeful future for them7 selves and their children. Thus, economic well-being

8 does not come solely from income, spending, and

9 consumption, but also requires savings, investment,

10 and accumulation of assets.

11 (3) Traditional public assistance programs

12 based on income and consumption have rarely been

13 successful in promoting and supporting the transi14 tion to increased economic self-sufficiency. Income15 based social policies that meet consumption needs

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

17 care) should be complemented by asset-based policies

18 that can provide the means to achieve long-term

19 independence and economic well-being.

20 (4) Individual Development Accounts (IDAs)

21 can provide working Americans with strong incen22 tives to build assets, basic financial management

23 training, and access to secure and relatively inexpen24 sive banking services.
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1 (5) There is reason to believe that Individual

2 Development Accounts would also foster greater par3 ticipation in electric fund transfers (EFT), generate

4 financial returns, including increased income, tax

5 revenue, and decreased welfare cash assistance, that

6 will far exceed the cost of public investment in the

7 program.

8 SEC. 3. PURPOSES.

9 The purposes of this Act are to provide for the estab10 lishment of individual development accounts projects that

11 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; and

17 (3) stabilize families and build communities.

18 SEC. 4. DEFINITIONS.

19 As used in this Act:

20 (1) ELIGIBLE INDIVIDUAL.—

21 (A) IN GENERAL.—The term ‘‘eligible indi22 vidual’’ means an individual who—

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

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

25 United States; and
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1 (iii) is a member of a household—

2 (I) which is eligible for the

3 earned income tax credit under sec4 tion 32 of the Internal Revenue Code

5 of 1986,

6 (II) which is eligible for assist7 ance under a State program funded

8 under part A of title IV of the Social

9 Security Act, or

10 (III) the gross income of which

11 does not exceed 60 percent of the area

12 median income (as determined by the

13 Department of Housing and Urban

14 Affairs) and the net worth of which

15 does not exceed $10,000.

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

17 means all individuals who share use of a dwell18 ing unit as primary quarters for living and eat19 ing separate from other individuals.

20 (C) DETERMINATION OF NET WORTH.—

21 (i) IN GENERAL.—For purposes of

22 subparagraph (A)(iii)(II), the net worth of

23 a household is the amount equal to—

24 (I) the aggregate fair market

25 value of all assets that are owned in
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1 whole or in part by any member of a

2 household, minus

3 (II) the obligations or debts of

4 any member of the household.

5 (ii) CERTAIN ASSETS DIS6 REGARDED.—For purposes of determining

7 the net worth of a household, a household’s

8 assets shall not be considered to include

9 the primary dwelling unit and 1 motor ve10 hicle owned by the household.

11 (2) INDIVIDUAL DEVELOPMENT ACCOUNT.—

12 The term ‘‘Individual Development Account’’ means

13 a custodial account established for an eligible indi14 vidual as part of an individual development account

15 program established under section 101, but only if

16 the written governing instrument creating the ac17 count meets the following requirements:

18 (A) No contribution will be accepted unless

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

20 transfer.

21 (B) The custodian of the account is a

22 qualified financial institution.

23 (C) The assets of the account will not be

24 commingled with other property except in a
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1 common trust fund or common investment

2 fund.

3 (D) Except as provided in section 105(b),

4 any amount in the account may be paid out

5 only for the purpose of paying the qualified ex6 penses of the eligible individual.

7 (3) QUALIFIED FINANCIAL INSTITUTION.—

8 (A) IN GENERAL.—The term ‘‘qualified fi9 nancial institution’’ means any federally insured

10 financial institution, including any bank, trust

11 company, savings bank, building and loan asso12 ciation, savings and loan company or credit

13 union.

14 (B) RULE OF CONSTRUCTION.—Nothing in

15 this paragraph shall be construed as preventing

16 an organization described in subparagraph (A)

17 from collaborating with 1 or more community18 based, not-for-profit organizations described in

19 section 501(c)(3) of the Internal Revenue Code

20 of 1986 and exempt from taxation under sec21 tion 501(a) of such Code to carry out an indi22 vidual development account program established

23 under section 101, including serving as a custo24 dian for any Individual Development Account.
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1 (4) QUALIFIED EXPENSES.—The term ‘‘quali2 fied expenses’’ means, with respect to an eligible in3 dividual, 1 or more of the following paid from an In4 dividual Development Account and from a separate,

5 parallel individual or pooled account, as provided by

6 a qualified financial institution:

7 (A) POST-SECONDARY EDUCATIONAL EX8 PENSES.—Post-secondary educational expenses

9 paid directly to an eligible educational institu10 tion. In this subparagraph:

11 (i) POST-SECONDARY EDUCATIONAL

12 EXPENSES.—The term ‘‘post-secondary

13 educational expenses’’ means the following:

14 (I) TUITION AND FEES.—Tuition

15 and fees required for the enrollment

16 or attendance of a student at an eligi17 ble educational institution.

18 (II) FEES, BOOKS, SUPPLIES AND

19 EQUIPMENT.—Fees, books, supplies,

20 and equipment required for courses of

21 instruction at an eligible educational

22 institution.

23 (ii) ELIGIBLE EDUCATIONAL INSTITU24 TION.—The term ‘‘eligible educational in25 stitution’’ means the following:
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1 (I) INSTITUTION OF HIGHER

2 EDUCATION.—An institution described

3 in section 481(a) or 1201(a) of the

4 Higher Education Act of 1965 (20

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

6 such sections are in effect on the date

7 of enactment of this Act.

8 (II) POST-SECONDARY VOCA9 TIONAL EDUCATION SCHOOL.—An

10 area vocational education school (as

11 defined in subparagraph (c) or (d) of

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

13 Vocational and Applied Technology

14 Education Act (20 U.S.C. 2471(a)))

15 which is in any State (as defined in

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

17 sections are in effect on the date of

18 enactment of this Act.

19 (B) FIRST-HOME PURCHASE.—Qualified

20 acquisition costs with respect to a qualified

21 principal residence for a qualified first-time

22 home buyer, if paid directly to the persons to

23 whom the amounts are due. In this subpara24 graph:
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1 (i) QUALIFIED ACQUISITION COSTS.—

2 The term ‘‘qualified acquisition costs’’

3 means the cost of acquiring, constructing,

4 or reconstructing a residence. The term in5 cludes any usual or reasonable settlement,

6 financing, or other closing costs.

7 (ii) QUALIFIED PRINCIPAL RESI8 DENCE.—The term ‘‘qualified principal

9 residence’’ means a principal residence

10 (within the meaning of section 121 of the

11 Internal Revenue Code of 1986).

12 (iii) QUALIFIED FIRST-TIME HOME

13 BUYER.—

14 (I) IN GENERAL.—The term

15 ‘‘qualified first-time home buyer’’

16 means an individual participating in

17 an individual development account

18 program (and, if married, the individ19 ual’s spouse) who has no present own20 ership interest in a principal residence

21 during the three-year period ending

22 on the date of acquisition of the prin23 cipal residence to which this subpara24 graph applies.
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1 (II) DATE OF ACQUISITION.—

2 The term ‘‘date of acquisition’’ means

3 the date on which a binding contract

4 to acquire, construct or reconstruct

5 the principal residence to which this

6 subparagraph applies is entered into.

7 (C) BUSINESS CAPITALIZATION.—Amounts

8 paid directly to a business capitalization ac9 count which is established in a qualified finan10 cial institution and is restricted to use solely for

11 qualified business capitalization expenses. In

12 this subparagraph:

13 (i) QUALIFIED BUSINESS CAPITALIZA14 TION EXPENSES.—The term ‘‘qualified

15 business capitalization expense’’ means

16 qualified expenditures for the capitalization

17 of a qualified business pursuant to a quali18 fied plan.

19 (ii) QUALIFIED EXPENDITURES.—The

20 term ‘‘qualified expenditures’’ means ex21 penditures included in a qualified plan, in22 cluding capital, plant, equipment, working

23 capital and inventory expenses.

24 (iii) QUALIFIED BUSINESS.—The term

25 ‘‘qualified business’’ means any business
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1 that does not contravene any law or public

2 policy (to be determined by the Secretary).

3 (iv) QUALIFIED PLAN.—The term

4 ‘‘qualified plan’’ means a business plan, or

5 a plan to use a business asset purchased,

6 which—

7 (I) is approved by a financial in8 stitution, a micro enterprise develop9 ment organization, or a nonprofit loan

10 fund having demonstrated fiduciary

11 integrity;

12 (II) includes a description of

13 services or goods to be sold, a mar14 keting plan, and projected financial

15 statements; and

16 (III) may require the eligible in17 dividual to obtain the assistance of an

18 experienced entrepreneurial adviser.

19 (D) QUALIFIED ROLLOVERS.—Amounts

20 paid as qualified rollovers. In this subpara21 graph, the term ‘‘qualified rollover’’ means any

22 amount paid directly—

23 (i) to another Individual Development

24 Account established for the benefit of the
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1 eligible individual in another qualified fi2 nancial institution, or

3 (ii) if such eligible individual dies, to

4 an Individual Development Account estab5 lished for the benefit of another eligible in6 dividual within 30 days of the date of

7 death.

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

9 the Secretary of the Treasury.

10 TITLE I—INDIVIDUAL DEVELOP11 MENT ACCOUNTS FOR LOW12 INCOME WORKERS

13 SEC. 101. STRUCTURE AND ADMINISTRATION OF INDI14 VIDUAL DEVELOPMENT ACCOUNT PRO15 GRAMS.

16 (a) ESTABLISHMENT OF INDIVIDUAL DEVELOPMENT

17 ACCOUNT PROGRAMS.—Any qualified financial institution

18 may establish 1 or more individual development account

19 programs which meet the requirements of this Act either

20 on its own initiative or in partnership with community21 based, not-for-profit organizations.

22 (b) BASIC PROGRAM STRUCTURE.—

23 (1) IN GENERAL.—All individual development

24 account programs shall consist of the following 2

25 components:
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1 (A) An Individual Development Account to

2 which an eligible individual may contribute

3 money in accordance with section 103.

4 (B) A separate, parallel individual or

5 pooled account to which all matching funds

6 shall be deposited in accordance with section

7 104.

8 (2) TAILORED IDA PROGRAMS.—A qualified fi9 nancial institution may tailor its individual develop10 ment account program to allow matching funds to be

11 spent on 1 or more of the categories of qualified ex12 penses.

13 (c) NUMBER OF ACCOUNTS.—

14 (1) IN GENERAL.—The average number of ac15 tive Individual Development Accounts in an indi16 vidual development account program at any 1 bank17 ing office of a qualified financial institution shall be

18 limited to the applicable limit.

19 (2) APPLICABLE LIMIT.—For purposes of this

20 title, the applicable limit shall be determined in ac21 cordance with the following table:

Applicable

‘‘Calendar year: Limit:

2000 ......................................................................................... 100

2001 ......................................................................................... 200

2002 ......................................................................................... 300

2003 ......................................................................................... 400

2004 and thereafter ................................................................. 500.
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1 (d) TAX TREATMENT OF ACCOUNTS.—Any account

2 described in subparagraph (B) of subsection (b)(1) is ex3 empt from taxation under the Internal Revenue Code of

4 1986 unless such account has ceased to be such an ac5 count by reason of section 105(c) or the termination of

6 the individual development account program under section

7 106(b).

8 SEC. 102. PROCEDURES FOR OPENING AN INDIVIDUAL DE9 VELOPMENT ACCOUNT AND QUALIFYING FOR

10 MATCHING FUNDS.

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

12 must open an Individual Development Account with a

13 qualified financial institution and contribute money in ac14 cordance with section 103 to qualify for matching funds

15 in a separate, parallel individual or pooled account.

16 (b) REQUIRED COMPLETION OF ECONOMIC LIT17 ERACY COURSE.—Before becoming eligible to withdraw

18 matching funds to pay for qualified expenses, holders of

19 Individual Development Accounts must complete an eco20 nomic literacy course offered by the qualified financial in21 stitution, a nonprofit organization, or a government entity.

22 SEC. 103. CONTRIBUTIONS TO INDIVIDUAL DEVELOPMENT

23 ACCOUNTS.

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

25 rollover, individual contributions to an Individual Develop-
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1 ment Account will not be accepted for the taxable year

2 in excess of an amount equal to the compensation (as de3 fined in section 219(f)(1) of the Internal Revenue Code

4 of 1986) includible in the individual’s gross income for

5 such taxable year.

6 (b) PROOF OF COMPENSATION AND STATUS AS AN

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

8 forms specified by the Secretary proving the eligible indi9 vidual’s wages and other compensation and the status of

10 the individual as an eligible individual shall be presented

11 to the custodian at the time of the establishment of the

12 Individual Development Account and at least once annu13 ally thereafter.

14 (c) TIME WHEN CONTRIBUTIONS DEEMED MADE.—

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

16 to have made a contribution to an Individual Development

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

18 the contribution is made on account of such taxable year

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

20 filing the Federal income tax return for such taxable year

21 (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 FINANCIAL INSTITU3 TIONS.

4 (a) SEPARATE, PARALLEL INDIVIDUAL OR POOLED

5 ACCOUNTS.—The qualified financial institution shall de6 posit all matching funds for each Individual Development

7 Account into a separate, parallel individual or pooled ac8 count. The parallel account or accounts shall earn not less

9 than the market rate of interest.

10 (b) REGULAR DEPOSITS OF MATCHING FUNDS.—

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

12 the qualified financial institution shall deposit not

13 less than quarterly into the separate, parallel ac14 count with respect to each eligible individual the fol15 lowing:

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

17 $300 contributed by the eligible individual into

18 an Individual Development Account with re19 spect to any taxable year.

20 (B) Any matching funds provided by State,

21 local, or private sources in accordance to the

22 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 to pay matches for

5 other Individual Development Account contributions by el6 igible individuals.

7 (d) EXCLUSION FROM INCOME.—Gross income of an

8 eligible individual shall not include any matching fund de9 posited into a parallel account under subsection (b) on be10 half of such individual.

11 (e) UNIFORM ACCOUNTING REGULATIONS.—The

12 Secretary shall prescribe regulations with respect to ac13 counting for matching funds from all possible sources in

14 the parallel accounts.

15 (f) REGULAR REPORTING OF MATCHING DEPOS16 ITS.—Any qualified financial institution shall report

17 matching fund deposits to eligible individuals with Indi18 vidual Development Accounts on not less than a quarterly

19 basis.

20 SEC. 105. WITHDRAWAL PROCEDURES.

21 (a) WITHDRAWALS FOR QUALIFIED EXPENSES.—

22 (1) REQUEST FOR WITHDRAWAL.—To withdraw

23 money from an eligible individual’s Individual Devel-
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1 opment Account to pay qualified expenses of such

2 individual or such individual’s spouse or dependents,

3 an eligible individual shall obtain permission from

4 the custodian of the individual development account

5 program. Such permission may include a request to

6 withdraw matching funds from the applicable par7 allel account.

8 (2) DISBURSEMENT OF FUNDS.—Once permis9 sion to withdraw funds is granted under paragraph

10 (1), the qualified financial institution shall directly

11 transfer such funds from the Individual Develop12 ment Account, and, if applicable, from the parallel

13 account electronically to the vendor or other Indi14 vidual Development Account. If the vendor is not

15 equipped to receive funds electronically, the qualified

16 financial institution may issue such funds by paper

17 check to the vendor.

18 (3) RESOLUTION OF DISPUTES.—The qualified

19 financial institution shall establish a grievance pro20 cedure to hear, review, and decide in writing any

21 grievance made by an Individual Development Ac22 count holder who disputes a decision of the oper23 ating organization that a withdrawal is not for quali24 fied expenses.
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1 (b) WITHDRAWALS FOR NONQUALIFIED EX2 PENSES.—An Individual Development Account holder may

3 unilaterally withdraw funds from the Individual Develop4 ment Account for purposes other than to pay qualified ex5 penses, but shall forfeit the corresponding matching funds

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

7 unless such withdrawn funds are recontributed to such Ac8 count within 1 year of withdrawal.

9 (c) DEEMED WITHDRAWALS FROM ACCOUNTS OF

10 NONELIGIBLE INDIVIDUALS.—If, during any taxable year

11 of the individual for whose benefit an Individual Develop12 ment Account is established, such individual ceases to be

13 an eligible individual, such account shall cease to be an

14 Individual Development Account as of the first day of such

15 taxable year and any balance in such account shall be

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

17 individual for purposes other than to pay qualified ex18 penses.

19 (d) TAX TREATMENT OF WITHDRAWN AMOUNTS.—

20 Any amount withdrawn from an Individual Development

21 Account or any matching funds withdrawn from a parallel

22 account shall be includible in gross income to the extent

23 such amount has not previously been so includible.
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1 SEC. 106. CERTIFICATION AND TERMINATION OF INDI2 VIDUAL DEVELOPMENT ACCOUNT PRO3 GRAMS.

4 (a) CERTIFICATION PROCEDURES.—Upon estab5 lishing an individual development account program under

6 section 101, a qualified financial institution shall certify

7 to the Secretary on forms prescribed by the Secretary and

8 accompanied by any documentation required by the Sec9 retary, that—

10 (1) the accounts described in subparagraphs

11 (A) and (B) of section 101(b)(1) are operating pur12 suant to all the provisions of this Act; and

13 (2) the qualified financial institution agrees to

14 implement an information system necessary to per15 mit the Secretary to evaluate the cost and effective16 ness of the individual development account program.

17 (b) AUTHORITY TO TERMINATE IDA PROGRAM.—If

18 the Secretary determines that a qualified financial institu19 tion under this Act is not operating an individual develop20 ment account program in accordance with the require21 ments of this Act (and has not implemented any corrective

22 recommendations directed by the Secretary), the Secretary

23 shall terminate such institution’s authority to conduct the

24 program. If the Secretary is unable to identify a qualified

25 financial institution to assume the authority to conduct

26 such program, then any account established for the benefit
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1 of any eligible individual under such program shall cease

2 to be an Individual Development Account as of the first

3 day of such termination and any balance in such account

4 shall be deemed to have been withdrawn on such first day

5 by such individual for purposes other than to pay qualified

6 expenses.

7 SEC. 107. REPORTING AND EVALUATION.

8 (a) RESPONSIBILITIES OF QUALIFIED FINANCIAL IN9 STITUTIONS.—Each qualified financial institution that es10 tablishes an individual development account program

11 under section 101 shall report annually to the Secretary

12 within 90 days after the end of each calendar year on—

13 (1) the number of eligible individuals making

14 contributions into Individual Development Accounts;

15 (2) the amounts contributed into Individual De16 velopment Accounts and deposited into the separate,

17 parallel accounts for matching funds;

18 (3) the amounts withdrawn from Individual De19 velopment Accounts and the separate, parallel ac20 counts, and the purposes for which such amounts

21 were withdrawn;

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

24 and
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1 (5) such other information needed to help the

2 Secretary evaluate the cost and effectiveness of the

3 individual development account program.

4 (b) RESPONSIBILITIES OF THE SECRETARY.—

5 (1) TWO-YEAR EVALUATION.—Not later than

6 24 months after the date of enactment of this Act,

7 the Secretary shall evaluate the cost and effective8 ness of the individual development account programs

9 established under section 101. In addition, the Sec10 retary shall evaluate the effect of the account limita11 tion under section 101(c) on each banking office of

12 a qualified financial institution and make rec13 ommendations for its adjustment or removal.

14 (2) FOUR-YEAR EVALUATION.—Not later than

15 48 months after the date of enactment of this Act,

16 the Secretary shall evaluate the effect of the indi17 vidual development account programs established

18 under section 101 on the eligible individuals.

19 (3) SUBSEQUENT ANNUAL EVALUATIONS.—In

20 each subsequent year after the first evaluation under

21 paragraph (1) or (2), the Secretary shall issue an

22 update on the status of such individual development

23 account programs.

24 (4) APPROPRIATIONS FOR EVALUATIONS.—

25 There is authorized to be appropriated $5,000,000
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1 for the purposes of evaluating individual develop2 ment account programs established under section

3 101, to remain available until expended.

4 SEC. 108. FUNDS IN PARALLEL ACCOUNTS OF PROGRAM

5 PARTICIPANTS DISREGARDED FOR PUR6 POSES OF ALL MEANS-TESTED FEDERAL PRO7 GRAMS.

8 Notwithstanding any other provision of law that re9 quires consideration of 1 or more financial circumstances

10 of an individual, for the purposes of determining eligibility

11 to receive, or the amount of, any assistance or benefit au12 thorized by such law to be provided to or for the benefit

13 of such individual, funds (including interest accruing) in

14 any parallel account shall be disregarded for such purpose

15 with respect to any period during which the individual par16 ticipates in an individual development account program es17 tablished under section 101.
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1 TITLE II—INDIVIDUAL DEVELOP2 MENT ACCOUNT INVESTMENT

3 CREDITS

4 SEC. 201. MATCHING FUNDS FOR INDIVIDUAL DEVELOP5 MENT ACCOUNTS PROVIDED THROUGH A TAX

6 CREDIT FOR QUALIFIED FINANCIAL INSTITU7 TIONS.

8 (a) IN GENERAL.—Subpart B of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to other credits) is amended by inserting

11 after section 30A the following:

12 ‘‘SEC. 30B. INDIVIDUAL DEVELOPMENT ACCOUNT INVEST13 MENT CREDIT FOR QUALIFIED FINANCIAL IN14 STITUTIONS.

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

16 allowed as a credit against the applicable tax for the tax17 able year an amount equal to the individual development

18 account investment provided by a qualified financial insti19 tution during the taxable year under an individual develop20 ment account program established under section 101 of

21 the Savings for Working Families Act.

22 ‘‘(b) APPLICABLE TAX.—For the purposes of this

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

24 of—

25 ‘‘(1) the sum of—
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1 ‘‘(A) the tax imposed under this chapter

2 (other than the taxes imposed under the provi3 sions described in subparagraphs (C) through

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

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

6 over

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

8 D of this part.

9 ‘‘(c) INDIVIDUAL DEVELOPMENT ACCOUNT INVEST10 MENT.—For purposes of this section, the term ‘individual

11 development account investment’ means, with respect to

12 an individual development account program of a qualified

13 financial institution in any taxable year, an amount equal

14 to the sum of—

15 ‘‘(1) the aggregate amount of dollar-for-dollar

16 matches under such program by such institution

17 under section 104 of the Savings for Working Fami18 lies Act for such taxable year, plus

19 ‘‘(2) an amount equal to the lesser of—

20 ‘‘(A) 50 percent of the aggregate costs

21 paid or incurred under such program by such

22 institution during such taxable year—

23 ‘‘(i) to provide economic literacy train24 ing to Individual Development Account

25 holders under section 102(b) of such Act,
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1 either directly or indirectly through non2 profit organizations or government entities,

3 and

4 ‘‘(ii) to underwrite the activities of

5 collaborating community-based, not-for6 profit organizations (within the meaning of

7 section 4(3)(B) of such Act), or

8 ‘‘(B) $100, times the total number of Indi9 vidual Development Accounts maintained by

10 such institution under such program during

11 such taxable year.

12 ‘‘(d) OTHER DEFINITIONS.—For purposes of this

13 section, the terms ‘Individual Development Account’ and

14 ‘qualified financial institution’ have the meanings given

15 such terms by section 4 of the Savings for Workings Fam16 ilies Act.

17 ‘‘(e) REGULATIONS.—The Secretary may prescribe

18 such regulations as may be necessary or appropriate to

19 carry out this section, including regulations providing for

20 a recapture of the credit allowed under this section in

21 cases where there is a forfeiture under section 105(b) of

22 the Savings for Workings Families Act in a subsequent

23 taxable year of any amount which was taken into account

24 in determining the amount of such credit.’’
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1 (b) TRANSFER TO TRUST FUNDS.—The Secretary of

2 the Treasury shall transfer from the general fund of the

3 United States Treasury to the Federal Old-Age and Sur4 vivors Insurance Trust Fund, the Federal Disability In5 surance Trust Fund, and the Federal Hospital Insurance

6 Trust Fund amounts equivalent to the amount of the re7 duction in taxes imposed by section 3111 of the Internal

8 Revenue Code of 1986 by reason of the credit determined

9 under section 30B (relating to the individual development

10 account investment credit for qualified financial institu11 tions). Any such transfer shall be made at the same time

12 that the reduced taxes would have been deposited in such

13 Trust Funds.

14 (c) CONFORMING AMENDMENT.—The table of sec15 tions for subpart B of part IV of subchapter A of chapter

16 1 of the Internal Revenue Code of 1986 is amended by

17 inserting after the item relating to section 30A the fol18 lowing:

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

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

20 this section shall apply to taxable years beginning after

21 December 31, 1999.
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1 SEC. 202. CRA CREDIT PROVIDED FOR INDIVIDUAL DEVEL2 OPMENT ACCOUNT PROGRAMS.

3 Qualified financial institutions which establish indi4 vidual development account programs under section 101

5 shall receive credit for funding, administration, and edu6 cation expenses under the services test contained in regu7 lations for the Community Reinvestment Act of 1977 for

8 those activities related to Individual Development Ac9 counts.

10 SEC. 203. DESIGNATION OF EARNED INCOME TAX CREDIT

11 PAYMENTS FOR DEPOSIT TO INDIVIDUAL DE12 VELOPMENT ACCOUNT.

13 (a) IN GENERAL.—Section 32 of the Internal Rev14 enue Code of 1986 (relating to earned income credit) is

15 amended by adding at the end the following:

16 ‘‘(o) DESIGNATION OF CREDIT FOR DEPOSIT TO IN17 DIVIDUAL DEVELOPMENT ACCOUNT.—

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

19 of any eligible individual (as defined in section 4(1)

20 of the Savings for Working Families Act) for the

21 taxable year of the tax imposed by this chapter, such

22 individual may designate that a specified portion

23 (not less than $1) of any overpayment of tax for

24 such taxable year which is attributable to the credit

25 allowed under this section shall be deposited by the

26 Secretary into an Individual Development Account
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1 (as defined in section 4(2) of such Act) of such indi2 vidual. The Secretary shall so deposit such portion

3 designated under this paragraph.

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

5 designation under paragraph (1) may be made with

6 respect to any taxable year—

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

8 tax imposed by this chapter for such taxable

9 year, or

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

11 filing the return of the tax imposed by this

12 chapter for such taxable year) specified in regu13 lations prescribed by the Secretary.

14 Such designation shall be made in such manner as

15 the Secretary prescribes by regulations.

16 ‘‘(3) PORTION ATTRIBUTABLE TO EARNED IN17 COME TAX CREDIT.—For purposes of paragraph (1),

18 an overpayment for any taxable year shall be treated

19 as attributable to the credit allowed under this sec20 tion for such taxable year to the extent that such

21 overpayment does not exceed the credit so allowed.

22 ‘‘(4) OVERPAYMENTS TREATED AS RE23 FUNDED.—For purposes of this title, any portion of

24 an overpayment of tax designated under paragraph

25 (1) shall be treated as being refunded to the tax-
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1 payer as of the last date prescribed for filing the re2 turn of tax imposed by this chapter (determined

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

4 the return is filed.

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

6 apply to any taxable year beginning after December

7 31, 2006.’’

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

9 this section shall apply to taxable years beginning after

10 December 31, 1999.

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