II 

117TH CONGRESS 

1ST SESSION S. 2601 

To allow employers to offer short-term savings accounts with automatic 

contribution arrangements for financial emergencies. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 4, 2021 

Mr. BOOKER (for himself and Mr. YOUNG) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL 

To allow employers to offer short-term savings accounts with 

automatic contribution arrangements for financial emergencies. 

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 ‘‘Strengthening Finan5 cial Security Through Short-Term Savings Accounts Act 

6 of 2021’’. 

7 SEC. 2. PURPOSE. 

8 The purpose of this Act is to improve financial secu9 rity, facilitate convenient and affordable access to all types 


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1 of employer sponsored short-term savings accounts, reduce 

2 leakage, and complement overall retirement savings. 

3 SEC. 3. STAND-ALONE SHORT-TERM SAVINGS ACCOUNTS. 

4 (a) IN GENERAL.—An employer may make available 

5 to employees a stand-alone, short-term savings account, 

6 using an automatic contribution arrangement (as defined 

7 in section 514(e)(2) of the Employee Retirement Income 

8 Security Act of 1974 (29 U.S.C. 1144(e)(2))) in accord9 ance with this Act. An employer that offers employees a 

10 short-term savings account shall deduct amounts from 

11 each participating employee’s wages in accordance with 

12 subsection (e) and transfer such amounts to a savings ac13 count that meets the requirements of subsection (b). 

14 (b) ACCOUNT REQUIREMENTS.— 

15 (1) IN GENERAL.—A short-term savings ac16 count offered in accordance with subsection (a) 

17 shall— 

18 (A) have no minimum balance require19 ments, reasonable fees as determined by a joint 

20 rulemaking by the Secretary of Labor and the 

21 Secretary of the Treasury, in consultation with 

22 other financial regulators, and a maximum ac23 count balance of not to exceed $10,000, ad24 justed annually for inflation and by the Sec25 retary of the Treasury; 


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1 (B) have a balance that is made readily 

2 available, in whole or in part, at any time to an 

3 individual who owns the account, subject to any 

4 reasonable, limited restrictions imposed on 

5 withdrawals pursuant to the terms of the ar6 rangement; and 

7 (C) make available to the individual who 

8 owns the account, not later than 5 business 

9 days after the individual terminates employ10 ment, the entire account balance. 

11 An employer may structure and adapt such short12 term savings account to assist employees with short13 term financial emergencies, so long as such savings 

14 accounts meet the minimum standards set forth in 

15 this Act. 

16 (2) COORDINATION.—An employer may coordi17 nate with a bank, credit union, or payroll card pro18 vider that is licensed by the Federal Government or 

19 a State government offering a short-term savings ac20 count under subsection (a), including— 

21 (A) an FDIC insured pooled account that 

22 the employer opens in the name of the employer 

23 for which the employer maintains responsibility, 

24 subject to reasonable fees as defined in section 

25 1022.380 of title 31, Code of Federal RegulaVerDate Sep 11 2014 04:16 Aug 05, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2601.IS S2601

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1 tions, and New Opinion No. 8 of the General 

2 Counsel of the Federal Deposit Insurance Cor3 poration (73 Fed. Reg. 67155 (November 13, 

4 2008)), a variation of a savings account for a 

5 short-term savings account offered under sub6 section (a); and 

7 (B) an individual account opened in the 

8 name of the employee for which the employee 

9 maintains responsibility. 

10 (3) REGULATIONS.—The Secretary of the 

11 Treasury, in consultation with the Secretary of 

12 Labor, shall promulgate regulations carrying out 

13 this subsection. Such regulations shall address the 

14 responsibility of employers to establish and maintain 

15 reasonable claims procedures, any associated pen16 alties for failure to comply with this Act, the timing 

17 and notice of benefit determination, how the funds 

18 must be invested and minimum interest require19 ments, and the manner and content of benefit deter20 mination, rights of participants in these accounts, 

21 among other things as they determine are necessary. 

22 (4) APPLICABILITY.—Notwithstanding any 

23 other provision of law, an employer may designate 

24 an account for direct deposit for a short-term sav25 ings account offered under subsection (a). 


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1 (c) ACCOUNT SPONSOR REQUIREMENTS.—Employ2 ers— 

3 (1) shall have a fiduciary responsibility to en4 sure that— 

5 (A) any account offered in accordance with 

6 subsection (a) meets the requirements of sub7 section (b); 

8 (B) relevant information about partici9 pating employees is submitted safely and se10 curely to the insured depository institution or 

11 insured credit union; 

12 (C) amounts are properly deducted from 

13 employees’ wages and transferred to the finan14 cial institution on behalf of the employees in ac15 cordance with subsection (f); 

16 (D) employees have clear instructions and 

17 an easy means to make changes to contribu18 tions or stop them entirely at any time; and 

19 (E) employees have clear guidance on how 

20 they may access their money and how quickly 

21 they will receive their money upon request; and 

22 (2) have no other fiduciary responsibility be23 yond the responsibilities described in paragraph (1). 

24 (d) APPLICABILITY OF BANKING LAWS.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), Federal banking laws (including regula3 tions) shall apply to short-term savings accounts as 

4 if the short-term savings accounts were savings ac5 counts. 

6 (2) KNOW YOUR CUSTOMER LAWS.—Notwith7 standing any other provision of law, a bank, credit 

8 union, or payroll card provider offering a short-term 

9 savings account under subsection (a) shall be treated 

10 as if it were an ERISA plan, for purposes of rules 

11 relating to Anti-Money Laundering, Customer Iden12 tification Program (CIP), Suspicious Activity Report 

13 (SAR) requirements, or any other rules required to 

14 establish the identity of the account holder before an 

15 account for a short-term savings account is opened 

16 in accordance with this Act. The Secretary may pre17 scribe regulations which would establish minimum 

18 standards that such an arrangement would be re19 quired to satisfy in order for this subsection to apply 

20 with respect to such an account. 

21 (e) PREEMPTION OF STATE ANTI-GARNISHMENT

22 LAWS.—Notwithstanding any other provision of law, this 

23 section shall supersede any law of a State which would 

24 directly or indirectly prohibit or restrict the use an auto25 matic contribution arrangement for a short-term savings 


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1 account, as if it were an ERISA plan. The Secretary may 

2 prescribe regulations which would establish minimum 

3 standards that such an arrangement would be required to 

4 satisfy in order for this subsection to apply with respect 

5 to such an account. 

6 (f) TRANSFERS TO ACCOUNTS.—The account sponsor 

7 shall transfer each pay period— 

8 (1) to the short-term savings account an 

9 amount equal to the percentage of the employee’s 

10 compensation, or a fixed amount, as the account 

11 sponsor determines; and 

12 (2) employees shall have the ability to adjust, 

13 stop, or pause, their contributions as they see fit. 

14 (g) DISCLOSURE REQUIREMENTS.—An account spon15 sor shall disclose in writing, or electronically if the em16 ployee so elects, to the participating employee within 5 

17 business days before the commencement of the contribu18 tions to the account— 

19 (1) a short-term savings account description, 

20 including the contours, all terms and conditions, and 

21 fees associated with the short-term savings account; 

22 (2) describe the tax treatment of the short-term 

23 savings account and the tax treatment of any tax fa24 vored account that is offered; 


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1 (3) any rules with respect to deposits or con2 tributions into the account, maintenance of the ac3 count, investments, balances, escalations not to ex4 ceed 4 percent and withdrawals, replenishment of 

5 the accounts, balance caps, and other features of the 

6 account; and 

7 (4) the access and availability to account infor8 mation and related account information to partici9 pating employees. 

10 (h) EFFECTIVE DATE.—The provisions of this Act 

11 shall be effective upon the date of enactment of this Act. 

12 SEC. 4. SHORT-TERM SAVINGS ACCOUNT WITHIN A RETIRE13 MENT PLAN. 

14 (a) IN GENERAL.—Not later than one year after the 

15 date of enactment of this Act, the Secretary of the Treas16 ury or the Secretary’s delegate shall issue regulations or 

17 other guidance that interprets and applies the rules of the 

18 Internal Revenue Code of 1986 applicable to tax-qualified 

19 plans and arrangements described in sections 219(g)(5), 

20 408 (including 408(q) and 408A), and 457(b) of such 

21 Code in a manner that facilitates the offering and oper22 ation, including automatic enrollment and automatic esca23 lation, of short-term savings arrangements as part of or 

24 in conjunction or coordination with, any such tax-qualified 

25 plan or arrangement. 


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1 (b) REQUIREMENTS.—Any short-term savings ac2 count that is part of a tax-qualified plans and arrange3 ments described in sections 219(g)(5), 408 (including 

4 408(q) and 408A), and 457(b) of the Internal Revenue 

5 Code of 1986 shall comply with applicable plan require6 ments, including provisions for the retention of assets in 

7 a qualified trust, timely payment of assets, and distribu8 tion of assets upon plan or participant termination. Any 

9 savings account that is not part of a tax-qualified plan, 

10 bank or credit union, shall be subject to appropriate regu11 lations by the Department of Treasury. 

12 SEC. 5. PILOT PROGRAM. 

13 The Secretary of the Treasury may establish a pilot 

14 program that incentivizes employers to set up short-term 

15 savings accounts under this Act. Any employer that par16 ticipates in the pilot program shall be eligible to receive 

17 not more than $400 per employee account. 

18 SEC. 6. STUDY OF EFFECTIVENESS OF SHORT-TERM SAV19 INGS ACCOUNT OPTIONS. 

20 Not later than 1 year after the date of enactment 

21 of this Act, the Comptroller General shall study, and re22 port to the Committee on Finance, the Committee on 

23 Banking, Housing, and Urban Affairs, and the Committee 

24 on Health, Education, Labor, and Pensions of the Senate 

25 and the Committee on Ways and Means of the House of 


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1 Representatives, the effectiveness of various methods for 

2 developing the savings accounts described in this Act, in3 cluding after-tax employee contributions to a plan de4 scribed in section 401(k) of the Internal Revenue Code 

5 of 1986, deemed treatment of such plans as a Roth plan 

6 for purposes of such Code, and the use of depository ac7 counts, including payroll cards. 

Æ 


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