Start Saving Sooner Act of 2015

To amend the Internal Revenue Code of 1986 to provide for tax preferred savings accounts for individuals under age 18, and for other purposes. 1. Short title This Act may be cited as the Start Saving Sooner Act of 2015 2. Findings Congress finds the following: (1) Studies indicate that children as young as 3 years old are able to grasp financial concepts and that basic financial habits are largely formulated by age 7. (2) Research shows that children born to low-income parents who are good financial savers are more likely to move up the economic ladder than children from low-income households that do not save. According to a 2011 study controlled for income and demographic factors, youth who own financial accounts are 7 times more likely to attend college. (3) If tax-advantaged retirement accounts such as Roth IRAs could be opened for children between the ages of zero and 18, these individuals are likely to acquire substantially more tax-free assets by retirement age than their peers. (4) Children who possess retirement accounts from a young age will benefit from longer exposure to compound interest and can be expected to attain higher levels of financial literacy, college graduation and retirement security in adulthood. (5) Greater private retirement savings for Americans of all ages will increase personal financial security and responsibility, reducing the likelihood that seniors will need to rely solely on Social Security for their retirement income. (6) Federal policy should better enable parents, guardians and families of all income levels to encourage youth saving and investment for retirement at an earlier age. (7) Federal policy should help create retirement savings incentives for low-income Americans because studies show that low-income Americans will save more for retirement if there are incentives and structures in place to help them do so. A refundable incentive like the Saver’s Credit would reach 50 million low-income households—nearly 10 times the number a non-refundable credit reaches. 3. Young savers account (a) Establishment of accounts (1) In general Section 408A (g) Young savers account (1) In general Except as provided in this subsection, a young savers account shall be treated in the same manner as a Roth IRA. (2) Young savers account For purposes of this subsection, the term young savers account (3) Contribution limits In the case of any contributions for any taxable year to 1 or more young savers accounts maintained on behalf of an individual, each of the following contribution limits for the taxable year shall be increased as follows: (A) The contribution limit applicable to the individual under subsection (c)(2) shall be increased by the aggregate amount of qualified young saver contributions to such accounts for the taxable year. (B) The contribution limits applicable to the young savers accounts under subsection (a)(1) or (b)(2)(B) of section 408, whichever is applicable, shall be increased by the deductible amount in effect under section 219(b)(5) for such taxable year (determined without regard to subparagraph (B) thereof). (4) Qualified young saver contributions For purposes of this subsection— (A) In general The term qualified young saver contribution (B) Limitations (i) Limit on accounts with respect to individual The aggregate amount of contributions which may be made for any taxable year to all young savers accounts maintained on behalf of an individual shall not exceed the deductible amount in effect for the taxable year under section 219(b)(5) (determined without regard to subparagraph (B) thereof). (ii) Limit on contributors The aggregate amount of qualified young saver contributions an individual may make for any taxable year to all young savers accounts shall not exceed the deductible amount in effect for the taxable year under section 219(b)(5) (determined without regard to subparagraph (B) thereof), reduced by any contributions made by or on behalf of the individual to any Roth IRA maintained on behalf of the individual. . (b) Eligible for Savers Credit Paragraph (1) of section 25B(d) of such Code is amended by striking and , and (D) the amount of any contribution to a young savers account. . (c) Refund payable to Young Savers Account (1) In general Subchapter B of chapter 65 6433. Young savers account refund payment In the case of any overpayment (or portion thereof) which is attributable to a credit allowed to an individual under section 25B by reason of a contribution to a young savers account, the Secretary shall pay the amount of such overpayment (or such portion) into the young savers account to which such contribution was made. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section. . (2) Clerical amendment The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item: Sec. 6433. Young savers account refund payment. . (d) Young savers account information included with application for social security card The Commissioner of Social Security, in consultation with the Secretary of the Treasury, shall include with materials relating to the application for a social security card information describing young savers accounts (as defined in section 408A(g)(2) (e) Account funds disregarded for purposes of all means tested federal programs Notwithstanding any other provision of Federal law, assets accumulated in young savers accounts (within the meaning of section 408A(g) (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2014.

Summary: Start Saving Sooner Act of 2015 Amends the Internal Revenue Code to establish a tax-exempt individual retirement account for taxpayers under age 18, to be known as a young savers account. Treats such accounts as Roth individual retirement accounts for income tax purposes. Allows the tax credit for retirement savings for contributions to a young savers account. Directs the Secretary of the Treasury to pay any overpayment of tax that is attributable to the tax credit for retirement savings to the taxpayer's young savers account.