RAYS Act

To amend the Internal Revenue Code of 1986 to provide for tax preferred savings accounts for dependent youth, and for other purposes. 1. Short title This Act may be cited as the Roth Accounts for Youth Savings Act of 2015 RAYS Act 2. Roth Account for Youth (a) In general Section 408A (g) Roth Account for Youth (1) In general In the case of a dependent of a taxpayer to whom this paragraph applies for the taxable year and with respect to whom an election for the taxable year is in effect under paragraph (3)(B), the limitation of subsection (c)(2) shall be equal to the sum of— (A) the contribution limit determined under this section (before the application of this subsection) with respect to the dependent, plus (B) (i) the dollar amount determined (before the application of this subsection) under subsection (c)(2) for the taxable year with respect to such taxpayer, without regard to section 219(b)(5)(B), reduced by (ii) the sum of— (I) all prior contributions to all other Roth IRAs maintained on behalf of all other dependents of such taxpayer for the taxable year, determined by taking into account the order elected by the taxpayer under paragraph (3)(B), plus (II) the aggregate amount of contributions to all individual retirement plans and Roth IRAs maintained on behalf of the taxpayer for the taxable year. (2) Maximum contribution In no case shall the aggregate amount of contributions to all individual retirement plans and Roth IRAs maintained on behalf of a dependent in a taxable year exceed the deductible amount determined under section 219(b)(5)(A). (3) Ordering rules (A) Taxpayer’s own IRAs Subsection (c)(2) shall apply with respect to all individual retirement plans maintained for the benefit of the taxpayer before paragraph (1) applies with respect to a dependent of the taxpayer. (B) Election of order in the case of more than 1 dependent For purposes of determining the contribution limit under paragraph (1) for more than 1 dependent, paragraph (1)(B)(ii) shall apply with respect to dependents of the taxpayer in the order elected by the taxpayer. (4) Dependent to whom paragraph (1) applies Paragraph (1) shall apply to any dependent of a taxpayer if— (A) the taxpayer is allowed a deduction under section 151 for the dependent for the taxable year, (B) in the case of a taxpayer who is married, the taxpayer files a joint return for the taxable year, and (C) the amount of compensation (if any) includible in the dependent’s gross income for the taxable year is less than the compensation includible in the gross income of the taxpayer for the taxable year. (5) Special rule for divorced parents, etc For purposes of paragraph (3), rules similar to the rules of section 152(e) shall apply. (6) Compensation For purposes of this subsection, the term compensation . (b) Conforming amendment Section 408A(d)(2)(B) Roth IRA) Roth IRA or a contribution is made to a dependent’s Roth IRA under subsection (g)) such individual’s spouse (c) Income Disregard Under Federal Means-Tested Benefit Programs The amount in a Roth Account for Youth established pursuant to section 408A(g) (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2015.

Summary: Roth Accounts for Youth Savings Act of 2015 or the RAYS Act This bill amends the Internal Revenue Code to allow dependents of a taxpayer to establish a tax-preferred savings account similar to the existing Roth Individual Retirement Account, to be known as a Roth Account for Youth. Any amounts in such an account will be disregarded for purposes of determining elibility for benefits or assistance under a means-tested federal benefit program.