I 
114TH CONGRESS 
2D SESSION 
H. R. 4608 
To amend the Internal Revenue Code of 1986 to establish small business 
savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 24, 2016 
Mr. ISRAEL introduced the following bill; which was referred to the Committee 
on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to establish 
small business savings accounts. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SAVE for Small Busi-
nesses Act’’ or the ‘‘Savings Accounts for a Variable Econ-
omy for Small Businesses Act’’. 
SEC. 2. SMALL BUSINESS SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Chapter 77 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new section: 
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‘‘(i) any 1-year period beginning im-
mediately after the end of any 3 consecu-
tive quarters during which the annual rate 
of real gross domestic product (as deter-
mined by the Bureau of Economic Analysis 
of the Department of Commerce) de-
creases, or 
‘‘(ii) any period, in no event shorter 
than 1 year, specified by the Administrator 
of the Small Business Administration for 
purposes of this section. 
‘‘(C) FEDERALLY
DECLARED
DISASTER 
AREAS.—The Administrator of the Small Busi-
ness Administration may specify a period under 
subparagraph (B)(ii) with respect to a specified 
area in the case of an area determined by the 
President to warrant assistance from the Fed-
eral Government under the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act 
(as in effect on the date of the enactment of the 
SAVE for Small Businesses Act). 
‘‘(D) LIMITATION.—The Administrator of 
the Small Business Administration shall, in 
consultation with the Secretary, for each speci-
fied period of economic hardship establish a dis-
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tribution limitation for qualified distributions 
from eligible small business accounts with re-
spect to such period. The aggregate qualified 
distributions for any such period from all ac-
counts with respect to an eligible small business 
shall not exceed such limitation. 
‘‘(E) AMOUNTS NOT USED FOR REINVEST-
MENT.—Any distribution not used in the man-
ner certified under subparagraph (A)(ii) shall 
be treated as a distribution other than a quali-
fied distribution in the taxable year of such dis-
tribution. 
‘‘(F) EIGHT-YEAR
RULE.—Any amount 
contributed to a small business savings account 
(and any earnings attributable thereto), once 
distributed, shall not be treated as a qualified 
distribution unless such distribution is made 
not later than 8 years after the date of such 
contribution. For purposes of the preceding sen-
tence, amounts (and the earnings attributable 
thereto) shall be treated as distributed on a 
first-in first-out basis. 
‘‘(e) TAX TREATMENT
OF ACCOUNT.—Any small 
business savings account is exempt from taxation under 
this subtitle A unless such account has ceased to be a 
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small business savings account. Notwithstanding the pre-
ceding sentence, any such account is subject to the taxes 
imposed by section 511 (relating to imposition of tax on 
unrelated business income of charitable, etc. organiza-
tions). 
‘‘(f) ELIGIBLE SMALL BUSINESS.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘eligible small 
business’ means, with respect to any calendar year, 
any person if the annual average number of full-time 
employees employed by such person during the pre-
ceding calendar year was 50 or fewer. For purposes 
of the preceding sentence, a preceding calendar year 
may be taken into account only if the person was in 
existence throughout the year. 
‘‘(2) FULL-TIME EMPLOYEES.— 
‘‘(A) IN
GENERAL.—The term ‘full-time 
employee’ means, with respect to any year, an 
employee who is employed on average at least 
40 hours of service per week. 
‘‘(B) HOURS OF SERVICE.—The Secretary, 
in consultation with the Secretary of Labor, 
shall prescribe such regulations, rules, and 
guidance as may be necessary to determine the 
hours of service of an employee, including rules 
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for the application of this paragraph to employ-
ees who are not compensated on an hourly 
basis. 
‘‘(3) STARTUPS, CONTROLLED
GROUPS, AND 
PREDECESSORS.—Rules similar to the rules of sub-
paragraphs (B) and (D) of section 220(c)(4) shall 
apply for purposes of this subsection. 
‘‘(g) EFFECT
OF PLEDGING ACCOUNT
AS SECU-
RITY.—If, during any taxable year of the eligible small 
business for whose benefit an account is established, the 
account or any portion thereof is pledged as security for 
a loan, the portion so pledged shall be treated as distrib-
uted in a distribution other than a qualified distribution.’’. 
(b) SMALL
BUSINESS
SAVINGS
ACCOUNT
PRO-
GRAMS.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall establish a program to administer small 
business savings accounts under section 7529 of the 
Internal Revenue Code of 1986. 
(2) 
ACCOUNT
STANDARDS.—The 
Secretary 
shall establish minimum standards for small busi-
ness savings accounts and shall establish accounts 
within the Department of the Treasury or enter into 
agreements with trustees that meet these standards 
to administer such accounts. In establishing such 
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standards and making such agreements the Sec-
retary shall, to the extent practicable, seek to mini-
mize fees, minimize risk of loss of principal, and en-
sure a range of investment risk options available to 
account beneficiaries. 
(c) EXCESS CONTRIBUTIONS.—Section 4973 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new subsection: 
‘‘(i) EXCESS CONTRIBUTIONS TO SMALL BUSINESS 
SAVINGS ACCOUNTS.—For purposes of this section, in the 
case of contributions to all small business savings accounts 
(within the meaning of section 7529(b)) maintained for 
the benefit of an individual, the term ‘excess contributions’ 
means the sum of— 
‘‘(1) the excess (if any) of— 
‘‘(A) the amount contributed to such ac-
counts for the taxable year, over 
‘‘(B) the amount allowable as a contribu-
tion under section 7529(c)(2) for such taxable 
year, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the accounts 
for the taxable year, and 
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