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: 
‘‘(h) 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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‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount allowable 
as a contribution under section 7529(c)(2) 
for such taxable year, over 
‘‘(ii) the amount contributed to such 
accounts for such taxable year.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for chapter 77 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new item: 
‘‘Sec. 7529. Small Business Savings Accounts.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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