Encouraging Americans to Save Act
Bill: S.2452 | Sponsor: Sen. Wyden, Ron (D-OR)
Policy area: Taxation

Summary:
Encouraging Americans to Save Act
This bill sets forth provisions to provide matching payments for retirement savings and Individual Retirement Account (IRA) contributions for individuals who have attained the age of 18 years, excluding taxpayer dependents. Specifically, it allows an enhanced 50% tax credit, up to $2,000, for deductible retirement savings contributions and for IRA contributions.
The bill also directs the Internal Revenue Service (IRS) to establish the R-Bond Program as a permanent program for the establishment and maintenance of individual retirement plans and directs the IRS to educate taxpayers on the benefits of the savings programs provided by this bill.

To amend the Internal Revenue Code of 1986 to provide matching payments 
 for retirement savings contributions by certain individuals, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Encouraging Americans to Save Act''.

SEC. 2. SAVER'S MATCHING CREDIT FOR ELECTIVE DEFERRAL AND IRA 
              CONTRIBUTIONS BY CERTAIN INDIVIDUALS.

    (a) In General.--Subchapter B of chapter 65 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 6433. SAVER'S MATCHING CREDIT FOR ELECTIVE DEFERRAL AND IRA 
              CONTRIBUTIONS BY CERTAIN INDIVIDUALS.

    ``(a) In General.--
            ``(1) Allowance of credit.--Any eligible individual who 
        makes qualified retirement savings contributions for the 
        taxable year shall be allowed a credit for such taxable year in 
        an amount equal to the applicable percentage of so much of the 
        qualified retirement savings contributions made by such 
        eligible individual for the taxable year as does not exceed 
        $2,000.
            ``(2) Payment of credit.--The credit under this section 
        shall be paid by the Secretary as a contribution (as soon as 
        practicable after the eligible individual has filed a tax 
        return for the taxable year) to the applicable retirement 
        savings vehicle of an eligible individual.
    ``(b) Applicable Percentage.--For purposes of this section--
            ``(1) In general.--Except as provided in paragraph (2), the 
        applicable percentage is 50 percent.
            ``(2) Phaseout.--The percentage under paragraph (1) shall 
        be reduced (but not below zero) by the number of percentage 
        points which bears the same ratio to 50 percentage points as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) the applicable dollar amount, bears 
                        to
                    ``(B) the phaseout range.
        If any reduction determined under this paragraph is not a whole 
        percentage point, such reduction shall be rounded to the next 
        lowest whole percentage point.
            ``(3) Applicable dollar amount; phaseout range.--
                    ``(A) Joint returns.--Except as provided in 
                subparagraph (B)--
                            ``(i) the applicable dollar amount is 
                        $65,000, and
                            ``(ii) the phaseout range is $20,000.
                    ``(B) Other returns.--In the case of--
                            ``(i) a head of a household (as defined in 
                        section 2(b)), the applicable dollar amount and 
                        the phaseout range shall be \3/4\ of the 
                        amounts applicable under subparagraph (A) (as 
                        adjusted under subsection (g)), and
                            ``(ii) any taxpayer who is not filing a 
                        joint return and who is not a head of a 
                        household (as so defined), the applicable 
                        dollar amount and the phaseout range shall be 
                        \1/2\ of the amounts applicable under 
                        subparagraph (A) (as so adjusted).
            ``(4) Exception; minimum credit.--In the case of an 
        eligible individual with respect to whom (without regard to 
        this paragraph) the credit determined under subsection (a)(1) 
        is greater than zero but less than $100, the credit allowed 
        under this section shall be $100.
    ``(c) Eligible Individual.--For purposes of this section--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term `eligible individual' means any individual if such 
        individual has attained the age of 18 as of the close of the 
        taxable year.
            ``(2) Dependents not eligible.--The term `eligible 
        individual' shall not include any individual with respect to 
        whom a deduction under section 151 is allowed to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
    ``(d) Qualified Retirement Savings Contributions.--For purposes of 
this section--
            ``(1) In general.--The term `qualified retirement savings 
        contributions' means, with respect to any taxable year, the sum 
        of--
                    ``(A) the amount of the qualified retirement 
                contributions (as defined in section 219(e)) made by 
                the eligible individual,
                    ``(B) the amount of--
                            ``(i) any elective deferrals (as defined in 
                        section 402(g)(3)) of such individual, and
                            ``(ii) any elective deferral of 
                        compensation by such individual under an 
                        eligible deferred compensation plan (as defined 
                        in section 457(b)) of an eligible employer 
                        described in section 457(e)(1)(A),
                    ``(C) the amount of voluntary employee 
                contributions by such individual to any qualified 
                retirement plan (as defined in section 4974(c)), and
                    ``(D) the amount of contributions by such 
                individual to a qualified ABLE program (as defined in 
                section 529A(b)) for the benefit of the individual.
        Such term shall not include any amount attributable to a 
        payment under subsection (a).
            ``(2) Reduction for certain distributions.--
                    ``(A) In general.--The qualified retirement savings 
                contributions determined under paragraph (1) for a 
                taxable year shall be reduced (but not below zero) by 
                the aggregate distributions received by the individual 
                during the testing period from any entity of a type to 
                which contributions under paragraph (1) may be made.
                    ``(B) Testing period.--For purposes of subparagraph 
                (A), the testing period, with respect to a taxable 
                year, is the period which includes--
                            ``(i) such taxable year,
                            ``(ii) the 2 preceding taxable years, and
                            ``(iii) the period beginning on the day 
                        after the last day of such taxable year and 
                        ending with the due date (including extensions) 
                        for filing the return of tax for such taxable 
                        year.
                    ``(C) Excepted distributions.--There shall not be 
                taken into account under subparagraph (A)--
                            ``(i) any distribution referred to in 
                        section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 
                        404(k), or 408(d)(4),
                            ``(ii) any distribution to which section 
                        408(d)(3) or 408A(d)(3) applies,
                            ``(iii) any distribution to which the rules 
                        described in the second sentence of section 
                        529A(b)(2) apply, and
                            ``(iv) any portion of a distribution if 
                        such portion is transferred or paid in a 
                        rollover contribution (as defined in section 
                        402(c), 403(a)(4), 403(b)(8), 408A(e), or 
                        457(e)(16)) to an account or plan to which 
                        qualified retirement savings contributions can 
                        be made.
                    ``(D) Treatment of distributions received by spouse 
                of individual.--For purposes of determining 
                distributions received by an individual under 
                subparagraph (A) for any taxable year, any distribution 
                received by the spouse of such individual shall be 
                treated as received by such individual if such 
                individual and spouse file a joint return for such 
                taxable year and for the taxable year during which the 
                spouse receives the distribution.
    ``(e) Applicable Retirement Savings Vehicle.--
            ``(1) In general.--The term `applicable retirement savings 
        vehicle' means--
                    ``(A) an account or plan elected by the eligible 
                individual under paragraph (2),
                    ``(B) in the case of qualified retirement savings 
                contributions described in subsection (d)(1)(D), the 
                qualified ABLE program (as defined in section 529A(b)) 
                to which such contributions were made, or
                    ``(C) if no such election is made or the Secretary 
                is not able to make a contribution into such account or 
                plan, an account established for the benefit of the 
                eligible individual under the R-Bond Program.
        For purposes of subparagraph (C), if no account has previously 
        been established for the benefit of the individual under the R-
        Bond Program, the Secretary shall establish such an account for 
        such individual for purposes of receiving contributions under 
        this section.
            ``(2) Other retirement vehicles.--An eligible individual 
        may elect, in such form and manner as the Secretary may 
        provide, to have the amount of the credit determined under 
        subsection (a) contributed to an account or plan which--
                    ``(A) is a Roth IRA or a designated Roth account 
                (within the meaning of section 402A) of an applicable 
                retirement plan (as defined in section 402A(e)(1)),
                    ``(B) is for the benefit of the eligible 
                individual, and
                    ``(C) accepts contributions made under this 
                section.
        In the case of a plan of which a qualified trust under section 
        401(a) is a part, an annuity contract described in section 
        403(b), or a plan described in section 457(b) which is 
        established and maintained by an employer described in section 
        457(e)(1)(A), the plan shall have discretion whether to accept 
        contributions made under this section, but if the plan accepts 
        any such contributions it shall accept them on a uniform basis.
    ``(f) Other Definitions and Special Rules.--
            ``(1) Modified adjusted gross income.--For purposes of this 
        section, the term `modified adjusted gross income' means 
        adjusted gross income--
                    ``(A) determined without regard to sections 911, 
                931, and 933, and
                    ``(B) determined without regard to any exclusion or 
                deduction allowed for any qualified retirement savings 
                contribution made during the taxable year.
            ``(2) Treatment of contributions.--In the case of any 
        contribution under subsection (a)(2)--
                    ``(A) except as otherwise provided in this section 
                or by the Secretary under regulations, such 
                contribution shall be treated as--
                            ``(i) an elective deferral made by the 
                        individual which is a designated Roth 
                        contribution, if contributed to an applicable 
                        retirement plan, or
                            ``(ii) a Roth IRA contribution made by such 
                        individual, if contributed to a Roth IRA,
                    ``(B) such contribution shall not be treated as 
                income to the taxpayer, and
                    ``(C) such contribution shall not be taken into 
                account with respect to any applicable limitation under 
                sections 402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 
                408A(c)(2), 414(v)(2), 415(c), or 457(b)(2), and shall 
                be disregarded for purposes of sections 401(a)(4), 
                401(k)(3), 401(k)(11)(B)(i)(III), 410(b), and 416.
            ``(3) Treatment of qualified plans, etc.--A plan or 
        arrangement to which a contribution is made under this section 
        shall not be treated as violating any requirement under section 
        401, 403, 408, or 457 solely by reason of accepting such 
        contribution.
            ``(4) Erroneous credits.--If any contribution is 
        erroneously paid under subsection (a)(2), the amount of such 
        erroneous payment shall be treated as an underpayment of tax.
    ``(g) Inflation Adjustments.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2023, each of the dollar 
        amounts in subsections (a)(1) and (b)(3)(A)(i) shall be 
        increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2022' for `calendar year 2016' in 
                subparagraph (A)(ii) thereof.
            ``(2) Rounding.--Any increase determined under paragraph 
        (1) shall be rounded to the nearest multiple of--
                    ``(A) $100 in the case of an adjustment of the 
                amount in subsection (a)(1), and
                    ``(B) $1,000 in the case of an adjustment of the 
                amount in subsection (b)(3)(A)(i).''.
    (b) Payment Authority.--Section 1324(b)(2) of title 31, United 
States Code, is amended by striking ``or 6431'' and inserting ``6431, 
or 6433''.
    (c) Deficiencies.--Section 6211(b)(4) is amended by striking ``and 
6431'' and inserting ``6431, and 6433''.
    (d) Reporting.--The Secretary of Labor, the Secretary of the 
Treasury, and the Director of the Pension Benefit Guaranty Corporation 
shall--
            (1) amend Form 5500 to require separate reporting of the 
        aggregate amount of contributions received by the plan during 
        the year under section 6433(a)(2) of the Internal Revenue Code 
        of 1986 (as added by this section), and
            (2) amend Form 5498 to require similar reporting with 
        respect to individual retirement plans (as defined in section 
        7701(a)(37) of such Code).
    (e) Conforming Amendments.--
            (1) Section 25B of the Internal Revenue Code of 1986 is 
        amended by striking subsections (a) through (f) and inserting 
        the following:
``For payment of credit related to qualified retirement savings 
contributions, see section 6433.''.
            (2) 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. Saver's matching credit for elective deferral and IRA 
                            contributions by certain individuals.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.
    (g) Coronavirus Recovery Bonus Credit.--
            (1) In general.--In the case of taxable years beginning 
        after December 31, 2022, and before January 1, 2028, the amount 
        of the credit determined under section 6433 of the Internal 
        Revenue Code of 1986, as added by this section, shall be 
        increased by an amount equal to 50 percent of so much of the 
        qualified retirement savings contributions made by an eligible 
        individual for the taxable year as does not exceed--
                    (A) $10,000, reduced by
                    (B) the aggregate amount of qualified retirement 
                savings contributions made by the eligible individual 
                in all preceding taxable years which begin after 
                December 31, 2022.
            (2) Phaseout.--The $10,000 amount under paragraph (1)(A) 
        shall be reduced (but not below zero) by a percentage which 
        bears the same ratio to 50 percent as--
                    (A) the excess of--
                            (i) the taxpayer's modified adjusted gross 
                        income for the taxable year, over
                            (ii) the applicable dollar amount, bears to
                    (B) the phaseout range.
        If any reduction determined under this paragraph is not a whole 
        percentage point, such reduction shall be rounded to the next 
        lowest whole percentage point.
            (3) Definitions.--For purposes of this subsection, the 
        terms ``qualified retirement savings contributions'', 
        ``eligible individual'', ``applicable dollar amount'', and 
        ``phaseout range'' have the meanings given such terms by 
        subsections (d), (c), and (b), respectively, of section 6433 of 
        such Code, as so added.

SEC. 3. ESTABLISHMENT OF R-BOND PROGRAM.

    (a) In General.--The Secretary of the Treasury shall, not later 
than January 31, 2023, establish a permanent program, to be known as 
the ``R-Bond Program'', which meets the requirements of this section to 
establish and maintain individual retirement plans on behalf of 
individuals.
    (b) Program Specifications.--
            (1) In general.--
                    (A) IRAs.--The R-Bond Program established under 
                this section shall--
                            (i) permit the establishment of individual 
                        retirement plans on behalf of an individual, 
                        whether a traditional IRA or a Roth IRA or 
                        both, as appropriate;
                            (ii) require the assets of each individual 
                        retirement plan established under the program 
                        to be held by the designated IRA trustee;
                            (iii) permit contributions to be made 
                        periodically to such individual retirement 
                        plans, including contributions paid under 
                        section 6433(a)(2) of the Internal Revenue Code 
                        of 1986, contributions made by direct deposit 
                        or other electronic means, including taxpayer-
                        directed direct deposit of Federal income tax 
                        refunds by the Department of the Treasury, and 
                        by methods that provide access for the 
                        unbanked;
                            (iv) permit distributions and rollovers 
                        from such individual retirement plans upon 
                        request of the account owner;
                            (v) include procedures to consolidate 
                        multiple accounts established for the same 
                        individual in order that each individual, to 
                        the extent practicable, has only one Roth IRA 
                        and only one traditional IRA under the program; 
                        and
                            (vi) ensure that such individual retirement 
                        plans are invested solely in retirement savings 
                        bonds issued by the Department of the Treasury 
                        for the purpose of the R-Bond Program.
                    (B) Regulations, etc.--The Secretary of the 
                Treasury shall have authority to promulgate such 
                regulations, rules, and other guidance as are necessary 
                to implement the R-Bond Program, and are consistent 
                with this section, as well as coordination rules 
                permitting individual retirement plans to be 
                established under the R-Bond Program by taxpayer 
                election on the return of tax, and in connection with 
                and in support of programs established under State and 
                local laws that enroll residents in individual 
                retirement plans.
            (2) No fees.--No fees shall be assessed on participants in 
        the R-Bond Program.
            (3) Limitations.--
                    (A) Contribution minimum.--The Secretary of the 
                Treasury may establish minimum amounts for initial and 
                additional contributions to an individual retirement 
                plan under the R-Bond Program, not to exceed $5.
                    (B) Limitation of rollover contributions and 
                transfers.--No rollover contribution or transfer shall 
                be accepted to an individual retirement plan under the 
                R-Bond Program except to the extent necessary to 
                consolidate accounts as provided in paragraph (1)(v).
            (4) Designated ira trustee.--For purposes of this section, 
        the designated IRA trustee is the Department of the Treasury or 
        such other person as the Secretary of the Treasury may 
        designate to act as trustee of the individual retirement plans 
        established under the R-Bond Program.
            (5) Disclosures.--The designated IRA trustee shall provide 
        in writing, in paper form mailed to the last known address of 
        the individual unless the individual affirmatively elects to 
        receive electronic statements--
                    (A) annual account balance statements to 
                individuals on behalf of whom individual retirement 
                plans are established under the R-Bond Program, which 
                shall include--
                            (i) an explanation that--
                                    (I) program account balances are 
                                solely invested in retirement savings 
                                bonds issued by the Department of the 
                                Treasury for the purpose of the R-Bond 
                                Program;
                                    (II) diversified investment 
                                opportunities which are not guaranteed 
                                by the Federal government are available 
                                for individual retirement plans 
                                established by other providers;
                                    (III) no fees are charged under the 
                                R-Bond Program; and
                                    (IV) the individual has the right 
                                to roll over or transfer an account 
                                balance without penalty;
                            (ii) an illustration of the potential 
                        impacts that higher yields may have on long-
                        term accumulation; and
                            (iii) information on the types of fees that 
                        other providers may charge for the 
                        establishment of individual retirement plans, 
                        and the impact of fees on long-term 
                        accumulation; and
                    (B) if the account balance of the individual 
                retirement plan exceeds $15,000 and the individual has 
                not previously so affirmed, a request that the 
                individual affirm (including instructions for making 
                such affirmation) to the designated IRA trustee that 
                the individual does not want to roll over such account 
                balance to another plan (according to the rules 
                relating to rollovers and transfers of individual 
                retirement plans under the Internal Revenue Code of 
                1986).
    (c) Retirement Savings Bonds.--For purposes of this section--
            (1) In general.--The term ``retirement savings bond'' means 
        an interest-bearing electronic United States savings bond 
        issued to the designated IRA trustee which is available only to 
        participants in the R-Bond Program.
            (2) Interest rate.--Bonds issued under the R-Bond Program 
        shall earn interest at a rate equal to the greater of 
        (determined on the issue date of the bond)--
                    (A) the rate earned by the Government Securities 
                Investment Fund established under section 8438(b)(1) of 
                title 5, United States Code, or
                    (B) the rate earned by a Series I United States 
                savings bond.
            (3) Reissue in case of change in trustee.--If a successor 
        designated IRA trustee is designated under subsection (b)(4), 
        the retirement savings bonds issued to the predecessor 
        designated IRA trustee shall be reissued to such successor.
    (d) Definitions.--For purposes of this section--
            (1) Individual retirement plan.--The term ``individual 
        retirement plan'' has the meaning given such term by section 
        7701(a)(37) of the Internal Revenue Code of 1986.
            (2) Traditional ira.--The term ``traditional IRA'' means an 
        individual retirement plan which is not a Roth IRA.
            (3) Roth ira.--The term ``Roth IRA'' has the meaning given 
        such term by section 408A(b) of such Code.
            (4) Secretary.--Any reference to the Secretary of the 
        Treasury includes a reference to such Secretary's delegate.

SEC. 4. PROMOTION AND GUIDANCE.

    (a) Promotion.--The Secretary of the Treasury (or the Secretary's 
delegate) shall educate taxpayers on the benefits provided under 
section 6433 of the Internal Revenue Code of 1986 and the R-Bond 
Program established under section 3 of this Act.
    (b) Notice.--Not later than 1 year after the date of the enactment 
of this Act--
            (1) Plan administrators.--The Secretary of the Treasury (or 
        the Secretary's delegate) and the Secretary of Labor, as 
        appropriate, shall issue guidance to plan administrators 
        regarding information on the benefits provided under section 
        6433 of the Internal Revenue Code of 1986 and the R-Bond 
        Program established under section 3 of this Act for 
        participants and beneficiaries which is to be required to be 
        included in plan disclosures including summary plan 
        descriptions, open enrollment materials, and annual notices 
        otherwise provided by plans. Such guidance--
                    (A) shall include model notice language in both 
                English and Spanish that is deemed to satisfy the 
                notice requirement of the preceding sentence, and
                    (B) in the case of annual enrollment materials for 
                a plan, shall specify that such notice may be given at 
                the same time as any elective deferral or matching 
                contribution safe harbor notice would be required to be 
                given (even if the plan does not incorporate such a 
                safe harbor) and may be incorporated into such safe 
                harbor notice.
            (2) Trustees and issuers of iras.--The Secretary of the 
        Treasury (or the Secretary's delegate) and the Secretary of 
        Labor, as appropriate, shall issue guidance to trustees and 
        issuers of individual retirement plans regarding information on 
        the benefits provided under section 6433 of the Internal 
        Revenue Code of 1986 and the R-Bond Program established under 
        section 3 of this Act for potentially eligible individuals 
        which is to be required to be included in individual retirement 
        plan disclosures.
            (3) Payment of credits.--Not later than 3 years after the 
        date of the enactment of this Act, the Secretary of the 
        Treasury (or the Secretary's delegate) shall promulgate 
        guidance setting forth procedures that permit the direct 
        payment of credits under section 6433 to an employer-sponsored 
        plan in which the taxpayer is a participant and that elects to 
        receive such credits, including rules regarding notice to 
        taxpayers and a plan of a payment of such credit and notice 
        from a plan to a taxpayer and the Secretary confirming receipt 
        of a payment.

SEC. 5. DEADLINE TO FUND IRA WITH TAX REFUND.

    (a) In General.--Paragraph (3) of section 219(f) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``is made not later than'' and inserting 
        ``is made--
                            ``(i) not later than'',
            (2) by striking the period at the end and inserting ``, 
        or'', and
            (3) by adding at the end the following new clause:
                            ``(ii) by direct deposit by the Secretary 
                        pursuant to an election on the return for such 
                        taxable year to contribute all or a portion of 
                        any amount owed to the taxpayer to an 
                        individual retirement plan of the taxpayer, but 
                        only if the return is filed not later than the 
                        date described in clause (i).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.
                                 <all>