Title: Encouraging Americans to Save Act
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 lower income individuals. 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 Roth IRAs and directs the IRS to educate taxpayers on the benefits of the savings programs provided by this bill.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 5035 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  2d Session
                                S. 5035

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 16, 2020

 Mr. Wyden (for himself, Mr. Bennet, Mr. Brown, Mr. Casey, Ms. Cortez 
   Masto, Mr. Durbin, Ms. Klobuchar, and Mrs. Murray) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


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

    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. MATCHING PAYMENTS 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. MATCHING PAYMENTS 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.--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 and full-time students not eligible.--The 
        term `eligible individual' shall not include--
                    ``(A) 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, 
                and
                    ``(B) any individual who is a student (as defined 
                in section 152(f)(2)).
    ``(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), and
                    ``(C) the amount of voluntary employee 
                contributions by such individual to any qualified 
                retirement plan (as defined in section 4974(c)).
        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 after such taxable year 
                        and before 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, and
                            ``(iii) 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 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), or
                    ``(B) if no such election is made or the Secretary 
                is not able to make a contribution into the account or 
                plan selected by the eligible individual, an account 
                established for the benefit of the eligible individual 
                under the R-Bond Program.
        For purposes of subparagraph (B), 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 contributions under this 
        section.
            ``(2) Other retirement vehicles.--An eligible individual 
        may elect to have the amount 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,
                    ``(C) accepts contributions made under this 
                section, and
                    ``(D) is designated by such individual (in such 
                form and manner as the Secretary may provide) on the 
                return of tax for the taxable year.
        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), amounts under this section may only be 
        contributed to such plan if the plan document permits such 
        contribution.
    ``(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) as 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), 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 2020, 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 2019' 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 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. Matching payments 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, 2021.
    (g) Coronavirus Recovery Bonus Credit.--
            (1) In general.--In the case of taxable years beginning 
        after December 31, 2021, and before January 1, 2027, 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, 2021.
            (2) Definitions.--For purposes of this subsection, the 
        terms ``qualified retirement savings contributions'' and 
        ``eligible individual'' have the meanings given such terms by 
        subsections (d) and (c), 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 December 31, 2022, establish a permanent program, to be known as 
the ``R-Bond Program'', which meets the requirements of this section to 
establish and maintain a Roth IRA on behalf of individuals.
    (b) Program Specifications.--
            (1) In general.--
                    (A) Roth iras.--The R-Bond Program established 
                under this section shall--
                            (i) permit an individual to establish a 
                        Roth IRA which satisfies the requirements of 
                        section 408A of the Internal Revenue Code of 
                        1986 on behalf of the individual;
                            (ii) permit an employer to establish such a 
                        Roth IRA on behalf of 1 or more employees of 
                        such employer;
                            (iii) require the assets of each Roth IRA 
                        established under the program to be held by the 
                        designated Roth IRA custodian;
                            (iv) permit contributions to be made 
                        periodically to such Roth IRAs by direct 
                        deposit or other electronic means and by 
                        methods that provide access for the unbanked;
                            (v) permit distributions and rollovers from 
                        such Roth IRAs upon request of the account 
                        owner;
                            (vi) include procedures to consolidate 
                        multiple accounts established for the same 
                        individual; and
                            (vii) ensure that such Roth IRAs 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 Roth IRAs to be established under the R-Bond 
                Program in connection with State and local laws that 
                enroll residents in Roth IRAs.
            (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 a Roth IRA under the R-Bond 
                Program, not to exceed $5.
                    (B) Rollover contributions not permitted.--No 
                rollover contribution shall be accepted to a Roth IRA 
                under the R-Bond Program.
                    (C) Account maximum.--No contributions (other than 
                a contribution made under section 6433(a)(2) of the 
                Internal Revenue Code of 1986, as added by this Act) 
                shall be credited to a Roth IRA under the R-Bond 
                Program after the account balance of such Roth IRA 
                reaches $15,000.
                    (D) Limitation on participation.--Within a 
                reasonable amount of time after the earlier of--
                            (i) the date the account balance of a Roth 
                        IRA under the R-Bond Program reaches $15,000; 
                        or
                            (ii) the earlier of--
                                    (I) the date that the participant 
                                has been a participant in the R-Bond 
                                Program for 30 years; or
                                    (II) the date that the participant 
                                reaches age 59\1/2\,
                the designated Roth IRA custodian shall provide notice 
                to the participant that no further contributions will 
                be accepted and that the participant may elect to have 
                the account balance rolled over to another Roth IRA 
                according to the rules relating to rollovers and 
                transfers of Roth IRAs under the Internal Revenue Code 
                of 1986.
                    (E) Adjustment for inflation.--
                            (i) In general.--In the case of any 
                        calendar year after 2023, the $15,000 amount in 
                        subparagraphs (C) and (D) and subsection 
                        (c)(3)(B) shall be increased by an amount equal 
                        to--
                                    (I) such dollar amount, multiplied 
                                by
                                    (II) the cost-of-living adjustment 
                                determined under section 1(f)(3) of the 
                                Internal Revenue Code of 1986 for the 
                                calendar year, determined by 
                                substituting ``calendar year 2022'' for 
                                ``calendar year 2016'' in subparagraph 
                                (A)(ii) thereof.
                            (ii) Rounding.--If any increase determined 
                        under clause (i) is not a multiple of $50, such 
                        increase shall be rounded to the next lowest 
                        multiple of $50.
            (4) Designated roth ira custodian.--For purposes of this 
        section, the designated Roth IRA custodian is the person 
        designated by the Secretary of the Treasury to act as custodian 
        of the Roth IRAs established on behalf of participants in the 
        retirement savings program of such Department.
    (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 Roth IRA custodian 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)--
                    (A) the rate earned by the Government Securities 
                Investment Fund established under section 8438(b)(1) of 
                title 5, United States Code; or
                    (B) a Series I United States savings bond.
            (3) Bonds to be credited to single account.--Each 
        retirement savings bond issued to the designated Roth IRA 
        custodian shall be credited to a single Roth IRA established 
        through the R-Bond Program on behalf of a participant.
            (4) Reissue in case of change in custodian.--If a successor 
        designated Roth IRA custodian is designated under subsection 
        (b)(4), the retirement savings bonds issued to the predecessor 
        designated Roth IRA custodian shall be reissued to such 
        successor.
    (d) Roth IRA.--For purposes of this section, the term ``Roth IRA'' 
has the meaning given such term by section 408A(b) of the Internal 
Revenue Code of 1986.

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) Guidance.--Not later than December 31, 2021, the Secretary of 
the Treasury (or the Secretary's delegate) shall issue guidance on the 
implementation and administration of the amendments made by section 2 
of this Act.
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