401Kids Savings Account Act of 2024

Bill: 118-hr-7162
Sponsor: full_name: Rep. Beyer, Donald S., Jr. [D-VA-8]
Introduced: 2024-01-31
Policy area: Taxation
Latest action: action_date: 2024-12-17
text: Referred to the Subcommittee on Work and Welfare.

Summaries:
action_date: 2024-01-31
action_desc: Introduced in House
text: <p><strong>401Kids Savings Account Act of 2024</strong></p><p>This bill establishes tax-exempt savings accounts for children who have not attained age 18 to be known as the 401Kids Account Program. Contributions to such accounts may not exceed $2,500 in a calendar year (adjusted for inflation). Accounts may pay expenses related to education, starting a small business, buying a residence, or promoting retirement security.&nbsp;</p><p>The Department of the Treasury must establish a permanent program, not later than December 31, 2024, to be known as the Federal 401Kids Account Program.&nbsp;</p><p>The bill authorizes disclosure of taxpayer information for administering the program. It also disregards account funds for purposes of determining eligibility for certain federal assistance programs.&nbsp;</p>

tv_txt: I 118th CONGRESS 2d Session H. R. 7162 IN THE HOUSE OF REPRESENTATIVES January 31, 2024 Mr. Beyer (for himself, Ms. DelBene , Mrs. Beatty , Ms. Norton , Ms. Sánchez , Mr. Thanedar , Ms. Kamlager-Dove , Mr. Davis of Illinois , and Mr. Blumenauer ) introduced the following bill; which was referred to the Committee on Ways and Means , and in addition to the Committee on Energy and Commerce , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To create children’s lifetime savings accounts, and for other purposes.

1. Short title This Act may be cited as the 401Kids Savings Account Act of 2024 . 2. 401Kids Account Programs (a) In general Section 529 of the Internal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: (f) 401Kids Account Programs (1) In general A qualified tuition program shall not be treated as failing to meet the requirements of this section solely because such program includes a 401Kids Account Program. (2) 401Kids Account Program For purposes of this section— (A) In general The term 401Kids Account Program means a program established and maintained by a State or agency or instrumentality thereof which— (i) establishes a savings account (referred to in this subsection as a 401Kids Savings Account ) which meets the requirements of this subsection on behalf of every eligible individual as of the later of— (I) birth or naturalization, or (II) establishment of the program under this section, including eligible individuals who are in foster care, in coordination with the applicable State agency, and notifies such individuals of the establishment of such accounts, (ii) requires the assets of each 401Kids Savings Account established under the program to be held by a person designated by the State or agency or instrumentality, (iii) within the limitations of paragraph (3), permits contributions to be made periodically to such 401Kids Savings Accounts by direct deposit through payroll deduction or by electronic means, and by methods that provide access for people with limited access to the financial system, (iv) provides for the annual deposit under section 3(b)(4) of the 401Kids Savings Account Act of 2024 and the matching contributions under section 3(b)(5) of such Act to be made to such 401Kids Savings Accounts, if applicable, (v) permits distributions and rollovers from such 401Kids Savings Accounts as provided in paragraph (4), (vi) except as provided in the second sentence of this subparagraph, prohibits multiple accounts from being established for the same individual, and includes— (I) procedures to consolidate multiple accounts established for the same individual and return excess contributions on an annual basis, with notice provided to the parent or guardian of the individual (or, if appropriate, to the individual) and a procedure for resolution of disputes, and (II) procedures by which all accounts established are reported to the Secretary to ensure compliance with this clause, (vii) permits, not less frequently than once per year, for an account to be moved from one State program to another or between a State program and the Federal 401Kids Account Program, and (viii) ensures that such 401Kids Savings Accounts are invested in accordance with prudent investment strategies which are in the best interest of eligible individuals. (B) Collective account For purposes of subparagraph (A), a State may establish a collective account for all eligible individuals in the State which is owned by the State, but only if— (i) the State program provides for separate accounting for each such individual, (ii) allows such account to receive contributions described in subparagraph (A)(iv), and (iii) if such account does not permit contributions by persons other than the State or the Secretary, permits for the establishment of a linked account under the program which accepts contributions by such other persons as provided in subparagraph (A)(iii) and which is aggregated for purposes of any limitation under this section with the amounts credited to the eligible individual in the State collective account. (C) Certification A program of a State shall not be treated as a 401Kids Account Program unless such program is certified by the Secretary as meeting the requirements of this subsection. (3) Limitations (A) Contribution minimum A 401Kids Account Program may establish minimum amounts for initial and additional contributions to a 401Kids Savings Account, not to exceed $10. (B) Contribution limitation (i) In general Contributions to a 401Kids Savings Account under a 401Kids Account Program during any taxable year (other than contributions made under section 3(b)(4) or 3(b)(5) of the 401Kids Savings Account Act of 2024 ) shall not be accepted to the extent such contributions exceed $2,500. (ii) Inflation adjustment In the case of any calendar year after 2024, the $2,500 amount in clause (i) 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) for the calendar year, determined by substituting calendar year 2023 for calendar year 2016 in subparagraph (A)(ii) thereof. If any dollar amount as increased under the preceding sentence is not a multiple of $5, such dollar amount shall be rounded to the nearest multiple of $5. (C) Limitation on participation Within a reasonable amount of time before the date an eligible individual attains age 17, the program shall provide notice to the eligible individual and the parent or guardian of the eligible individual that— (i) no deposits under paragraph (4) or (5) of section 3(b) of the 401Kids Savings Account Act of 2024 will be made for calendar years after the year in which the individual attains age 18, (ii) any contributions made by any person after the date the individual attains age 18 will be taken into account as provided in subparagraph (F), and (iii) the individual may elect to have the account balance rolled over or distributed as provided, and at the time specified, in paragraph (4). (D) State contributions The State establishing or maintaining a 401Kids Account Program may make contributions under such program to accounts established or maintained thereunder. Such contributions— (i) shall not be taken into account for purposes of subparagraph (B), and (ii) may be limited to eligible individuals residing in the State at the time the contribution is made. (E) Coordination with amounts contributed for qualified higher education expenses (i) In general Contributions to a qualified tuition program which are not contributed to a 401Kids Account Program shall not be taken into account under subparagraph (B), and contributions to a 401Kids Account Program shall not be taken into account for purposes of subsection (b)(6). (ii) Transfers from qualified tuition program Amounts contributed to a qualified tuition program (other than to a 401Kids Account Program which is part of such qualified tuition program) may be transferred to a 401Kids Savings Account established under a 401Kids Account Program on behalf of the designated beneficiary, subject to the limitation of subparagraph (B). For purposes of such limitation, any such transfer in a taxable year shall be aggregated with any other contributions to such 401Kids Account program (other than contributions made under section 3(b)(4) or 3(b)(5) of the 401Kids Savings Account Act of 2024 ). (F) Amounts contributed after age 18 Any contribution by any person to a 401Kids Savings Account after the date the individual on whose behalf the account is established attains age 18 shall be treated for purposes of section 408A(c)(2) as a contribution to a Roth IRA maintained for the benefit of the individual, and no such contribution shall be accepted to the extent such contribution, when aggregated with all contributions for the taxable year to all Roth IRAs maintained for the benefit of the individual, exceeds the limitation of section 408A(c)(2). (4) Distributions (A) In general Amounts in a 401Kids Savings Account under a 401Kids Account Program— (i) if such amounts are held in a collective account owned by the State, may be rolled over into a linked account under the program which accepts contributions by persons other than the State, or merged with such an account previously established, after the date the individual on whose behalf the account was established attains age 18 (or earlier as permitted by the State program), and (ii) after the date the individual on whose behalf the account was established attains age 18, may be— (I) distributed to such individual in cash, (II) transferred directly to an eligible educational institution, mortgagee, lender, or guarantor with respect to an expense described in subparagraph (E)(i), or (III) contributed in a direct transfer to an ABLE account (as defined in section 529A(e)(6)) or a Roth IRA of the individual, and (iii) if the individual whose behalf the account was established does not elect to receive any such distribution, shall remain in the account. (B) Treatment of distributions No amount shall be includible in gross income under subsection (c)(3)(A) by reason of any cash distribution from an account under a 401Kids Account Program which is made after the date the individual on whose behalf such account was established attains age 18, to the extent such distribution does not exceed the qualified expenses of the individual which are paid or incurred during the taxable year of the distribution. (C) Treatment of rollovers (i) ABLE accounts Any contribution from a 401Kids Account Program to an ABLE account pursuant to subparagraph (A)(ii)(III) shall be treated— (I) as a contribution from another ABLE account as described in section 529A(c)(1)(C)(i), and (II) as having been contributed to such ABLE account in a direct trustee-to-trustee transfer within 60 days of the distribution for purposes of such section. (ii) Roth IRAs Any contribution from a 401Kids Account Program to a Roth IRA pursuant to subparagraph (A)(ii)(III) shall be treated— (I) as a contribution from another Roth IRA as described in section 408A(e)(1)(A), and (II) as having been contributed to such Roth IRA in a direct trustee-to-trustee transfer within 60 days of the distribution for purposes of section 408(d)(3), and shall not be taken into account under subsection (c)(3)(E). (D) Additional tax on nonqualified use (i) In general The tax imposed by this chapter for the taxable year shall be increased by an amount equal to 10 percent of the amount of any distribution from an account under a 401Kids Account Program during the taxable year which is not described in subparagraph (A)(i), (A)(ii)(II), (A)(ii)(III), or (B). (ii) Distributions from Roth IRA If any amount is contributed to a Roth IRA in a rollover distribution from an account under a 401Kids Account Program pursuant to subparagraph (A)(ii)(III), the tax imposed by this title for the taxable year shall be increased by an amount equal to 10 percent of the amount of any distribution from such Roth IRA which is made within the 5-year period beginning on the date of the rollover— (I) to the extent that such distribution from the Roth IRA, when aggregated with all other distributions from such Roth IRA during such 5-year period, does not exceed the amount contributed in such rollover distribution, and (II) unless the qualified expenses of the individual on whose behalf the account was established paid or incurred during the taxable year of the distribution are equal to or exceed the amount of such distribution. (iii) Coordination rule Subsection (c)(6) shall not apply to any amount with respect to which a tax is imposed under clause (i) or (ii). (iv) Federal 401Kids Account Program (I) In general The tax imposed by this chapter for the taxable year shall be increased by an amount equal to 10 percent of the amount of any distribution during the taxable year from an account under the Federal 401Kids Account Program established by section 3 of the 401Kids Savings Account Act of 2024 which is not described in subsection (c)(1)(A)(ii), (c)(1)(A)(iii), or (c)(2)(A) of section 3 of such Act. (II) Distributions from Roth IRA The tax imposed by clause (ii) shall apply to a rollover distribution from an account under the Federal 401Kids Account program pursuant to section 3(c)(1)(A)(iii) of the 401Kids Savings Account Act of 2024 in the same manner as a rollover distribution from an account under a 401Kids Account Program pursuant to subparagraph (A)(ii)(III). (E) Qualified expenses For purposes of this paragraph— (i) In general The term qualified expenses means amounts paid or incurred by an individual— (I) as payment or collateral required for a loan guaranteed by the Small Business Administration or the United States Department of Agriculture Rural Development or other small business loan as determined by the Secretary, pursuant to the rules determined under clause (iii), (II) as qualified acquisition costs (as defined in section 72(t)(8)(C)) with respect to a residence intended to be the primary residence of the individual, (III) for qualified higher education expenses of the individual at an eligible educational institution, or for other post-secondary educational expenses in an accredited degree-granting program or expenses for obtaining a trade certificate, as provided by the Secretary in consultation with the Secretary of Education, or (IV) after the date the individual on whose behalf the account was established attains age 59½, for any purpose. (ii) Certification Except in the case of qualified expenses described in clause (i)(IV), the individual shall certify on the return of tax, in such manner as the Secretary shall prescribe, the qualified expenses paid or incurred by the individual during the taxable year. (iii) Small business loans The Secretary shall prescribe rules or other guidance, or shall certify a process, for determining whether a loan shall be taken into account under clause (i)(I). (5) Eligible individual For purposes of this subsection— (A) In general The term eligible individual means a child who has not attained age 18 and is a citizen of the United States. (B) Treatment as designated beneficiary The rules of subsections (a) through (e) shall be applied (except as otherwise provided in this subsection) by treating the eligible individual on whose behalf a 401Kids Savings Account under a 401Kids Account Program is established as the designated beneficiary with respect to such account. (6) State For purposes of this subsection, the term State includes the District of Columbia, any possession of the United States, and any Indian tribe (as defined in section 45A(c)(6)). (7) Accounts may not be assigned An account established on behalf of an individual under a 401Kids Account Program may not be pledged or assigned to any other person. (8) Third-party contractors A State may contract with a third party for purposes of administration of a 401Kids Account Program, including record keeping and account investment. (9) Account management (A) In general Except as provided in subparagraph (B)— (i) the eligible individual on whose behalf a 401Kids Savings Account under a 401Kids Account Program is established, after the date the individual attains age 18, shall have sole discretion over the distribution of amounts in the account, and (ii) in the case of an account not owned and controlled by a State, such eligible individual, after the date the individual attains age 18, and the parent or guardian of such individual before such date, may exercise control over the investment of account assets other than amounts attributable to deposits under paragraph (4) or (5) of section 3(b) of the 401Kids Savings Account Act of 2024 (including any gain or loss attributable thereto). (B) Death of account beneficiary In the event the individual on whose behalf a 401Kids Savings Account under a 401Kids Account Program is established dies before attaining age 18— (i) any amounts attributable to deposits under paragraph (4) or (5) of section 3(b) of the 401Kids Savings Account Act of 2024 (including any gain or loss attributable thereto) shall be returned to the Treasury, and (ii) the successor owner or beneficiary of the account shall withdraw all amounts not returned under subparagraph (A) not later than the last day of the calendar year after the calendar year in which the death occurs. Amounts withdrawn pursuant to this subparagraph shall not be included in gross income of the deceased individual or the successor owner or beneficiary to the extent such amounts are attributable to contributions to the account (and not to gain attributable thereto). . (b) Conforming amendments (1) Reports Paragraph (1) of section 529(d) of the Internal Revenue Code of 1986 is amended by inserting , including a 401Kids Account Program under such qualified tuition program, after the qualified tuition program . (2) Reports regarding rollover distributions Paragraph (2) of section 529(d) of such Code is amended— (A) by striking subsection (c)(3)(E) and inserting subsection (c)(3)(E) or (f)(4)(C) , (B) by striking Roth IRA and inserting Roth IRA or ABLE account , (C) by striking the qualified tuition program and inserting the qualified tuition program or 401Kids Account Program , and (D) by striking subsection (c)(3)(A) and inserting subsection (c)(3)(E) or (f)(4)(C) . (3) Qualified use Clause (i) of section 529(c)(3)(C) of such Code is amended— (A) by striking or at the end of subclause (II), (B) by redesignating subclause (III) as subclause (IV), (C) by inserting after subclause (II) the following new subclause: (III) to a 401Kids Savings Account under a 401Kids Account Program established on behalf of the designated beneficiary under subsection (f) or section 3 of the 401Kids Savings Account Act of 2024 , or , and (D) by striking Subclause (III) shall not apply in the second sentence and inserting Subclause (III) shall not apply to so much of a distribution which, when aggregated with other contributions as provided in subsection (f)(3)(E)(ii), exceeds the limitation under subsection (f)(3)(B). Subclause (IV) shall not apply . (c) Effective date (1) In general The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (2) Existing programs A qualified tuition program (as defined in section 529 of the Internal Revenue Code of 1986) of a State which includes a savings account program shall be treated for taxable years beginning after the date of the enactment of this Act as meeting the requirements of section 529(f) of the Internal Revenue Code of 1986, as added by this Act, if such qualified tuition program (as amended, if necessary) meets such requirements for the first taxable year beginning more than 1 year after such date of enactment. (d) Regulations The Secretary of the Treasury (or such Secretary's delegate) shall issue such regulations or other guidance as is necessary to implement State 401Kids Account Programs, including guidance— (1) regarding the personally identifying information which is necessary for States to establish accounts on behalf of individuals born in the State, (2) for informing individuals of accounts established on their behalf, and (3) for processing accounts of deceased individuals and returning Federal contributions to the Treasury pursuant to section 529(f)(9)(B) of the Internal Revenue Code of 1986. 3. Establishment of Federal 401Kids Account Program (a) Establishment of program The Secretary of the Treasury shall, not later than December 31, 2024, establish a permanent program, to be known as the Federal 401Kids Account Program , which meets the requirements of this section to— (1) establish and maintain a savings account (referred to in this section as a 401Kids Savings Account ) meeting the requirements of subsections (b) and (c) on behalf of eligible individuals whose State does not maintain a 401Kids Account Program pursuant to section 529(f) of the Internal Revenue Code of 1986, and (2) make contributions pursuant to paragraphs (4) and (5) on behalf of eligible individuals to such 401Kids Savings Accounts and to accounts under any such State 401Kids Account Program. (b) Program specifications (1) In general (A) 401Kids Savings Accounts The Federal 401Kids Account Program established under this section shall— (i) establish on behalf of each eligible individual whose State does not maintain a 401Kids Account Program pursuant to section 529(f) of the Internal Revenue Code of 1986 a 401Kids Savings Account which meets the requirements of this subsection and subsection (c) on behalf of the individual as of 1 year after the later of— (I) birth or naturalization; or (II) establishment of the program under this section; and notify such individuals of the establishment of such accounts; (ii) require the assets of each 401Kids Savings Account established under the program to be held by the designated custodian; (iii) within the limitations of paragraph (3), permit contributions to be made periodically to such 401Kids Savings Accounts by direct deposit through payroll deduction or by electronic means, and by methods that provide access for people with limited access to the financial system; (iv) provide for the annual deposit under paragraph (4) and the matching contributions under paragraph (5) to be made to such 401Kids Savings Accounts, and to 401Kids Savings Accounts under such 401Kids Account Programs established and maintained by States, if applicable; (v) as provided in subsection (c), permit distributions and rollovers from such 401Kids Savings Accounts after the individual on whose behalf the account is established attains age 18; (vi) include procedures to consolidate multiple accounts established for the same individual, including across States, and return excess contributions on an annual basis, with notice provided to the parent or guardian of the individual (or, if appropriate, to the individual) and a procedure for resolution of disputes; (vii) permit, not less frequently than once per year, for an account to be moved between a State program and the Federal 401Kids Account Program; and (viii) ensure that such 401Kids Savings Accounts are invested in accordance with subsection (e). (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 Federal 401Kids Account Program, and are consistent with this section and section 529(f) of the Internal Revenue Code of 1986, including— (i) rules regarding the provision of periodic notices to individuals and parents or guardians of individuals, as appropriate, on whose behalf accounts are established under the program, including information on account balances and activity; (ii) rules for making the deposit under paragraph (4)(A) in the case of taxpayers who are not required to file an income tax return; (iii) rules for recapture of improperly made deposits under paragraphs (4) and (5); and (iv) rules regarding beneficiary designation in the case of the death of the individual on whose behalf an account was established. (2) Program for deposits made with Federal partners The Secretary of the Treasury may, in fulfillment of subparagraph (A)(iii), establish a program which would allow grocery stores, pharmacies, banks, and other similar businesses to partner with the Federal Government to accept cash deposits from customers and to remit such deposits to the Treasury for payment into 401Kids Savings Accounts under the Federal 401Kids Account Program. (3) Limitations (A) Contribution minimum The Secretary of the Treasury may establish minimum amounts for initial and additional contributions to a 401Kids Savings Account under the Federal 401Kids Account Program, not to exceed $10. (B) Contribution limitation Contributions to a 401Kids Savings Account under the Federal 401Kids Account Program during any taxable year (other than contributions made under paragraphs (4) and (5)) shall not be accepted to the extent such contributions exceed $2,500. (C) Limitation on participation Within a reasonable amount of time before the date an eligible individual attains age 17, the designated custodian shall provide notice to the eligible individual and the parent or guardian of the eligible individual that— (i) no deposits under paragraph (4) or (5) will be made for calendar years after the year in which the individual attains age 18; (ii) any contributions made by any person after the date the individual attains age 18 will be taken into account as provided in section 529(f)(3)(F) of the Internal Revenue Code of 1986, and (iii) the individual (or, as provided, the individual's parent or guardian) may elect to have the account balance rolled over or distributed as provided, and at the time specified, in subsection (c). (4) Annual deposit (A) In general (i) Annual amount Within a reasonable amount of time (not to exceed 60 days) after the filing of the return of tax for each taxable year by a taxpayer claiming an eligible individual as a dependent, the Secretary of the Treasury shall deposit $500 into the 401Kids Savings Account established for such individual under the Federal 401Kids Account Program or a 401Kids Account Program established and maintained by a State. (ii) Additional amount for earned income credit eligible families If a credit is allowable under section 32 of the Internal Revenue Code of 1986 to the parent or guardian or an eligible individual for a taxable year, clause (i) shall be applied by substituting $750 for $500 . (B) Phaseout In the case of a taxpayer to whom subparagraph (A)(ii) does not apply, the $500 amount under subparagraph (A)(i) shall be reduced (but not below zero) by $10 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income for the taxable year exceeds $75,000 ($150,000 in the case of a joint return). (C) Married couples must file joint return If the taxpayer is married at the close of the taxable year, subparagraph (A) shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year. (D) Deposit on behalf of children in foster care At an appropriate time each year as determined by the Secretary of the Treasury in coordination with the Administration for Children and Families, such Secretary shall deposit $750 into the 401Kids Savings Account established under the Federal 401Kids Account Program or a 401Kids Account Program established and maintained by a State for any eligible individual in foster care, in any State, with respect to whom no deposit was made for such year under subparagraph (A). (5) Matching contributions for earned income credit eligible families If a credit is allowable under section 32 of the Internal Revenue Code of 1986 to the parent or guardian or an eligible individual for a taxable year, the Secretary of the Treasury shall deposit, at the same time as the annual deposit under paragraph (4)(A), into the 401Kids Savings Account established for such eligible individual under the Federal 401Kids Account Program or a 401Kids Account Program established and maintained by a State an amount equal to so much of the contributions made by the parent or guardian of the eligible individual to such account during the preceding taxable year as does not exceed $250. Such deposit shall be made in addition to the deposit under paragraph (4). (6) Designated custodian For purposes of this section, the designated custodian is the person designated by the Secretary of the Treasury to act as custodian of the 401Kids Savings Accounts established on behalf of participants in the Federal 401Kids Account Program. (7) Inflation adjustments (A) In general In the case of any calendar year after 2024, the $2,500 amount in paragraph (3)(B), the $500 amount in paragraphs (4)(A), (4)(B), and (4)(D), the $750 amount in paragraphs (4)(A) and (4)(D), and the $250 amount in paragraph (5) shall each 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 2023 for calendar year 2016 in subparagraph (A)(ii) thereof. (B) Rounding If any dollar amount increased under subparagraph (A) is not a multiple of $5, such dollar amount shall be rounded to the nearest multiple of $5. (8) Accounts may not be assigned An account established on behalf of an individual under the Federal 401Kids Account Program may not be pledged or assigned to any other person. (9) Modified adjusted gross income For purposes of this subsection, the term modified adjusted gross income means adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986) increased by— (A) any amount excluded from gross income under section 911 of such Code, (B) any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, and (C) an amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86(d) of such Code) which is not included in gross income under such section 86 for the taxable year. (c) Distributions from 401Kids Savings Account (1) In general Amounts in a 401Kids Savings Account under the Federal 401Kids Account Program— (A) after the date the individual on whose behalf the account was established attains age 18, may be— (i) distributed to such individual in cash, (ii) transferred directly to an eligible educational institution, mortgagee, lender, or guarantor with respect to an expense described in section 529(f)(4)(E)(i) of the Internal Revenue Code of 1986, or (iii) contributed in a direct transfer to an ABLE account (as defined in section 529A(e)(6) of the Internal Revenue Code of 1986) or a Roth IRA (as defined in section 408A of such Code) of the individual, and (B) if the individual whose behalf the account was established does not elect to receive any such distribution, shall remain in the account. (2) Treatment of distributions (A) In general No amount shall be includible in gross income for purposes of the Internal Revenue Code of 1986 by reason of any cash distribution from an account under the Federal 401Kids Account Program which is made after the date the individual on whose behalf such account was established attains age 18, to the extent such distribution does not exceed the qualified expenses of the individual (as defined in section 529(f)(4)(E) of such Code) which are paid or incurred during the taxable year of the distribution. (B) Treatment of rollovers The rules of section 529(f)(4)(C) of such Code shall apply in the case of a rollover distribution described in paragraph (1)(A)(iii). (d) Eligible individual For purposes of this section, with respect to any calendar year, the term eligible individual means a child who has not attained age 18 as of the last day of such calendar year and is a citizen of the United States. (e) Investment of account assets The Secretary of the Treasury shall ensure that amounts in the Federal 401Kids Account Program are invested so as to maximize returns over the first 18 years of the life of an eligible individual on whose behalf a 401Kids Savings Account is established under such program, and shall reevaluate the investment of such amounts after an eligible individual attains age 18 to ensure amounts are available and growing for uses later in the individual's life. The Secretary of the Treasury may, in the Secretary's discretion, permit some or all eligible individuals to exercise control over the investment of account assets other than amounts attributable to deposits under paragraph (4) or (5) of subsection (b) (including any gain or loss attributable thereto). (f) Reports (1) In general The designated custodian shall make such reports regarding the Federal 401Kids Account Program to the Secretary of the Treasury and to individuals on whose behalf accounts are established under such program with respect to contributions, distributions, and such other matters as the Secretary of the Treasury may require. The reports required by this paragraph shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the Secretary of the Treasury. (2) Rollover distributions In the case of any distribution described in subsection (c)(1)(A)(iii), the designated custodian shall provide a report to the trustee of the Roth IRA or ABLE account to which the distribution is made. Such report shall be filed at such time and in such manner as the Secretary of the Treasury may require and shall include information with respect to the contributions, distributions, and earnings of the account under the Federal 401Kids Account program as of the date of the distribution described in subsection (c)(1)(A)(iii), together with such other matters as the Secretary of the Treasury may require. 4. Treatment of accounts under certain Federal programs (a) Account funds disregarded for purposes of certain other means-Tested Federal programs Notwithstanding any other provision of Federal law that requires consideration of one or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such provision to be provided to or for the benefit of such individual, any amount (including earnings thereon) in an individual's account established under a 401Kids Account Program (as defined in section 529(f) of the Internal Revenue Code of 1986) or the Federal 401Kids Account Program pursuant to section 3, any contributions to such account, and any distribution (or portion thereof) shall be disregarded for such purpose with respect to any period during which such individual maintains, makes contributions to, or receives distributions from such account, except that— (1) a distribution for qualified acquisition costs (within the meaning of section 529(f)(4)(E)(ii) of such Code) shall not be so disregarded; and (2) any amount (including such earnings) in such account shall be considered a resource of the individual to the extent that such amount exceeds $100,000. (b) Suspension of SSI benefits during periods of excessive account funds (1) In general The benefits of an individual under the supplemental security income program under title XVI of the Social Security Act shall not be terminated, but shall be suspended, by reason of excess resources of the individual attributable to an amount in the account of the individual established under a 401Kids Account Program which is not disregarded under subsection (a). (2) No impact on Medicaid eligibility An individual who would be receiving payment of such supplemental security income benefits but for the application of paragraph (1) shall be treated for purposes of title XIX of the Social Security Act as if the individual continued to be receiving payment of such benefits. 5. Disclosure of taxpayer information, etc (a) In general Subsection (l) of section 6103 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (23) Disclosure of return information for purposes of administration of 401Kids Account Programs The Secretary shall disclose to any officer or employee of the Department of the Treasury, as necessary for the administration of the Federal 401Kids Account Program established under section 3(a) of the 401Kids Savings Account Act of 2024 and the requirements of paragraphs (4) and (5) of section 3(b) of such Act, return information relating to taxpayer identity, dependents, adjusted gross income, and whether the taxpayer has claimed the earned income credit under section 32 for the taxable year. . (b) Prohibition of redisclosure Paragraph (3) of section 6103(a) of the Internal Revenue Code of 1986 is amended by striking or (21) and inserting (21), or (23) . (c) Data sharing The Secretary of the Treasury shall enter into an agreement with the Commissioner of Social Security, the Secretary of State, and the Director of the United States Citizenship and Immigration Services to share data regarding births and naturalizations of children under the age of 18 solely for purposes of— (1) establishing accounts under the Federal 401Kids Account Program, and (2) making deposits pursuant to paragraphs (4) and (5) of section 3. (d) Use of social security numbers Section 205(c)(2)(C) of the Social Security Act ( 42 U.S.C. 405(c)(2)(C) ) is amended by adding at the end the following new clause: (xiv) The Secretary of the Treasury, for purposes of the Federal 401Kids Account Program established under section 3(a) of the 401Kids Savings Account Act of 2024 , and any State that elects to establish a 401Kids Account Program pursuant to section 529(f) of the Internal Revenue Code of 1986, are authorized to collect and use the names and social security account numbers of individuals as required to establish and maintain such accounts. . 6. Treasury audit of State programs The Secretary of the Treasury is authorized— (1) to conduct audits of 401Kids Account Programs established pursuant to section 529(f) of the Internal Revenue Code of 1986 by States, and to assume management of any such program as part of the Federal 401Kids Account Program under section 3 in the event that such a program does not meet the requirements of such section 529(f), and (2) to require informational reports from States maintaining such a 401Kids Account Program. 7. State For purposes of this Act, the term State includes the District of Columbia, any possession of the United States, and any Indian tribe (as defined in section 45A(c)(6) of the Internal Revenue Code of 1986). 8. Appropriation There is hereby appropriated to the Secretary of the Treasury, to remain available until spent without fiscal year limitation— (1) $100,000,000 for the implementation and administration of this Act (other than the purposes described in paragraphs (2), (3), and (4)); (2) $30,000,000 for each fiscal year beginning with fiscal year 2024 for the administration of the Federal 401Kids Account Program; (3) such sums as are necessary to assist States in the establishment of a 401 Kids Account Program pursuant to section 529(f) of the Internal Revenue Code of 1986 (according to such procedures as the Secretary shall determine); and (4) such sums as are necessary to make contributions to Federal 401Kids Accounts as required under paragraphs (4) and (5) of section 3(b).