Chairman Crowley, Congressman Ellison Introduce Legislation to Help Hardworking Americans Save for their Children’s Future
(Washington, D.C.) – This week, House Democratic Caucus Chairman Joe Crowley (D-NY) and Rep. Keith Ellison (D-MN) will re-introduce theUSAccounts: Investing in America’s Future Act to help hard-working Americans save for their children’s future.
The USAccounts: Investing in America’s Future Act will create USAccounts, a long-term savings account to help every American child start their financial future on the right foot.
“All American families, regardless of their economic situation, deserve an opportunity to develop savings for their children that will positively impact the rest of their lives,” said Chairman Crowley. “Having assets can make a big difference, and the USAccounts: Investing in America’s Future Act will help our nation’s families by giving them the availability they desperately need, while also promoting saving habits, financial literacy, and education.”
“Wages for working Americans have remained stagnant for decades while the basic cost of living and raising a family have skyrocketed. Instead of saving and building toward a prosperous future, too many families are forced to live paycheck to paycheck,” said Congressman Ellison. “The USAccounts savings program will open the door to success for millions of young people, and put us on the path to an economy that works for everyone.”
“We know that Children’s Savings Accounts can transform children’s lives by helping their dreams of college become a reality. The USAccounts Act will help the 4 million children born every year save for higher education, building a better future for all Americans,” said Andrea Levere, President of Prosperity Now.
The legislation directs the U.S. Department of the Treasury to create the savings program, which will be funded through a combination of federal seed money, matching funds, and family contributions. Upon the birth of a child, a USAccount will be established in the child’s name, and the federal government will contribute $500 in seed money the first year. The child’s family will be allowed to deposit up to $2,000 into the account annually. For families at the lowest income levels, these contributions will be matched dollar-for-dollar by the government up to $500 per USAccount, per year. In addition, to aid families who want to save but have trouble getting started, the legislation includes another match through the Child Tax Credit. Families who are eligible for either the Child Tax Credit or the Additional Child Tax Credit and make a contribution to their child’s account will receive up to $500 annually per account.
While USAccounts will be established through the Treasury Department, parents will have the option of keeping the account within the government or moving it to an approved financial services institution. Contributions in these accounts can later be withdrawn tax-free to fund higher education. Once the child is no longer a dependent, the funds will be rolled over to an IRA, providing an opportunity to continue to save for retirement, or to access funds penalty- and tax-free when needed to pay for medical expenses, buy a home, or start a small business.
Based on legislation first introduced by Chairman Crowley and Rep. Keith Ellison in 2014, the funds in the account will invest in U.S. treasuries, ensuring a safe investment that won’t go down in value. Additionally, this legislation improves the Internal Revenue Service outreach on the Earned Income Tax Credit (EITC), by requiring the IRS, when processing tax returns, to determine which taxpayers are owed the EITC but are not claiming it.