Home > 106th Congressional Bills > S. 1026 (is) To amend title XVIII of the Social Security Act to prevent sudden disruption of medicare beneficiary enrollment in Medicare+Choice plans. [Introduced in Senate] ...

S. 1026 (is) To amend title XVIII of the Social Security Act to prevent sudden disruption of medicare beneficiary enrollment in Medicare+Choice plans. [Introduced in Senate] ...

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  1st Session
                                S. 1025

              To provide for savings for working families.



                             June 13, 2001

 Mr. Lieberman introduced the following bill; which was read twice and 
                  referred to the Committee on Finance


                                 A BILL

              To provide for savings for working families.

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


    This Act may be cited as the ``Savings for Working Families Act of 


    (a) Findings.--Congress makes the following findings:
            (1) For the vast majority of households the pathway to the 
        economic mainstream and financial security is not through 
        spending and consumption, but through saving, investing, and 
        the accumulation of assets. Assets promote economic household 
        stability, decrease economic strain on households, promote 
        educational attainment, decrease marital dissolution, decrease 
        the risk of intergenerational poverty transmission, increase 
        health and satisfaction among adults, increase property values, 
        decrease residential mobility, increase property maintenance, 
        and increase local civic involvement.
            (2) One-third of all Americans have no assets available for 
        investment and another 20 percent have only negligible assets. 
        Assets are distributed far more unevenly than income. Whereas 
        the top 20 percent of American households earn over 43 percent 
        of all income, such households hold over 68 percent of net 
        worth and almost 87 percent of net financial assets. Moreover, 
        asset poverty and wealth gaps are even higher among minority 
        households by a ratio of more than 11 to 1. Up to 20 percent of 
        all households are unbanked and do not have access to the basic 
        financial tools that make asset accumulation possible.
            (3) Public policy has contributed to large asset gaps in 
        the United States. Traditional public assistance programs based 
        on income and consumption have rarely been successful in 
        supporting the transition to economic self-sufficiency. Tax 
        policy, through $288,000,000,000 in annual tax incentives, has 
        helped lay the foundation for the great American middle class, 
        but only for some citizens. Fully 90 percent of such current 
        tax benefits accrue to households earning more than $50,000 per 
        year, roughly half of all American households. Lacking an 
        income tax liability, low-income working families cannot take 
        advantage of asset development incentives. Moreover, low-income 
        families seeking public assistance must first spend down their 
        assets and face severe asset limits once on assistance.
            (4) Individual Development Accounts, or IDAs, have proven 
        to be successful in helping low-income working families save 
        and accumulate assets. In one national demonstration project, 
        2,378 low-income families saved a total of $834,442 in one year 
        which generated another $1,644,510 in private matching funds. 
        Thus far, IDA savings have been used to purchase long-term, 
        high-return assets, including homes, post-secondary education 
        and training, and small businesses. Presently, about 10,000 
        IDAs are in existence in the United States, held by a very 
        small fraction of the at least 70 million Americans who are 
        asset poor.
            (5) Therefore, the Federal Government should support, 
        through the tax code, a significant expansion of Individual 
        Development Accounts so that millions of low-income working 
        families across the country can save, accumulate assets, and 
        move their lives forward, and thus make positive contributions 
        to the economic and social well-being of the United States, as 
        well as to its future.
    (b) Purposes.--The purposes of this Act are to provide for the 
establishment of individual development account programs that will--
            (1) provide individuals and families with limited means an 
        opportunity to accumulate assets and to enter the financial 
            (2) promote education, homeownership, and the development 
        of small businesses;
            (3) stabilize families and build communities; and
            (4) support continued United States economic expansion.


    As used in this Act:
            (1) Eligible individual.--
                    (A) In general.--The term ``eligible individual'' 
                means an individual who--
                            (i) has attained the age of 18 years but 
                        not the age of 61;
                            (ii) is a citizen or legal resident of the 
                        United States;
                            (iii) is not a student (as defined in 
                        section 151(c)(4)); and
                            (iv) is a taxpayer the adjusted gross 
                        income of whom for the preceding taxable year 
                        does not exceed--
                                    (I) $20,000, in the case of a 
                                taxpayer described in section 1(c) or 
                                1(d) of the Internal Revenue Code of 
                                    (II) $25,000, in the case of a 
                                taxpayer described in section 1(b) of 
                                such Code; and
                                    (III) $40,000, in the case of a 
                                taxpayer described in section 1(a) of 
                                such Code.
                    (B) Inflation adjustment.--
                            (i) In general.--In the case of any taxable 
                        year beginning after 2002, each dollar amount 
                        referred to in subparagraph (A)(iv) shall be 
increased by an amount equal to--
                                    (I) such dollar amount, multiplied 
                                    (II) the cost-of-living adjustment 
                                determined under section (1)(f)(3) of 
                                the Internal Revenue Code of 1986 for 
                                the calendar year in which the taxable 
                                year begins, by substituting ``2001'' 
                                for ``1992''.
                            (ii) Rounding.--If any amount as adjusted 
                        under clause (i) is not a multiple of $50, such 
                        amount shall be rounded to the nearest multiple 
                        of $50.
            (2) Individual development account.--The term ``Individual 
        Development Account'' means an account established for an 
        eligible individual as part of a qualified individual 
        development account program, but only if the written governing 
        instrument creating the account meets the following 
                    (A) The sole owner of the account is the individual 
                for whom the account was established.
                    (B) No contribution will be accepted unless it is 
                in cash.
                    (C) The holder of the account is a qualified 
                financial institution.
                    (D) The assets of the account will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    (E) Except as provided in section 7(b), any amount 
                in the account may be paid out only for the purpose of 
                paying the qualified expenses of the account owner.
            (3) Parallel account.--The term ``parallel account'' means 
        a separate, parallel individual or pooled account for all 
        matching funds and earnings dedicated to an Individual 
        Development Account owner as part of a qualified individual 
        development account program, the sole owner of which is a 
        qualified financial institution, a qualified nonprofit 
        organization, or an Indian tribe.
            (4) Qualified financial institution.--
                    (A) In general.--The term ``qualified financial 
                institution'' means any person authorized to be a 
                trustee of any individual retirement account under 
                section 408(a)(2) of the Internal Revenue Code of 1986.
                    (B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing a person 
                described in subparagraph (A) from collaborating with 1 
                or more contractual affiliates, qualified nonprofit 
                organizations, or Indian tribes to carry out an 
                individual development account program established 
                under section 4.
            (5) Qualified nonprofit organization.--The term ``qualified 
        nonprofit organization'' means--
                    (A) any organization described in section 501(c)(3) 
                of the Internal Revenue Code of 1986 and exempt from 
                taxation under section 501(a) of such Code;
                    (B) any community development financial institution 
                certified by the Community Development Financial 
                Institution Fund; or
                    (C) any credit union chartered under Federal or 
                State law.
            (6) Indian tribe.--The term ``Indian tribe'' means any 
        Indian tribe as defined in section 4(12) of the Native American 
        Housing Assistance and Self-Determination Act of 1996 (25 
        U.S.C. 4103(12), and includes any tribal subsidiary, 
        subdivision, or other wholly owned tribal entity.
            (7) Qualified individual development account program.--The 
        term ``qualified individual development account program'' means 
        a program established under section 4 under which--
                    (A) Individual Development Accounts and parallel 
                accounts are held by a qualified financial institution; 
                    (B) additional activities determined by the 
                Secretary as necessary to responsibly develop and 
                administer accounts, including recruiting, providing 
                financial education and other training to account 
                owners, and regular program monitoring, are carried out 
                by the qualified financial institution, a qualified 
                nonprofit organization, or an Indian tribe.
            (8) Qualified expense distribution.--
                    (A) In general.--The term ``qualified expense 
                distribution'' means any amount paid (including through 
                electronic payments) or distributed out of an 
                Individual Development Account and a parallel account 
                established for an eligible individual if such amount--
                            (i) is used exclusively to pay the 
                        qualified expenses of the Individual 
                        Development Account owner or such owner's 
                        spouse or dependents, as approved by the 
                        qualified financial institution, qualified 
                        nonprofit organization, or Indian tribe;
                            (ii) is paid by the qualified financial 
                        institution, qualified nonprofit organization, 
                        or Indian tribe--
                                    (I) except as otherwise provided in 
                                this clause, directly to the unrelated 
                                third party to whom the amount is due;
                                    (II) in the case of distributions 
                                for working capital under a qualified 
                                business plan (as defined in 
                                subparagraph (B)(iv)(IV)), directly to 
                                the account owner;
                                    (III) in the case of any qualified 
                                rollover, directly to another 
                                Individual Development Account and 
                                parallel account; or
                                    (IV) in the case of a qualified 
                                final distribution, directly to the 
                                spouse, dependent, or other 
named beneficiary of the deceased account owner; and
                            (iii) is paid after the account owner has 
                        completed a financial education course as 
                        required under section 5(b).
                    (B) Qualified expenses.--
                            (i) In general.--The term ``qualified 
                        expenses'' means any of the following:
                                    (I) Qualified higher education 
                                    (II) Qualified first-time homebuyer 
                                    (III) Qualified business 
                                capitalization or expansion costs.
                                    (IV) Qualified rollovers.
                                    (V) Qualified final distribution.
                            (ii) Qualified higher education expenses.--
                                    (I) In general.--The term 
                                ``qualified higher education expenses'' 
                                has the meaning given such term by 
                                section 72(t)(7) of the Internal 
                                Revenue Code of 1986, determined by 
                                treating postsecondary vocational 
                                educational schools as eligible 
                                educational institutions.
                                    (II) Postsecondary vocational 
                                education school.--The term 
                                ``postsecondary vocational educational 
                                school'' means an area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined in 
                                section 521(33) of such Act), as such 
                                sections are in effect on the date of 
                                the enactment of this Act.
                                    (III) Coordination with other 
                                benefits.--The amount of qualified 
                                higher education expenses for any 
                                taxable year shall be reduced as 
                                provided in section 25A(g)(2) of the 
                                Internal Revenue Code of 1986 and may 
                                not be taken into account for purposes 
                                of determining qualified higher 
                                education expenses under section 135, 
                                529, or 530 of such Code.
                            (iii) Qualified first-time homebuyer 
                        costs.--The term ``qualified first-time 
                        homebuyer costs'' means qualified acquisition 
                        costs (as defined in section 72(t)(8) of such 
                        Code without regard to subparagraph (B) 
                        thereof) with respect to a principal residence 
                        (within the meaning of section 121 of such 
                        Code) for a qualified first-time homebuyer (as 
                        defined in section 72(t)(8) of such Code).
                            (iv) Qualified business capitalization or 
                        expansion costs.--
                                    (I) In general.--The term 

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