Sec. 4. USAccounts
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The Executive Director shall establish in the USAccount Fund an account (to be known as a USAccount ) for each qualifying child certified under subsection (b). Each such account shall be identified to its account holder by means of a unique personal identifier currently recognized by the Internal Revenue Service and shall remain in the USAccount Fund unless transferred to private management under subsection (g). The balance in an account holder’s USAccount at any time is the excess of— the sum of— all deposits made into the USAccount Fund and credited to the account under paragraph (3), and the total amount of allocations made to and reductions made in the account pursuant to paragraph (4), over the amounts paid out of the account with respect to such individual under subsection (d).
Pursuant to regulations which shall be prescribed by the Executive Director, the Executive Director shall credit to each USAccount the amounts paid into the USAccount Fund under section 3(d) which are attributable to the account holder of such account. The Executive Director shall allocate to each USAccount an amount equal to the net earnings and net losses from each investment of sums in the USAccount Fund which are attributable, on a pro rata basis, to sums credited to such account, reduced by an appropriate share of the administrative expenses paid out of the net earnings, as determined by the Executive Director.
For purposes of this Act— The term qualifying child has the meaning given such term by section 24(c) of the Internal Revenue Code of 1986. On the date on which a qualifying child is registered for a USAccount, the Secretary shall certify to the Executive Director the name of such qualifying child. The Executive Director shall accept cash contributions for payment into the USAccount Fund if such contribution is identified (in such manner as the Executive Director may require) with the account holder of a USAccount to whom it is to be credited at the time the contribution is made.
Under regulations prescribed by the Executive Director and at the election of the employer, contributions under paragraph
(1)may be made through payroll deductions. Under regulations prescribed by the Secretary, contributions under paragraph
(1)may be made by an election to contribute all or a portion of the tax refund of the contributor. No contribution may be accepted under paragraph (1)— unless it is in cash, after the date on which the USAccount holder ceases to be a qualifying child, and except in the case of matching contributions under subsection (d), if such contribution would result in aggregate contributions for the calendar year exceeding $2,000. Upon such showing as the Executive Director may require to establish the basis for certification, the Executive Director shall, with respect to each private contribution to the account of an account holder which is made before such account holder attains age 18, certify to the Secretary the matching amount with respect to such contribution. For purposes of this subsection, the term matching amount means, an amount equal to 100 percent of private contributions to the USAccount of an individual during any calendar year beginning after the calendar year in which the USAccount is established, not in excess of $500 for the calendar year. The $500 in subparagraph
(A)shall be reduced (but not below zero) by an amount equal to the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount. For purposes of this paragraph, terms used in the preceding sentence which are used in section 32 of the Internal Revenue Code of 1986 shall have the meanings given such terms by such section 32. For purposes of this subsection, the term private contribution means a contribution accepted under subsection (c). No amount may be distributed from a USAccount before the date on which the account holder attains the age of 18. Paragraph
(1)shall not apply to amounts paid for qualified tuition and related expenses (as defined in section 25A(f)(1)) of the account holder if the account holder is an eligible student (as defined in section 25A(b)(3)) with respect to such expenses. Distributions from a USAccount after the date on which the account holder attains the age of 18 which, within 60 days of such distribution, are transferred to an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) of the account holder shall be treated as a rollover contribution which meets the requirements of section 408(d)(3) of such Code. On the date on which the account holder attains age 19, the account shall cease to be treated as a USAccount and any remaining funds in the account shall be distributed to the account holder’s retirement savings vehicle established pursuant to the Presidential Memorandum on Retirement Savings Security issued January 28, 2014. Amounts transferred to a savings vehicle under subparagraph
(A)may be distributed from such vehicles during the 10-year period beginning on the date of such transfer without any penalty under the Internal Revenue Code of 1986. Until the account holder of a USAccount attains age 18, any rights or duties of the account holder under this Act with respect to such account shall be exercised or performed by the legal guardian of such account holder. The account holder of a USAccount may elect, under regulations prescribed by the Secretary, to transfer the USAccount to a trustee who meets the requirements of paragraph (2). A trustee meets the requirements of this paragraph if the trustee— is a bank (as defined in section 408(n)) or another person who demonstrates to the satisfaction of the Secretary that the manner in which that person will administer the USAccount will be consistent with the requirements of this Act or who has so demonstrated with respect to any USAccount, agrees to a cap on its fees and costs, as determined by the Treasury, for the management of USAccounts, provides an investment fund that maximizes growth over time while minimizing risk, and provides the safeguards with respect to USAccounts required by the Secretary. For purposes of this subsection, rules similar to the rules of paragraphs (3), (4), and
(5)of section 408 of the Internal Revenue Code of 1986 shall apply. For each calendar year beginning after 2015, the dollar amounts under sections 3(d)(1), 4(c)(3)(C), and 4(d)(2) shall each be increased by such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) of the Internal Revenue Code of 1986 determined by substituting calendar year 2014 for calendar year 1992 in subparagraph
(B)thereof. If any amount adjusted under clause
(i)is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.