U.S. Rep. Joseph Crowley (D-Jackson Heights) recently announced a plan to help American families build savings for their future. Crowley’s legislation will create a new long-term savings account for every American child, helping to create a culture of saving and investment from their earliest days. The bill also authorizes an expansion of the successful Child Tax Credit, giving low-income families the opportunity to contribute to the savings account.
Crowley’s legislation will create a new savings program called USAccounts, to be established by the Social Security Administration (SSA). USAccounts 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 initial seed money the first year. The child’s family will be allowed to deposit up to $2,000 into the account annually and the government would provide dollar-for-dollar matching funds to a maximum annual match of $500 per account, per year.
The bill authorizes an increase of the refundable Child Tax Credit up to a maximum of $500 annually to give low-income families the opportunity to support a family contribution to the account. While USAccounts will be established through the SSA, parents will have the option of keeping the account within the SSA or moving it to an approved financial services institution.
Once independent, the account holder can access the funds to pay for college, buy a home, or start a small business. The funds can also be rolled over to a 401k, IRA, or traditional private savings account, giving the account holder the opportunity to continue to save for retirement.
“American families are struggling to make ends meet and pay for basic necessities, let alone set aside savings for their children’s futures,” Crowley said. “My legislation will give every American child, regardless of their economic background, the opportunity to start their financial future on the right foot.”