Protecting America’s Retirement Security Act of 2022
A BILL
To protect America’s retirement security, and for other purposes.
Sec. 2 Defined contribution plan fee disclosure improvements
Not later than 2 years after the date of enactment of this Act, the Secretary of Labor shall review section 2550.404a-5 of title 29, Code of Federal Regulations, and explore how the content and design of the covered disclosures may be improved to enhance participants’ understanding of fees and expenses as well as the cumulative effect of fees and expenses on retirement savings over time. As part of such review, the Secretary shall conduct outreach to stakeholders, including those representing plan sponsors and retirement plan participants.
Sec. 3 Personal finance education portal
In general— Not later than 3 years after the date of enactment of this Act, the Secretary of Education, in consultation with the Director of the Bureau of Consumer Financial Protection, the Secretary of the Treasury as chair of the Financial Literacy and Education Commission, and the Commissioner of Internal Revenue, shall create a personal finance education portal on a centralized and publicly available website of the Department of Education pertaining to Federal financial aid for voluntary use by recipients of aid awarded under title IV of the Higher Education Act of 1965.
Content of personal finance education portal— The personal finance education portal created under subsection (a) shall include information on personal finance concepts, including the following:
Core personal finance concepts, such as earning, saving, investing, spending, and borrowing, including—
the concept of compound growth as it applies to savings and retirement savings, with information about the different types of retirement savings accounts; and
budgeting and credit usage.
Managing student loan repayment, including—
the interaction between savings and retirement decisions and Federal student loan repayment plans;
Federal student loan discharge or forgiveness options;
the types of voluntary benefits employers may use to help workers while they are paying down student loan debt;
tax credits or deductions that are relevant to student loan borrowers in repayment; and
any other Federal policies that significantly impact student loan borrowers in repayment, as determined by the Secretary.
Any other personal finance concepts determined relevant by the Secretary of Education, in consultation with the Director of the Bureau of Consumer Financial Protection, the Secretary of the Treasury as chair of the Financial Literacy and Education Commission, and the Commissioner of Internal Revenue.
Provision of content— The personal finance content included under subsection (b) may be provided in an interactive format through text or video.
Analytics— The Secretary of Education, in consultation with the Director of the Bureau of Consumer Financial Protection, the Secretary of the Treasury as chair of the Financial Literacy and Education Commission, and the Commissioner of Internal Revenue, shall review not less than once every three years the utilization of the portal, make recommendations to improve the portal, and make such findings and recommendations publicly available.
Authorization of appropriations— There are authorized to be appropriated such sums as may be necessary to carry out this section.
Sec. 4 Increasing spousal protection under defined contribution plans
Amendments to Employee Retirement Income Security Act of 1974—
In general— Part 2 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1051 et seq.) is amended by inserting after section 205 the following new section:
“205A. Additional spousal consent requirements
“(a) In general—Each individual account plan to which section 205 does not apply (but to which this title otherwise applies) shall provide that, except as provided in subsections (c) and (d), no distribution may be made under the plan unless the spousal consent requirements of subsection (e) are met.
“(b) Coordination with section 205—Nothing in this section shall be construed to exempt an individual account plan from the requirements of paragraph (1)(B), (1)(C), or (2) of section 205(b) with respect to any participant.
“(c) Exceptions for certain distributions—Subsection (a) shall not apply to—
“(1) any distribution that is—
“(A) a minimum required distribution described in section 4974(b) of the Internal Revenue Code of 1986; or
“(B) permitted under section 203(e)(1) to be made without the consent of the participant;
“(2) any distribution in the form of a qualified joint and survivor annuity (as defined in section 205(d)(1)), a qualified optional survivor annuity (as defined in section 205(d)(2)), a qualified preretirement survivor annuity (as defined in section 205(e)), or a series of substantially equal periodic payments (not less frequently than annually) made for the joint lives (or life expectancies) of the participant and the participant’s spouse; or
“(3) in the case of a participant who does not elect a form of benefit described in paragraph (2) under the plan or who is participating in a plan that does not provide such a form of benefit, any distribution of the participant’s entire nonforfeitable accrued benefit if 50 percent of such accrued benefit is transferred to an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) of the spouse of the participant.
“(d) Exceptions for certain rollover contributions
“(1) In general—Subsection (a) shall not apply to any distribution that is an eligible rollover distribution (as defined in section 402(f)(2)(A) of the Internal Revenue Code of 1986) made in the form of a direct trustee-to-trustee transfer within the meaning of section 401(a)(31) of the Internal Revenue Code of 1986—
“(A) to a plan to which this section or section 205 applies; or
“(B) to an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986) if—
“(i) the sole beneficiary of such plan is the spouse of the participant, or the spousal consent requirements of subsection (e) are met with respect to any designation of 1 or more other beneficiaries; and
“(ii) under the terms of the individual retirement plan, the beneficiary of such plan (whether the spouse or other beneficiary designated under subparagraph (A)) may not be changed unless—
“(I) the spousal consent requirements of subsection (e) are met with respect to any such change; or
“(II) the spousal consent under clause (i) to the designation of a beneficiary other than the spouse expressly permits such designation to be changed without the further consent of the spouse.
“(2) Regulatory authority—The Secretary of the Treasury and the Secretary of Labor may jointly issue regulations to implement subparagraphs (A) and (B) of paragraph (1).
“(e) Spousal consent requirements
“(1) In general—For purposes of this section, except as provided in paragraph (2), the spousal consent requirements of this subsection are met with respect to any distribution or any designation or change of beneficiary if—
“(A) the plan provides to each participant, within a reasonable period of time before such distribution or designation or change of beneficiary is made and consistent with such regulations as the Secretary of the Treasury may prescribe, a written explanation of the rights of the participant and the participant’s spouse under this section;
“(B) the spouse of the participant consents in writing to the distribution or designation or change of beneficiary;
“(C) in the case of a distribution, the written consent under subparagraph (B) is made during the consent period; and
“(D) the written consent under subparagraph (B)—
“(i) acknowledges the effect of such distribution or designation or change of beneficiary; and
“(ii) is witnessed by a plan representative or a notary public.
“(2) Exceptions—The requirements of paragraph (1) (other than subparagraph (A) thereof) shall not apply with respect to any distribution or designation or change of beneficiary if a participant establishes to the satisfaction of the administrator that—
“(A) there is no spouse;
“(B) the participant and the participant’s spouse have not been married for at least 1 year as of the date of the distribution or designation or change of beneficiary; or
“(C) such consent cannot be obtained because—
“(i) the spouse cannot be located after taking documented search efforts in accordance with guidance from the Secretary of Labor;
“(ii) due to exceptional circumstances, requiring the participant to seek the spouse’s consent would be inappropriate; or
“(iii) of such other circumstances as the Secretary of the Treasury, in consultation with the Secretary of Labor, may by regulations prescribe.
“(3) Consent limited to spouse and event—Any written consent by a spouse under paragraph (1), or the establishment by a participant that an exception under paragraph (2) applies with respect to a spouse, shall be effective only with respect to that spouse and to the distribution or designation or change of beneficiary to which it relates.
“(4) Consent period—For purposes of this subsection, the term “consent period” means, with respect to any distribution—
“(A) the 90-day period immediately preceding the date of such distribution; or
“(B) such other period as the Secretary of the Treasury may provide.
“(f) Discharge of plan from liability—Rules similar to the rules of section 205(c)(6) shall apply for purposes of this section.”
Clerical amendment— The table of sections of part 2 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by inserting after the item relating to section 205 the following new item:
Parallel amendment to section 205— Section 205(c)(2)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)(2)(B)) is amended by inserting “, because due to exceptional circumstances, requiring the participant to seek the spouse’s consent would be inappropriate” after “located”.
Conforming amendment to Internal Revenue Code of 1986— Section 401(a) of the Internal Revenue Code of 1986 is amended by inserting after paragraph (17) the following new paragraph:
“(18) Additional spousal consent requirements
“(A) In general—To the extent paragraph (11) does not apply to a defined contribution plan to which title I of the Employee Retirement Income Security Act of 1974 applies, except as provided in subparagraphs (C) and (D), a trust forming part of such plan shall not constitute a qualified trust under this section unless no distribution may be made under the plan unless the spousal consent requirements of subparagraph (E) are met.
“(B) Coordination with paragraph (11)—Nothing in this paragraph shall be construed to exempt a defined contribution plan from the requirements of subparagraph (B)(ii), (B)(iii), or (C) of paragraph (11) with respect to any participant.
“(C) Exceptions for certain distributions—Subparagraph (A) shall not apply to—
“(i) any distribution that is—
“(I) a minimum required distribution described in section 4974(b), or
“(II) permitted under section 411(a)(11) to be made without the consent of the participant,
“(ii) any distribution in the form of a qualified joint and survivor annuity (as defined in section 417(b)), a qualified optional survivor annuity (as defined in section 417(g)), a qualified preretirement survivor annuity (as defined in section 417(c)), or a series of substantially equal periodic payments (not less frequently than annually) made for the joint lives (or life expectancies) of the participant and the participant’s spouse, or
“(iii) in the case of a participant who does not elect a form of benefit described in clause (ii) under the plan or who is participating in a plan that does not provide such a form of benefit, any distribution of the participant’s entire nonforfeitable accrued benefit if 50 percent of such accrued benefit is directly transferred to an individual retirement plan of the spouse of the participant.
“(D) Exceptions for certain rollover contributions
“(i) In general—Subparagraph (A) shall not apply to any distribution, involving a participant who has a spouse, that is an eligible rollover distribution (as defined in section 402(f)(2)(A)) made in the form of a direct trustee-to-trustee transfer within the meaning of paragraph (31)—
“(I) to a plan to which this paragraph or paragraph (11) applies; or
“(II) to an individual retirement plan if—
“(aa) the sole beneficiary of such plan is the spouse of the participant, or the spousal consent requirements of subparagraph (E) are met with respect to any designation of 1 or more other beneficiaries; and
“(bb) under the terms of the individual retirement plan, the beneficiary of such plan (whether the spouse or other beneficiary designated under clause (i)) may not be changed unless—
“(AA) the spousal consent requirements of subparagraph (E) are met with respect to any such change, or
“(BB) the spousal consent under subclause (I) to the designation of a beneficiary other than the spouse expressly permits such designation to be changed without the further consent of the spouse.
“(ii) Regulatory authority—The Secretary of the Treasury, in consultation with the Secretary of Labor, may issue regulations to implement subparagraphs subclauses (I) and (II) or clause (i).
“(E) Spousal consent requirements
“(i) In general—For purposes of this paragraph, except as provided in clause (ii), the spousal consent requirements of this subparagraph are met with respect to any distribution or any designation or change of beneficiary if—
“(I) the plan provides to each participant, within a reasonable period of time before such distribution or designation or change of beneficiary is made and consistent with such regulations as the Secretary may prescribe, a written explanation of the rights of the participant and the participant’s spouse under this paragraph,
“(II) the spouse of the participant consents in writing to the distribution or designation or change of beneficiary,
“(III) in the case of a distribution, the written consent under subclause (II) is made during the consent period, and
“(IV) the written consent under subclause (ii)—
“(aa) acknowledges the effect of such distribution or designation or change of beneficiary, and
“(bb) is witnessed by a plan representative or a notary public.
“(ii) Exceptions under section 417(a)(2)(b) to apply—The requirements of clause (i) (other than subclause (I) thereof) shall not apply with respect to any distribution or designation or change of beneficiary if a participant establishes to the satisfaction of the administrator that—
“(I) there is no spouse,
“(II) the participant and the participant’s spouse have not been married for at least 1 year as of the date of the distribution or designation or change of beneficiary, or
“(III) such consent cannot be obtained because—
“(aa) the spouse cannot be located after taking documented search efforts in accordance with guidance from the Secretary of Labor;
“(bb) due to exceptional circumstances, requiring the participant to seek the spouse’s consent would be inappropriate; or
“(cc) of such other circumstances as the Secretary, in consultation with the Secretary of Labor, may by regulations prescribe.
“(iii) Consent limited to spouse and event—Any written consent by a spouse under clause (i), or the establishment by a participant that an exception under clause (ii) applies with respect to a spouse, shall be effective only with respect to that spouse and to the distribution or designation or change of beneficiary to which it relates.
“(iv) Consent period—For purposes of this subparagraph, the term “consent period” means, with respect to any distribution—
“(I) the 90-day period immediately preceding the date of such distribution, or
“(II) such other period as the Secretary may provide.”
Sec. 5 Automatic reenrollment
Eligible automatic contribution arrangements—
Amendment to the Employee Retirement Income Security Act of 1974— Section 514(e)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(e)(2)) is amended—
by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and moving the margins of such clauses 2 ems to the right,
by striking “(2) For purposes of” and inserting “(2)(A) For purposes of”, and
by adding at the end the following:
“(B) In the case of an automatic contribution arrangement taking effect after December 31, 2024, the requirements of subparagraph (A)(ii) shall be treated as met only if, under the arrangement, at least every 3 years each employee—
“(i) who is eligible to participate in the arrangement, and
“(ii) who, at the time of the determination, has in effect an affirmative election pursuant to subparagraph (A)(ii) not to have contributions described in such subparagraph made,”
Amendment to the Internal Revenue Code of 1986— Section 414(w)(3) of the Internal Revenue Code of 1986 is amended—
by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and moving the margins of such clauses 2 ems to the right;
by striking “ For purposes of” and inserting the following:
“(A) In general—For purposes of”
by adding at the end the following new subparagraph:
“(B) Periodic automatic deferral required—In the case of an eligible automatic contribution arrangement taking effect after December 31, 2024, the requirements of this subsection shall be treated as met only if, under the arrangement, at least every 3 plan years each employee—
“(i) who is eligible to participate in the arrangement, and
“(ii) who, at the time of the determination, has in effect an affirmative election under subparagraph (A)(ii) not to have such contributions described in such subparagraph made,”
Qualified automatic contribution arrangements—
In general— Section 401(k)(13)(C) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause:
“(v) Periodic automatic deferral required for post-2024 arrangements—In the case of a qualified automatic contribution arrangement which takes effect after December 31, 2024, the requirements of this subparagraph shall be treated as met only if, under the arrangement, at least every 3 plan years each employee—
“(I) who is eligible to participate in the arrangement, and
“(II) who, at the time of the determination, has in effect an affirmative election pursuant to clause (ii) not to have contributions described in clause (i) made,”
Conforming amendments— Clause (iv) of section 401(k)(13)(C) of such Code is amended—
in the heading, by inserting “for pre-2025 arrangements” after “required”; and
by striking “Clause (i)” and inserting “In the case of a qualified automatic contribution arrangement in effect before January 1, 2025, clause (i)”.
Effective date— The amendments made by this section shall apply to arrangements taking effect after December 31, 2024.
Sec. 6 Employee Ownership and Participation Initiative
Definitions— In this section:
Existing program— The term “existing program” means a program, designed to promote employee ownership and employee participation in business decisionmaking, that exists on the date on which the Secretary is carrying out a responsibility authorized under this section.
Initiative— The term “Initiative” means the Employee Ownership and Participation Initiative established under subsection (b).
New program— The term “new program” means a program, designed to promote employee ownership and employee participation in business decisionmaking, that does not exist on the date on which the Secretary is carrying out a responsibility authorized under this section.
Secretary— The term “Secretary” means the Secretary of Labor.
State— The term “State” has the meaning given the term under section 3 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102).
Employee ownership and participation initiative—
Establishment— The Secretary of Labor shall establish within the Department of Labor an Employee Ownership and Participation Initiative to promote employee ownership and employee participation in business decisionmaking.
Functions— In carrying out the Initiative, the Secretary shall—
support within the States existing programs designed to promote employee ownership and employee participation in business decisionmaking; and
facilitate within the States the formation of new programs designed to promote employee ownership and employee participation in business decisionmaking.
Duties— To carry out the functions enumerated in paragraph (2), the Secretary shall—
support new programs and existing programs by—
making Federal grants authorized under subsection (d); and
acting as a clearinghouse on techniques employed by new programs and existing programs within the States, and disseminating information relating to those techniques to the programs; and
facilitate the formation of new programs, in ways that include holding or funding an annual conference of representatives from States with existing programs, representatives from States developing new programs, and representatives from States without existing programs.
Programs regarding employee ownership and participation—
Establishment of program— Not later than 180 days after the date of enactment of this Act, the Secretary shall establish a program to encourage new programs and existing programs within the States to foster employee ownership and employee participation in business decisionmaking throughout the United States.
Purpose of program— The purpose of the program established under paragraph (1) is to encourage new and existing programs within the States that focus on—
providing education and outreach to inform employees and employers about the possibilities and benefits of employee ownership, business ownership succession planning, and employee participation in business decisionmaking, including providing information about financial education, employee teams, open-book management, and other tools that enable employees to share ideas and information about how their businesses can succeed;
providing technical assistance to assist employee efforts to become business owners, to enable employers and employees to explore and assess the feasibility of transferring full or partial ownership to employees, and to encourage employees and employers to start new employee-owned businesses; and
training employees and employers with respect to methods of employee participation in open-book management, work teams, committees, and other approaches for seeking greater employee input.
Program details— The Secretary may include, in the program established under paragraph (1), provisions that—
in the case of activities described in paragraph (2)(A)—
target key groups, such as retiring business owners, senior managers, unions, trade associations, community organizations, and economic development organizations;
encourage cooperation in the organization of workshops and conferences; and
prepare and distribute materials concerning employee ownership and participation, and business ownership succession planning;
in the case of activities described in paragraph (2)(B)—
provide preliminary technical assistance to employee groups, managers, and retiring owners exploring the possibility of employee ownership;
provide for the performance of preliminary feasibility assessments;
assist in the funding of objective third-party feasibility studies and preliminary business valuations, and in selecting and monitoring professionals qualified to conduct such studies; and
provide a data bank to help employees find legal, financial, and technical advice in connection with business ownership;
in the case of activities described in paragraph (2)(C)—
provide for courses on employee participation; and
provide for the development and fostering of networks of employee-owned companies to spread the use of successful participation techniques; and
in the case of training described in paragraph (2)(D)—
provide for visits to existing programs by staff from new programs receiving funding under this section; and
provide materials to be used for such training.
Guidance— The Secretary shall issue formal guidance, for recipients of grants awarded under subsection (d) and one-stop partners (as defined in section 3 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102)) affiliated with the workforce development systems (as so defined) of the States, proposing that programs and other activities funded under this section be—
proactive in encouraging actions and activities that promote employee ownership of, and participation in, businesses; and
comprehensive in emphasizing both employee ownership of, and participation in, businesses so as to increase productivity and broaden capital ownership.
Grants—
In general— In carrying out the program established under subsection (c), the Secretary may make grants to States (except as provided in paragraph (5)) for use in connection with new programs and existing programs within a State for—
education and outreach as provided in subsection (c)(2)(A);
technical assistance as provided in subsection (c)(2)(B);
training activities for employees and employers as provided in subsection (c)(2)(C);
activities facilitating cooperation among employee-owned firms; and
training as provided in subsection (c)(2)(D) for new programs provided by participants in existing programs dedicated to the objectives of this section, except that, for each fiscal year, the amount of the grants made for such training shall not exceed 10 percent of the total amount of the grants made under this section.
Amounts and conditions— The Secretary shall determine the amount and any conditions for a grant made under this subsection. The amount of the grant shall be subject to paragraph (6), and shall reflect the capacity of the applicant for the grant.
Applications— Each entity desiring a grant under this subsection shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may reasonably require.
State applications— Each State may sponsor and submit an application under paragraph (3) on behalf of any local entity consisting of a unit of State or local government, State-supported institution of higher education, or nonprofit organization, meeting the requirements of this section.
Applications by entities—
Entity applications— If a State fails to support or establish a program pursuant to this section during any fiscal year, the Secretary shall, in the subsequent fiscal years, allow local entities described in paragraph (4) from that State to make applications for grants under paragraph (3) on their own initiative.
Application screening— In any case in which a local entity makes an application for a grant pursuant to subparagraph (A), the relevant State may take no actions to screen such application.
Limitations— A recipient of a grant made under this subsection shall not receive, during a fiscal year, in the aggregate, more than the following amounts:
For fiscal year 2023, $300,000.
For fiscal year 2024, $330,000.
For fiscal year 2025, $363,000.
For fiscal year 2026, $399,300.
For fiscal year 2027, $439,200.
Annual report— For each year, each recipient of a grant under this subsection shall submit to the Secretary a report describing how grant funds allocated pursuant to this subsection were expended during the 12-month period preceding the date of the submission of the report.
Evaluations— The Secretary is authorized to reserve not more than 10 percent of the funds appropriated for a fiscal year to carry out this section for the purposes of conducting evaluations of the grant programs identified in subsection (d) and to provide related technical assistance.
Reporting— Not later than 36 months after the date of enactment of this Act, the Secretary shall prepare and submit to Congress a report—
on progress related to employee ownership and participation in businesses in the United States; and
containing an analysis of critical costs and benefits of activities carried out under this section.
Authorizations of appropriations—
In general— There are authorized to be appropriated for the purpose of making grants pursuant to subsection (d) the following:
For fiscal year 2023, $4,000,000.
For fiscal year 2024, $7,000,000.
For fiscal year 2025, $10,000,000.
For fiscal year 2026, $13,000,000.
For fiscal year 2027, $16,000,000.
Administrative expenses— There are authorized to be appropriated for the purpose of funding the administrative expenses related to the Initiative, for each of fiscal years 2022 through 2026, an amount not in excess of the lesser of—
$350,000; or
5.0 percent of the maximum amount available under paragraph (1) for that fiscal year.
Sec. 7 Refund to Rainy Day Savings Program
Establishment—
In general— Not later than December 31, 2024, the Secretary of the Treasury or the Secretary’s delegate (referred to in this subsection as the “Secretary”) shall establish and implement a program (referred to in this subsection as the “Refund to Rainy Day Savings Program”) to allow participating taxpayers, pursuant to the requirements established under this section, to defer payment on 20 percent of the amount which would otherwise be refunded to such taxpayer as an overpayment (as described in section 6401 of the Internal Revenue Code of 1986).
Period of deferral— Except as provided under paragraph (3)(E), a participating taxpayer may elect to defer payment of the amount described in paragraph (1) and have such amount deposited in the Rainy Day Fund (as described in paragraph (3)).
Rainy day fund—
In general— The Secretary shall establish in the Treasury a fund, in such manner as the Secretary determines to be appropriate, to be known as the “Rainy Day Fund”, consisting of any amounts described in paragraph (1) on which payment has been deferred by participating taxpayers.
Investment— Any amounts deposited in the Rainy Day Fund shall be invested by the Secretary, in United States Treasury securities issued under chapter 31 of title 31, United States Code, that are suitable for the needs of the Rainy Day Fund.
Disbursements from fund—
In general— On the date that is 180 days after the date of deposit in the Rainy Day Fund of an amount deferred by such taxpayer under paragraph (1), the amounts in the Rainy Day Fund shall be made available to the Secretary to distribute to such taxpayer in an amount equal to such amount plus any interest accrued on such amount (as determined under subparagraph (D)).
Distributed to taxpayers— The amounts described in clause (i) shall be distributed to the account identified by the participating taxpayer under paragraph (4)(B).
Interest accrued— The amount of interest accrued on the amount deferred by a participating taxpayer under subsection (a) shall be determined by the Secretary based upon the return on the investment of such amounts under subparagraph (B).
Early withdrawal—
In general— As soon as possible after receipt by the Secretary of the individual income tax return of the participating taxpayer and October 15 of the applicable year, such taxpayer may elect to terminate the deferral of the amount described under paragraph (1) and receive a distribution from the Rainy Day Fund equal to such amount and any interest which has accrued on such amount up to that date.
Complete withdrawal— A participating taxpayer making an election under clause (i) must terminate deferral of the full amount described under paragraph (1), and such amount shall be distributed to the bank account identified by the participating taxpayer under paragraph (4)(B).
Participating taxpayer— For purposes of this section, the term “participating taxpayer” means a taxpayer who—
prior to the due date for filing the return of tax for such taxable year, elects to participate in the Refund to Rainy Day Savings Program, in accordance with regulations to be issued by the Secretary; and
provides the Secretary with an account and routing number or any other financial information deemed necessary by the Secretary for purposes of subparagraphs (C)(ii) and (E)(ii) of paragraph (3).
Forms— The Secretary shall ensure that the election to defer payment of the amount described in paragraph (1) may be claimed on appropriate tax forms.
Implementation—
Educational materials and outreach— The Secretary shall—
design educational materials for taxpayers regarding financial savings and the Refund to Rainy Day Savings Program,
publicly disseminate and distribute such materials during the first calendar quarter of each calendar year and following disbursement of amounts described in paragraph (3)(C), and
engage in outreach regarding the Refund to Rainy Day Savings Program to the Volunteer Income Tax Assistance program and paid tax preparers.
Information for participating taxpayers— The Secretary shall ensure that a participating taxpayer is able to electronically verify the status of the amount deferred by such taxpayer under paragraph (1), including any interest accrued on such amount and the status of any distribution.
Federally funded benefits— Any amounts described in paragraph (1) that are distributed to a participating taxpayer, including any interest accrued on such amount, shall be treated in the same manner as any refund made to such taxpayer under section 32 of the Internal Revenue Code of 1986 for purposes of determining the eligibility of such taxpayer for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds.
Assets for independence innovation demonstration projects—
in section 416, by inserting “, and, subject to section 417, $25,000,000 for each of fiscal years 2024, 2025, 2026, 2027, and 2028, to remain available until expended”at the end before the period; and
by adding at the end the following new section:
“417. Reservation of funds
“(a) In general—Subject to subsections (b) and (c), from the funds appropriated for each of fiscal years 2024, 2025, 2026, 2027, and 2028 under section 416, the Secretary shall reserve—
“(1) $3,000,000 for general research and evaluation; and
“(2) any amounts remaining after application of paragraph (1) to fund Assets for Independence innovation projects under section 418.
“(b) Pilot program funding—From the amounts reserved under subsection (a) for each of fiscal years 2024, 2025, and 2026, the Secretary shall make available for operating the pilot program established under section 7(c) of the Protecting America’s Retirement Security Act of 2022—
“(1) 50 percent of the amount reserved for the relevant fiscal year under paragraph (1) of subsection (a) (after any adjustment under subsection (c)); and
“(2) 25 percent of the amount reserved for the relevant fiscal year under paragraph (2) of subsection (a) (after any adjustment under subsection (c)).
“(c) Proportional adjustment—In any of fiscal years 2024, 2025, 2026, 2027, and 2028, if the amount appropriated for such fiscal year is greater or less than the amount authorized for such fiscal year under section 416, the amounts reserved under subsection (a) shall be increased or decreased for such fiscal year so that each such amount bears the same proportion to the amount appropriated as each of the amounts reserved under such subsection bears to the amount authorized.”
Establishment of innovation program— The Assets for Independence Act (42 U.S.C. 604 note), as amended by paragraph (1), is further amended by adding at the end the following new section:
“418. Assets for Independence innovation projects
“(a) In general—The Secretary is authorized to make grants to qualified entities to conduct Assets for Independence innovation projects under this section.
“(b) Definitions—For purposes of this section:
“(1) Assets for Independence innovation project—The term “Assets for Independence innovation project” means a demonstration project carried out by a qualified entity under this section.
“(2) Innovation development account—The term “innovation development account” means an account that is established in a federally insured financial institution or a State insured financial institution and meets such other requirements as are established by the Secretary.
“(c) Application
“(1) Criteria and preferences
“(A) In general—Subject to subparagraph (B), in considering an application to conduct an Assets for Independence innovation project, the Secretary shall apply subsections (c) and (d) of section 405 to the application in the same manner that such subsections apply to an application to conduct a demonstration project under section 405.
“(B) Modification—For purposes of this paragraph, paragraph (1) of section 405(c) shall be applied without regard to the phrase “through activities requiring one or more qualified expenses”.
“(2) Approval of Assets for Independence innovation projects—Not later than 12 months after the date of the enactment of this section, the Secretary shall, on a competitive basis, approve such applications to conduct Assets for Independence innovation projects as the Secretary considers to be appropriate, taking into account the considerations required by paragraph (1). The Secretary shall ensure, to the maximum extent practicable, that the applications that are approved involve a range of communities (spread out both geographically and in rural and urban areas) and diverse populations.
“(d) Project duration and grant amount
“(1) Duration—The Secretary shall award grants under this section for a period not to exceed 5 project years.
“(2) Grant amount—For each project year of an Assets for Independence innovation project approved under this section, the Secretary may make a grant to the qualified entity authorized to conduct the project. In making such a grant, the Secretary shall make the grant on the first day of the project year in an amount not to exceed the lesser of—
“(A) the aggregate amount of funds committed as matching contributions from non-Federal public or private sector sources; or
“(B) $1,000,000.
“(e) Eligibility and selection of individuals to participate in an Assets for Independence innovation project
“(1) Eligibility criteria—Subject to the approval of the Secretary, each qualified entity conducting an Assets for Independence innovation project shall establish eligibility requirements for participants in the project. Such requirements shall—
“(A) be more expansive than the requirements established under section 408; and
“(B) ensure that eligibility is limited to low-income individuals.
“(2) Selection of individuals to participate—Each qualified entity conducting an Assets for Independence innovation project shall select, from among the individuals that meet the eligibility requirements established by the entity under paragraph (1), the individuals—
“(A) that the qualified entity determines to be most appropriate to participate; and
“(B) to whom the qualified entity will make disbursements or deposits in accordance with subsection (f).
“(f) Disbursements by qualified entities
“(1) In general—Each qualified entity conducting an Assets for Independence innovation project shall, in a manner consistent with the program requirements established by such entity, disburse to a third-party or deposit into the innovation development account of each individual participating in the project from the funds described in subsection (d)(2), a matching contribution of not less than $0.50 and not more than $8 for every $1 deposited in the account by a project participant, except that the rate of matching shall be equal for all individuals participating in the project conducted by such qualified entity.
“(2) Limitation on disbursements for an individual—Not more than $5,000 from a grant made under subsection (d)(1) shall be provided to any one individual over the course of the Assets for Independence innovation project.
“(3) Limitation on disbursements for a household—Not more than $10,000 from a grant made under subsection (d)(1) shall be provided to any one household over the course of the Assets for Independence innovation project.
“(4) Adjustment for inflation
“(A) In general—For each calendar year after 2023, the dollar amounts in paragraphs (2) and (3) shall be increased by an amount equal to the product of—
“(i) such dollar amount, and
“(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 “2022” for “2016” in subparagraph (A)(ii) thereof.
“(B) Rounding—If any increase determined under subparagraph (A) is not a multiple of $50, such increase shall be rounded up to the next lowest multiple of $50.”
Conforming amendments— The Assets for Independence Act (42 U.S.C. 604 note), as amended by paragraphs (1) and (2), is further amended—
in section 404(2), by inserting “or section 418” before the period;
in section 406—
in subsection (a), by striking “to conduct a demonstration project under this title” and inserting “under section 405”; and
in subsection (b), by striking “conducted under this title” and inserting “approved under section 405”;
in section 407—
in subsection (c)—
in paragraph (1)—
in subparagraph (A), by inserting “or, in the case of a participant in a project conducted under section 418, other permitted expenses” after “qualified expenses”; and
in subparagraph (B), by inserting “or subsection (f) of section 418” after “section 410”; and
in paragraph (3), by inserting “or section 418(d)(1)”after “ section 406(b)”; and
in subsection (d)(2)(A), by inserting “or section 418(d)(1)” after “section 406(b)”;
in section 408, by striking “conducted under this title” each place it appears and inserting “approved under section 405”;
in section 409, by striking “conducted under this title” and inserting “approved under section 405”;
in section 410, by striking “under this title” and inserting “conducting a demonstration project approved under section 405”;
in section 413(a), by inserting “or section 418(c)” after “under section 405”; and
in section 415, by inserting “or innovation development account” after “individual development account”.
Matched refund to rainy day savings pilot program—
In general— Not later than 6 months after the date of the enactment of this Act and using the funds made available pursuant to section 417(b) of the Assets for Independence Act, the Secretary of Health and Human Services, acting through the Director of Community Services (in this section referred to as “the Secretary”), shall establish under this subsection a matched savings account pilot program to encourage saving by eligible individuals. Under the pilot program, a qualified entity may apply to the Secretary for a grant to conduct a pilot project described in paragraph (2) (in this section referred to as a “pilot project”). The pilot program shall operate for a period of 3 years.
Pilot project described—
In general— A pilot project is a project in which a qualified entity establishes a matched savings program that meets the requirements of subparagraph (B) for eligible individuals who are selected by the entity to participate in the program.
Requirements—
Deposits into direct deposit accounts—
In general— A matched savings program established as part of a pilot project shall match amounts saved by each eligible individual participating in the pilot project—
with the amount matched to be equal to or less than the amount of any payment deferred by such individual under the Refund to Rainy Day Savings Program established in subsection (a)(1); and
with the rate of matching to be equal for all eligible individuals participating in the program.
Timing— Any amount described in subclause (I) shall not be distributed to an eligible individual until the amounts described in subparagraphs (C)(ii) or (E)(ii) of subsection (a)(1) have been distributed to the bank account identified by such individual.
Evaluation of program by independent research organization—
In general— From amounts made available under section 417(b)(2) of the Assets for Independence Act, as added by subsection (b)(1)(B), the Secretary shall enter into a contract with an independent research organization for purposes of evaluating pilot projects conducted under this section.
Coordination— Each qualified entity that establishes a matched savings program as part of a pilot project shall collaborate with the independent research organization described in subclause (I) to evaluate the outcomes and impact of the project.
Impact— The evaluation described in subclause (I) shall include an examination of the demographic characteristics of the individuals participating in the pilot project, such as gender, race, age, geographic location, and family makeup, and how the impacts of the project vary among different demographic groups and the effects of the pilot program on retirement savings for eligible individuals.
Program features— The program features to be evaluated through the pilot projects conducted under this section may include—
different levels of matching contributions by qualified entities;
lock-out periods during which an eligible individual may not make withdrawals from their account; and
educational materials intended to promote savings.
Safeguarding privacy— Any contract entered into under this clause shall require the selected independent research organization to take all necessary and proper precautions to protect eligible individuals’ privacy and personally identifiable information when conducting the evaluation.
Duration— A pilot project shall be for a duration of not more than 3 years.
Federally funded benefits— Any amounts described in subparagraph (B)(i) which are distributed to an eligible individual shall be treated in the same manner as any refund made to such taxpayer under section 32 of the Internal Revenue Code of 1986 for purposes of determining the eligibility of such taxpayer for benefits or assistance, or the amount or extent of benefits or assistance, under any Federal program or under any State or local program financed in whole or in part with Federal funds.
Strategic communications plan— The Secretary shall devise a strategic communications plan to ensure a successful pilot program.
Annual report to congress— The Secretary shall submit an annual report to Congress on the progress and outcomes of the pilot program established under this section.
Definitions— In this subsection:
Eligible individual— The term “eligible individual” means an individual who—
has deferred payment of the amount described in subsection (a)(1) under the Refund to Rainy Day Savings Program established in such subsection, and
meets the eligibility requirements under section 408 of the Assets for Independence Act, except that subsection (a)(2) of such section shall not apply.
Qualified entity—
In general— The term “qualified entity” means—
one or more not-for-profit organizations described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code;
a State or local government agency, or a tribal government, submitting an application to conduct a pilot project jointly with an organization described in subclause (I);
a site that offers free tax help to individuals who qualify through the Internal Revenue Service’s Voluntary Income Tax Assistance or Tax Counseling for the Elderly programs; or
an entity that—
is—
a credit union designated as a low-income credit union by the National Credit Union Administration; or
an organization designated as a community development financial institution by the Secretary of the Treasury (or the Community Development Financial Institutions Fund); and
can demonstrate a collaborative relationship with a local community-based organization whose activities are designed to address poverty in the community and the needs of community members for economic independence and stability.
Rule of construction— Nothing in this paragraph shall be construed as preventing an organization described in clause (i)(I) from collaborating with a financial institution or for-profit community development corporation to carry out the purposes of this section.