Presidential hopeful Sen. Hillary Clinton (D-N.Y.) and Oregon Republican Sen. Gordon H. Smith introduced this week the New Savers Bill, a multi-faceted proposal including provisions to create IRAs for children and encourage 539 college savings plans.
“Too many families are living paycheck to paycheck without saving for their futures and too many Americans have not been brought into the financial mainstream,” said Clinton.
One provision of the bill calls for the creation of an IRA for children. Income-earning family members would be allowed to contribute to a savings account for children, which will accumulate. These funds would then be withdrawn tax-free to pay for education, a first home or even retirement. Contributions would be post-tax dollars, like the Roth IRA.
The bill also calls for requiring more detailed information on each state’s fund’s performance and operation to be published in an annual report. These reports would also outline the impact of the funds on taxpayers, and provide for grants to states looking to increase participation.
Other provisions of the proposed bill call for promoting the use of U.S. Savings Bonds and expanding the list of allowable deductions under the Savers’ Credit, including Coverdale college savings accounts, while increasing the amount of savings allowed. Low-income workers are already allowed credits matching their contributions to IRAs and 401(k) plans.