Democratic lawmakers have introduced bicameral legislation that would create children's savings accounts, which could later be used toward college, housing or retirement savings.
Senate Majority Leader Chuck Schumer, D-N.Y., and Sens. Bob Casey, D-Pa., and Ron Wyden, D-Ore., introduced the 401Kids Savings Act alongside Reps. Don Beyer, D-Va., Joyce Beatty, D-Ohio, and Suzan DelBene, D-Wash., on Jan. 31.
The bill would create a savings account for all newborns and children in the U.S. under 18, to which families, non-profits, employers, foundations and others could contribute. Once account holders turn 18, they could use the money "for post-secondary education and training, a small business, a first home or retirement security," according to a Jan. 31 news release from Casey's office.
"The 401Kids Saving Act would invest in our nation's youth and make it easier for future generations of children to build savings, escape poverty and obtain economic security," Schumer said in the news release. "No one should miss out on the opportunity to go to college, own a home, or start a business because they don't come from a wealthy family. This legislation would ensure that every child in America has much more ability to reach their full potential."
While all families could contribute up to $2,500 per year toward the accounts, lower- and moderate-income families would also receive federal support. The accounts would be built on state 529 plan platforms and managed by state treasurers, according to the news release.
"As American families grapple with rising costs, they deserve a way to save not just for their future, but for their children's future," Casey said in the news release. "My 401Kids Savings Act would provide every child in this nation with the cushion they need to take risks and pursue opportunities to create generational wealth."
"The positive effects of 401Kids accounts would go far beyond the children and their families who get accounts, because we know that when young adults can pursue education, start businesses, and buy homes, it creates economywide benefits," Beyer said in the news release.
For every dollar invested in 401Kids accounts, "society would receive at least $2.61 in benefits associated with increased income, improved health, additional tax revenues and savings to other government sectors," according to an analysis from Jose Diaz, chief economist at the Constellation Fund, a philanthropic organization focused on fighting poverty in Minneapolis and St. Paul, Minn.
Organizations endorsing the bill include the Aspen Institute Financial Security Program, National Association of Social Workers, Northern California College Promise Coalition, and Vestwell, according to the news release.
