S. 1718

119 S1718 IS: Invest America Act
 U.S. Senate
 2025-05-12
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II
 119th CONGRESS  1st Session
 S. 1718
 IN THE SENATE OF THE UNITED STATES
 May 12, 2025
  Mr. Cruz  introduced the following bill; which was read twice and referred to the  Committee on Finance
 A BILL
To amend the Internal Revenue Code of 1986 to create invest America accounts.
1.
Short title
This Act may be cited as the   Invest America Act  .
2.
Invest America accounts
(a)
In general
Subchapter F of  Chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:
IX
Invest America accounts
530A.
Invest America accounts
(a)
General rule
An invest America account shall be exempt from taxation under this subtitle. Notwithstanding the preceding sentence, such account shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations).
(b)
Invest America account
For purposes of this section—
(1)
In general
The term  invest America account  means a trust created or organized in the United States for the exclusive benefit of an individual and which is designated (in such manner as the Secretary shall prescribe) at the time of the establishment of the trust as an invest America account, but only if the written governing instrument creating the trust meets the following requirements:
(A)
Except in the case of a qualified rollover contribution described in subsection (e), no contribution will be accepted—
(i)
unless it is in cash, and
(ii)
if such contribution would result in aggregate contributions for the taxable year exceeding the contribution limit specified in subsection (c)(1).
(B)
No distribution (other than a qualified rollover distribution) will be allowed before the date on which the beneficiary attains the age of 18.
(C)
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 trust will be consistent with the requirements of this section or who has so demonstrated with respect to any individual retirement plan.
(D)
The interest of an individual in the balance of his account is nonforfeitable.
(E)
The assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund.
(F)
No part of the trust funds will be invested in any asset other than eligible investments.
(2)
Eligible investments
The term  eligible investments  means any mutual fund or exchange traded fund which—
(A)
tracks the returns of the Standard and Poor's 500 stock market index, and
(B)
meets such other requirements as provided by the Secretary.
(c)
Treatment of contributions
(1)
Contribution limit
The contribution limit for any taxable year is $5,000.
(2)
Cost-of-living adjustment
(A)
In general
In the case of any taxable year beginning in a calendar year after 2026, the $5,000 amount under paragraph (1) shall be increased by an amount equal to—
(i)
such dollar amount, multiplied by
(ii)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting  calendar year 2025  for  calendar year 2016  in subparagraph (A)(ii) thereof.
(B)
Rounding
If any increase under subparagraph (A) is not a multiple of $100, such amount shall be rounded to the next lower multiple of $100.
(d)
Distributions
(1)
In general
Any distribution from an invest America account shall be included in gross income of the distributee in the manner as provided in section 72, except that the character of such income shall be determined after the application of section 1(h)(12).
(2)
Exceptions
Paragraph (1) shall not apply to any qualified rollover contribution.
(e)
Qualified rollover contribution
For purposes of this section, the term  qualified rollover contribution  means—
(1)
a contribution made pursuant to section 3(a) of the  Invest America Act , or
(2)
an amount which is paid in a direct trustee-to-trustee transfer to an invest America account maintained for the benefit of such designated beneficiary.
(f)
Treatment after death of account beneficiary
Rules similar to the rules of section 223(f)(8) shall apply for purposes of this section.
(g)
Custodial accounts
For purposes of this section, a custodial account or an annuity contract issued by an insurance company qualified to do business in a State shall be treated as a trust under this section if—
(1)
the custodial account or annuity contract would, except for the fact that it is not a trust, constitute a trust which meets the requirements of subsection (b)(1), and
(2)
in the case of a custodial account, the assets of such account are held by a bank (as defined in section 408(n)) or another person who demonstrates, to the satisfaction of the Secretary, that the manner in which he will administer the account will be consistent with the requirements of this section.
 For purposes of this title, in the case of a custodial account or annuity contract treated as a trust by reason of the preceding sentence, the person holding the assets of such account or holding such annuity contract shall be treated as the trustee thereof.
(h)
Reports
The trustee of an invest America account shall make such reports regarding such account to the Secretary and to the beneficiary of the account with respect to contributions, distributions, and such other matters as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required.
  .
(b)
Distribution taxed at same rate as net capital gains
 Section 1(h)  of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
(12)
Distributions from invest America accounts taxed as net capital gain
For purposes of this subsection, the term  net capital gain  meant the net capital gain (determined without regard to this paragraph) increased by the amount of distributions made during the taxable year from an invest America account (as defined in section 530A) which are includible in income under section 530A(d).
 .
(c)
Tax on excess contributions
(1)
In general
Subsection (a) of  section 4973  of the Internal Revenue Code of 1986 is amended by striking  or  at the end of paragraph (5), by inserting  or  at the end of paragraph (6), and by inserting after paragraph (6) the following new paragraph:
(7)
an invest America account (as defined in section 530A),
 .
(2)
Excess contribution
Section 4973 of such Code is amended by adding at the end the following new subsection:
(i)
Excess contributions to invest America accounts
For purposes of this section, in the case of invest America accounts (within the meaning of section 530A), the term  excess contributions  means the sum of—
(1)
the amount by which the amount contributed for the calendar year to such account (other than qualified rollover contributions (as defined in section 530A(e))) exceeds the contribution limit under section 530A(c)(1), and
(2)
the amount determined under this subsection for the preceding calendar year, reduced by the excess (if any) of the maximum amount allowable as a contribution under section 530A(c)(1) for the calendar year over the amount contributed to the account for the calendar year (other than qualified rollover contributions (as so defined)).
 .
(d)
Failure To provide reports on invest America accounts
Paragraph (2) of  section 6693(a)  of the Internal Revenue Code of 1986 is amended by striking  and  at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting  , and , and by adding at the end the following new subparagraph:
(G)
section 530A(h) (relating to invest America accounts).
  .
(e)
Conforming amendment
The table of parts for subchapter F of  chapter 1  of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Part IX. Invest America accounts
  .
(f)
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
3.
Federal contributions to invest America accounts
(a)
In general
As soon as practical after an individual is certified as an eligible individual under subsection (c), the Secretary of the Treasury shall pay to the invest America account of such eligible individual an amount equal to $1,000.
(b)
Eligible individual
For purposes of this section, the term  eligible individual  means any individual who—
(1)
is born after July 4, 2026,
(2)
is a United States citizen, and
'(3)
has at least one parent who, at the time of the individual's birth, is a United States citizen.
(c)
Certification of eligible individuals
(1)
In general
The Secretary of the Treasury, in consultation with the Commissioner of Social Security, shall establish procedures for the certification of individuals as eligible individuals.
(2)
Timing
No certification may be made under this section more than 6 months after the date of the individual's birth.
(d)
Automatic establishment of invest America accounts in certain cases
(1)
In general
If an eligible individual does not have an invest America account, the Secretary shall establish such an account on behalf of such individual.
(2)
Selection of account provider
The Secretary of the Treasury shall develop rules for the selection of persons described in section 530A(b)(1)(C) for the establishment of invest America accounts of individuals to whom paragraph (1) applies. Such rules shall provide for selection based on low fees, historical investment performance, administrative capabilities, and such other criteria as the Secretary determines appropriate.
(e)
Tax treatment
(1)
In general
Part III of subchapter B of  chapter 1  of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:
139J.
Federal contributions to invest America accounts
Gross income shall not include any contribution made by the Secretary to an invest America account under section 3(a) of the  Invest America Act .
 .
(2)
Clerical amendment
The table of sections for part III of subchapter B of  chapter 1  of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139I the following new item:
Sec. 139J. Federal contributions to invest America accounts.
  .
(3)
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
(f)
Appropriation
There are hereby appropriated such sums as may be necessary to make payments under subsection (a).