New Savings Account for College Proposal

New Savings Account for College Proposal

U.S. Congressman Jose Serrano (D-NY) and a number of his colleagues in the U.S. House of Representatives agree. On August 1st, they introduced the Financial Security Credit Act of 2013 (H.R. 2917).

  

If passed into law, eligible families who contributed to a range of saving products, including those traditionally associated with retirement, such as 401ks and IRAs, as well as more flexible vehicles, such as savings bonds and short-term savings accounts or certificates of deposit, would see a meaningful match delivered to their account. Families that didn't have their own accounts would be able to open them directly on their tax return.

As Congressman Serrano put it in his statement to the press, "We know that many American households are unprepared to meet short-term and long-term financial needs, and many more feel as though they cannot save for their long term goals. This legislation will address these problems by offering an incentive for taxpayers from low- and moderate- income brackets to save their tax refunds by making deposits into any of a number of savings options."

The Financial Security Credit Act of 2013 is unique in several significant respects. It offers a simple and easily understood incentive through a direct 50% match to qualifying contributions, up to $500 a year. It also makes clear that increasing personal savings is a policy priority, including savings that can be accessed when needed. Under the proposal, families are empowered to choose whether they want to save for higher education, build up a savings cushion to handle an unexpected emergency, or plan ahead for retirement many years down the road.

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